Small business confidence remains fragile despite signs that broader business sentiment has improved from recent lows. For many owners, the pressure point is no longer just rising supplier costs, but the combined effect of higher wages, cautious consumer demand and tighter payroll cash flow.
From 1 July 2026, award wages increased by 4.75%, while the National Minimum Wage rose to $26.44 per hour or $1,004.90 per week. At the same time, Payday Super began, requiring employers to pay superannuation at the same time as wages rather than quarterly.
For small businesses, that means employment costs are now hitting cash flow more immediately. Higher wage bills can also flow through to penalty rates, overtime, allowances, leave loading and superannuation.
Payday Super does not create a new super obligation, but it changes the timing of payments, reducing the cash-flow buffer businesses previously had under quarterly super payments. This may make roster planning, pricing, working capital and payroll accuracy more important through July and August.
The issue is not only whether costs are rising, but whether businesses can absorb higher employment costs while customers remain cautious and pricing power remains limited.
Who is affected:
Award-reliant and labour-intensive businesses, including hospitality, retail, trades, personal services, cleaning, security, transport, care services, pharmacies and small professional services firms.
What businesses may need to check:
Businesses should ensure payroll systems, award rates and super payment processes have been updated. Employers may wish to seek support from their bookkeeper, accountant, payroll provider or business adviser where needed.
Sources:
Fair Work Ombudsman — Annual Wage Review 2026