Middle East war causing too much pressure for pay rises, Australian Chamber of Commerce and Industry argues

Australia’s largest businesses have told the Federal Government to tread carefully on wage increases, claiming members will not be able to stomach further hits to margins under pressure from inflation and now fuel prices. The plea from employers ahead of changes to minimum entitlements in Australia, currently $24.95 per hour or $948 per week, comes during submissions to the Fair Work Commission’s 2026 wage review. The Federal Government has said pay rises should be above inflation, currently 3.7 per cent, in a bid to assuage cost of living pressures among voters who are also feeling the pinch from massive and unexpected fuel price rises as well as a cash rate hike earlier this month. However the Australian Chamber of Commerce and Industry — one of the country’s biggest lobby groups — wants to scale the raise back at 3.5 per cent. CCIA is worried businesses could also be in line for another hit from any further changes to industry award rates. “This cannot be justified at a time when inflation is rising, productivity remains weak, and businesses with minimum wage employees face tight margins and headwinds from mounting global tensions,” chief executive Andrew McKellar said. He argued businesses were under strain from rising cost of fuel and goods. A minimum wage increase of 3.5 per cent was also “consistent with the Reserve Bank’s strategy to try to contain inflation” of between 2 per cent and 3 per cent, he said. “If expanding the minimum wage base results in a 3.6 per cent increase in the wage bill, and the Commission rules a 3.5 per cent increase in the minimum wage, that’s a total increase of 7.1 per cent. That would be totally unsustainable in the current economic situation.” Chamber of Commerce and Industry WA earlier this week that members had said surging fuel prices could be the “nail in the coffin” for some of them. Survey results revealed 82 per cent of WA businesses have started to feel higher supplier costs, and almost half say they have been directly affected by difficulties getting fuel. Nearly one in three say the conflict has had a severe or significant impact on their business. To mitigate rising costs, almost of half of WA business say they’re trying to reduce “non-essential spending”, and one in four are reviewing their workforce. More than half of businesses surveyed say they plan to try and absorb rising input costs, but the rest say they will have to pass the additional expenses to their customers.