How the minimum wage increase will affect the cleaning industry

The increase to the national minimum wage may put struggling small businesses under further pressure.

The Fair Work Commission (FWC) has announced that Australia’s minimum and award wages will be increased by 3.75 percent from 1 July 2024. 

The national minimum wage will increase to $24.10 per hour and $915.91 per week, based on a full-time, 38-hour working week. 

This increase is expected to affect about 2.6 million workers (almost a quarter of all employees), adding approximately $33 a week to the current minimum wage.

In a statement, the FWC said it expected the increase would only make a “modest contribution” to the total amount of wage-growth in 2024 and would have a “limited” effect on the broader economy. Most employees who relied on modern award minimum-wage rates were “significantly different” to the rest of the workforce, the commission said.

“They mostly work part-time hours, are predominantly women, and almost half are casual employees. They are also much more likely to be low paid.”

Director of human resources advice service HR On Call, Melissa Behrend, said that description likely applied to many workers in the cleaning industry. Employers in the industry should be aware that the increase to the award would be on top of an annual increase to superannuation payments.

“Workers’ rates will go up, probably the full 3.75 percent, and then you have an added kick of a 0.5 percent increase in super as of July,” Behrend said.

There was concern from some sectors that wage pressures would only exaggerate the difficulties many small businesses faced since the pandemic. Writing in SmartCompany, Entrepreneurial and Small Business Women Australia chief executive Amanda Rose said with inflation pushing up costs across the board, even a small increase to the minimum wage could wipe out slender profit margins from small businesses. 

“An unpalatable fact about small business owners is that they work more than the average 38 hour week,” Rose said.

She noted a survey that found a quarter of small business owners worked  more than 50 hours a  week. Additionally, the latest report from the Australian Small Business and Family Enterprise Ombudsman showed 27 percent of businesses had a turnover of less than  $50,000.

The answer, Rose said, was for the government to provide meaningful tax breaks and rebates, making it easier for small businesses to hold onto employees.

Behrend said tax was one of the biggest stressors for small businesses, but new tax cuts due on 1 July may provide relief for some. Businesses could also look at other ways to make  positions more attractive to workers.

“In the cleaning business, you’ve got quite a diverse cohort – students, women, casual workers. So it’s worth thinking about how you look after them, in terms of flexibility, wellbeing or training,” Behrend said.

The FWC cited cost of living pressures for workers as the main reason for the increase.

While the raise would be unwelcome for many struggling businesses, Behrend said the picture might have been worse. Last year’s increase came in at 5.75 percent. 

The FWC this year resisted calls from trade unions to increase award wages by a similar amount and declined to raise wages “by any amount significantly above the inflation rate”. The commission also noted that, even allowing for the increase, award minimum wages remained lower than five years ago, in real terms.

“A lot of people did think the minimum wage increase was going to be considerably higher,” Behrend said. 

“But businesses will still be looking at a 4.25 percent rise come July, once you factor in super.”

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