I would like to address the subject of Award Wages from the point-of-view, of a small business operator.
My business has costs that have to be absorbed in the price of my product. The first operating expense is the return to the partners who put in the capital. No sensible person sets up a business and flogs their guts out during the day and spends the night paying bills and reading regulations in order to break even, let alone to lose money.
My business turns over approximately $20,000 per week, my costs in percentage terms must come in at:
Rent & Outgoings 15%
Raw materials 18%
Repairs & Maintenance 3%
Odds & Sods 2%
My current staff are earning, including ‘on costs’ (holiday pay, super etc.), around $31 per hour. For their wage to come in at 33% of my gross, every one of those staff would appear to have to be able to make $93 in sales per hour ($31 = 33% of $93)
But it is worse than that, there is one staff member who is producing the product for everyone on the ‘floor’ selling it. Therefore, the selling staff have to make twice that – $186 per hour in sales on average. If they cannot do that, then simple maths dictates that the business cannot afford them.
Every time that a wage rise is imposed, we are forced to calculate how much the staff now have to sell. If the new wage is $33 per hour, then now the staff have to sell $198 of product per hour on average. Then we have to look at the stats of our sales staff and find out which ones are no longer up to the new performance level.
Every wage increase raises the bar for the level of staff that we must employ. Lovely people that were entirely acceptable to me and my customers ten years ago, are no longer employable in the industry.
It has created a ‘law of the jungle’ situation whereby we can employ only the very best, fastest and most efficient. Formerly valued staff are pushed, through no fault of theirs or ours, into the category of unemployable (in our industry). Every wage rise sets the bar higher.
When we have great staff who exceed their government imposed $186 per hour, we pay them more because we cannot afford to lose them.
When we have staff who can’t make the $186 per hour, we have to gently let them go.
Australia was already doing it very tough before the Wuhan Virus, but now we are heading into a depression. The current mandated wage structure was imposed in super prosperous times when we could painlessly raise the price of our product to cover any wage rise. Those times are now well and truly gone. They will never return unless business is freed from the chains of Award Wages and can again begin employing from the broad population.
Australia must again begin to manufacture and export finished goods. That cannot happen under the existing system of Award Wages. We employ 17 people and the next wage rise will see the closure of our business. That is what drove all of Australia’s manufacturers to close down. Where is the gain in that for anyone? The answer is obvious; there is no gain, only loss – loss of business, loss of capital, loss of jobs, loss of self-respect and loss of government revenue.
It cannot be that only the very best and brightest and most efficient are entitled to a job and that everyone else has to go on the dole.
Give us back the incentive to create businesses, and give everyone the chance of a job, not just the super talented.
Award wages are elitist. Everyone has value, but under the Award Wage system, very few of them are employable.
It is the same story for every business in Australia. Those businesses still trading are only just surviving and it is the system of Award Wages, not the Wuhan Virus, that is pushing us over the edge.
Sunday 22nd March, 2020