Hospitality industry calls for pay freeze for Australia’s lowest-paid workers

Workers on the lowest pay would receive a real pay cut under a proposal to freeze the minimum wage pushed by the cafe and restaurant industry.

The Restaurant and Catering Industry Association called for no increase in the minimum wage in its submission to the annual review, arguing take-home pay is already rising due to job shortages, on top of super increases and budget giveaways.

Wes Lambert, the association's chief executive, warned that if the Fair Work Commission ordered bigger pay rises it was "only a matter of time" before cafes charged $7 for a coffee - prices he said were common in other major global cities.

The call to freeze pay is likely to provoke outrage from unions, who argue 2.67 million employees who rely on the annual wage review deserve a 5% or $2,000 a year increase to keep up with spiralling inflation. The Australian Industry Group has called for a 2% increase.

Last year inflation grew by 3.8%, compared with just 1.7% for wages, and the decline in real wages has continued this year, with inflation growing 1.25 percentage points faster than wages.

The restaurant association argued that its members had already shelled out 4.75% more for employee expenses in 2021: 0.5% for increased super in July, 1.75% for the 2020 minimum wage rise delayed to February, and 2.5% for the 2021 rise in November.

Lambert said that market wages in hospitality had increased by 3.5% this year alone, "higher than any other industry".

"That is absolutely evident in advertisements for nearly 100,000 open positions in accommodation and food services at rates that are well above the award, with some barista and kitchen hand positions earning nearly six-figures," he told Guardian Australia.

"So certainly the critical workforce shortage and low unemployment is naturally driving up wages."

The submission said the "overwhelming majority" of the association's members sought "no change to the current minimum wage".

Some 59% of members surveyed wanted any minimum wage increase, if ordered, to be pushed back from July to November or February.

Lambert said if the Covid pandemic was considered an "extraordinary" event that resulted in delayed pay rises in 2020 and 2021, the same was true of a year that had seen "Delta, Omicron, floods and critical workforce shortages".

"The industry's wage bill is as high as it's ever been as a percentage of sales: over 40%. The only thing that can move is prices."

Willox said the commission should consider "sectors that are struggling and will be severely impacted by an excessive increase", including accommodation, food services and retail trade.

The AiGroup wants a 2% increase, or $15.45 a week to the minimum wage and about $18 to minimums in awards.

"The increase that we have proposed would still have us jostling with Luxembourg as the country with the highest national minimum wage in the world," Willox said.

The Australian Chamber of Commerce and Industry also called for "extreme caution".

The chief executive, Andrew McKellar, said "small businesses are on a knife's edge - the risk of further Covid-19 outbreaks, the impact of flooding in New South Wales and Queensland, and the ongoing conflict in Ukraine, continue to dampen the prospects of recovery".

"Business is operating in a multispeed economy," he said, warning sectors including tourism, arts and recreation had been "smashed by lockdowns and restrictions".

"It will still take some time for many of these businesses to pay back debt accrued through the pandemic and return to profitability."