Today’s decision by the Fair Work Commission to increase award wages by 5.75 per cent and minimum wages by 8.6 per cent will slug small and family businesses, already encumbered by soaring costs, with a $12.6 billion wages bill.

Taking account of the 0.5 per cent increase in the superannuation guarantee from July 1, this represents a significant burden for small business, and risks unlocking the floodgates for deep and prolonged economic pain.

“Today’s decision will come as a hammer blow for the 260,000 small and family-owned businesses who pay minimum and award wages,” ACCI chief executive Andrew McKellar said.

“The Fair Work Commission has made a dangerous choice to chase after the supply-side inflation shock that we are experiencing. An arbitrary increase of this magnitude consigns Australia to high inflation, mounting interest rates and fewer jobs.

“Businesses in the accommodation, food, construction, manufacturing, and retail sectors have experienced falling profits over the past two years. The reality is many of the small and family firms in these industries will be unable to absorb this extra cost without raising prices.

“The commission has disregarded the message it conveys to the wider labour market and the influence it holds over entrenching high inflation as the Australian economy faces a worsening outlook in the years ahead.

“A 5.75 per cent increase will make the job of the Reserve Bank more difficult to control ongoing inflationary pressures, inflicting pain on families and small business when they are already down to the wire.

“In our submissions to the annual wage review, ACCI proposed a fair and responsible increase of 4 per cent that aligned with efforts to contain inflation and return it to the Reserve Bank’s target range.

*An earlier version of this release incorrectly referred to the increase in minimum wages as 5.75 per cent.