Effective July 1, the minimum and award wage will increase by 3.75% which will see the national minimum wage go up to $24.10 per hour or $913.19 per week based on a 38-hour week. At any other time, this would have been widely accepted as the price of progress, but during an unprecedented crisis in the small business sector, this is a callous kick in the guts.
As inflation pushes up the cost of labour, goods, and materials across the board, it’s understandable that the Fair Work Commission wants to ensure those who earn the least in this country can survive in the current cost of living crisis. It’s an inconvenient truth however that small business owners are among those who are earning little to nothing as they are forced to take on multiple roles in order to stay afloat. What’s even more sad is that small business owners are blamed for having small profit margins when in actual fact they have been struggling since the government locked us down. These decisions crippled small business and with the rise in the cost of doing business in Australia, it’s now catastrophic.
An unpalatable fact about small business owners is that they work more than the average 38-hour week. A survey found that a quarter of small business owners are clocking in more than 50+ hours per week. At the same time, the latest report from ASBFEO shows 27% of businesses have a turnover of $0 to less than $50,000. A further 32% bring in between $50,000 and $200,000.
Out of these paltry earnings, business owners are expected to pay wages, tax, their suppliers, and other expenses associated with the cost of running a business. Finally, if they are lucky, they get to take some of it home for themselves. Cash flow is tight and business owners would rather sacrifice paying themselves to keep their business running.
Even a small increase to the minimum wage could wipe out slender profit margins from small businesses and in many cases leave them in the red. What follows is mass closure, empty shop fronts, and derelict streets. This scenario is already playing out as ABS data reflects the dire situation many SMEs are dealing with right now. In 2022-23 the entry rate of new businesses is 16% compared to the exit rate of 14%.
Hospitality and construction are in strife and the numbers rolling in show there’s been an increase in unemployment. Australia’s biggest employer also happens to be small businesses. Put two and two together and it’s no surprise that anti-small business government policies have finally come home to roost.
What is the solution? Common sense dictates Labor immediately needs to stop adding financial pressures to the small business sector. Small businesses don’t need cybersecurity funding as much as they need meaningful tax breaks and rebates. Instead of expecting small business owners to single-handedly bear the cost of living burden, the government should step in to make it easier for them to hold onto their employees.
For instance, entry-level roles should equate to entry-level wages to keep the labour market affordable for employers. After all, it’s better to have a job than to have no job at all if small businesses end up folding.
Small business owners are some of the hardest working people in the country yet they’re being openly persecuted for simply having a go. The irony of small business owners dipping into savings, forgoing holidays, sick leave, and compassionate leave to keep their business running while their employees enjoy mandated benefits points to the dysfunctional relationship the government has with this incredibly important sector.
In light of such facts, it’s no wonder younger generations aren’t stepping up to start the next generation of small businesses. One can only hope legislators take notice and act to save small businesses before more disappear.
Amanda Rose is the founder and CEO of Entrepreneurial and Small Business Women Australia.
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Amanda Rose is a brand strategist, speaker and founder and CEO of The Business Woman Media.
