'It's about survival': Businesses wary of wage hike flow-on effects

Little Istanbul's Kadir Seven said a 5.2 per cent increase to the minimum wage would not have an immediate effect on his business, which generally pays employees between $2 and $4 above the minimum.

Mr Seven does, however, harbour concerns about the long-term impacts of rising wages on top of head-spinning inflation.

"If we're going to be fair, obviously, the minimum wage is not really a great wage, especially [with] the price of everything going up," he said.

"You want to be there to support the staff, but it just makes it hard."

The restaurant recently increased its prices by 10 to 15 per cent to keep up with the rising cost of produce, but would ideally inch prices up even further, Mr Seven said.

"We can't increase prices on a weekly basis, now you're lucky to put your price up once a year," he said, echoing the concerns of other Canberra businesses who have grappled with raising their charges.

A box of salad mix which once cost him $25 for three kilograms now costs $60, Mr Seven said.

"When we go through times like this, it's more about survival. We're not worried about trying to make a profit anymore," he said.

"Right now, all we're trying to do is keep the business operating."

David Marshall, chair of the Canberra Region Tourism Leaders Forum, said it was too soon to tell what the flow-on effects of the wage hike would be on business.

"It's very challenging to to live if you've got to pay rent, and all the costs associated with just general living - and I think that's been the biggest argument in place - for those on the very bare minimum wage," he said of the 5.2 per cent minimum wage increase.

"So it's going to have an impact, certainly on employers, but that does remain to be seen how that will flow through into an increase in costs - or the increase in the overhead expense that businesses will experience."

Peak bodies and industry groups such as the Canberra Business Chamber have used reactions to the wage increase to refocus attention on the labour shortage which is hampering businesses across the ACT, from hairdressers to trades to cyber security.

The more urgent issue for business is a wide-ranging skills shortage being felt across the nation, Mr Marshall said.

"For most of those small businesses, this morning's announcement will add even more pressure along with rapidly rising inflation, supply chain bottlenecks and acute labour and skills shortages," Canberra Business Chamber chief executive Graham Catt said in a statement.

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"Everyone understands that we need to help our lowest-paid workers keep up with the rising cost of living.

"But today's announcement adds costs for small businesses who are struggling and reliant on paying minimum wage, and will exacerbate the biggest problem for employers, which is that they simply haven't got and can't find the workers they need to grow.

"Businesses have done what they can to avoid passing price increases on to consumers.

"But with already thin margins, a significant wage increase will leave many with no choice but to pass on costs."

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