Funding for Australian small business

The Fair Wage Commission announced earlier this month that there would be an annual national minimum wage increase of 2.5%, raising the hourly rate to $20.33. That’s $772.60 per full-time week. Most states (with Victoria the exception) and business associations were against the move, but trade and employee unions have applauded it.

According to Inside Retail ACTU secretary Sally McManus says “’Pay increase will be spent in local communities across the country and will help small and medium businesses as well as working people get back on their feet after the pandemic. This wage rise goes to one in four working people – and this process is the only avenue those people have to a pay rise each year.’ But Australian Retail Association President Paul Zahra counters by saying ‘Our economic recovery remains uneven, with many businesses – particularly small businesses in CBD locations, travel retail and in Victoria – continuing to struggle for survival.'” The decision was made on robust economic indicators in the retail sector, but Hair and Beauty Australia Industry Association CEO Jan Gawel says that wasn’t the case with hair and beauty.

“Costs rising are an inevitable part of life, and no one is against good employees earning a fair wage, but after COVID-19 a lot of the hair and beauty industry are still struggling. While initial research by the FWC suggested that the retail sector had largely recovered as a whole, this was not true in hair and beauty,” says Jan.  

“We absolutely agree that we haven’t seen the recovery across the hair and beauty industry post-COVID that we would have liked. HABA have been dedicated to negotiating with The Fair Work Commission about a change in pay rates, and they have obviously heard us in their recent decision to postpone the the 2.5% wage increase for the hair and beauty industry until at least 1 November 2021. This increase, in our perspective, seems to be very much at the high end. This in conjunction with the increase in superannuation contributions in July are putting that much more pressure on salons considering all we have been through as an industry.”

The hair and beauty industry minimum wage award stays the same until 1 November, at which point beauty businesses need to be prepared for an increase in outgoings on payroll.

What can you do to prepare for the increase? Jan says a salons need to really review and trim their costs wherever they can in tandem with looking at their revenue mix. If you don’t do e-commerce yet, now might be the time? Virtual skin consults, takeaway products, a new mix of services and offerings, memberships. Any and all potential revenue streams. And little costs can add up over time. “There are two main paths to success for salon owners,” says Jan. “Costs, which employee salaries are a large component, and Revenue. Salons have to take this opportunity to review their running costs, from equipment to wages and consumables, while considering their service prices and the impact this will have on their overall revenue mix. Simply “getting more revenue” is never easy, and we are well aware that the financial struggles in the community due to COVID make any increase in prices that much tougher, but most customers will understand that the price of services will have to go up and are sympathetic to that.”

It’s can be hard to stomach wage increases as a small business, particularly coming out of a global pandemic. But they are a regular, predictable cost factor and do go back into the local economy. Plus, says Jan, “hair and beauty is a people business and we do support all efforts to attract and retain quality people in the industry, and while we are always looking out for the well being of salon owners, we understand salaries are one of the core drivers for employees and as such want a fair and equitable relationship between the two parties.” 

Get more information about the minimum wage increase at the Fair Work Ombudsman here and small business-specific tools here.

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