The Australian Chamber of Commerce and Industry acknowledges today’s decision by the Fair Work Commission to raise the national minimum wage and modern award minimum wages by 3.75 per cent.

“This tests the acceptable limits for businesses. The outcome is slightly above current inflation and well over the Reserve Bank’s target range for inflation,” ACCI chief executive officer Andrew McKellar said.

“This decision is not in line with the trajectory needed to shore up the Australian economy, but it does not pose a significant inflation threat so long as productivity is addressed.

“Over the past year, productivity has been flat at best. For the outcome of 3.75 per cent to be justified, it is essential that there is renewed growth in productivity as an urgent priority. This must be central to bargaining at an enterprise level.

“This decision is further evidence of wages being de-linked from underlying productivity, which is not an economically prudent approach.”

The Fair Work Commission has ignored the extreme claims of the union movement.

“This decision is a repudiation of the irresponsible five per cent demand from the ACTU,” Mr McKellar said.

“Such an increase would have dangerously burdened the economy. It posed an unacceptable risk to inflation, and would have seen interest rates higher for longer.

“Bringing inflation under control is central to the economic well-being of all. So long as inflation remains elevated, the buying power of every dollar diminishes.

“Small businesses are grappling with significant increase costs as a result of the increased compliance burden and wages remain a concern in such an environment.

“It is inevitable that businesses will need to pass increased costs through to consumers. Many small businesses are in a position where they simply cannot absorb any more.

“Regulatory costs are going to increase further the impact of the governments industrial relations changes continue to flow through to the economy in such an environment business will need to pass on additional costs.”