With 2.2 million workers set to pocket an $18.80 a week pay rise, the hip pocket debate is: will this be good or bad for the economic recovery? On one hand, many workers need a lift in pay after a harrowing 2020 dominated by the Coronavirus, but businesses need cost increases like a hole in the head.

In case you missed it, the Fair Work Commission gave an $18.80 increase to the minimum wage, taking it to $772.60.

This was less than what the ACTU wanted at $26.38 but was a lot higher than the $8.30 bosses were prepared to pay.

So is this pay hike, that now sets the minimum hourly rate at $20.33, a recovery killer? The Fair Work Commission noted that a better-than-expected recovery was on the way but Justice Ian Ross did accept that the rollout of the vaccine programme could undermine high economic growth expectations.

The employers body wasn’t happy about the decision.

“The Australian Chamber of Commerce and Industry said the ‘premature and irresponsible’ pay rises would cost businesses $3.6 billion a year,” The Australian’s Ewin Hannan reported. “Chamber chief executive Jenny Lambert said the pay rise, combined with the increase in the superannuation guarantee, ‘represents a huge burden on business’.”

Ms Lambert pointed out that around a third of those who’ll benefit from the pay rise work in retail, food and accommodation services, which are the business sectors that most get creamed by a lockdown, social distancing and the many processes designed to KO the Coronavirus.

According to Ms Lambert, that’s about 230,000 small family-owned businesses, but medium-sized businesses, who pay these minimum pay rates are also copping hard times.

Those businesses in CBD locations are currently coping with the work-from-home trend, thanks to COVID-19, and are having to endure a 30% to 40% fall in turnover as a consequence.

I’m currently in Port Douglas where the Melbourne lockdown resulted in many cancellations. There are restaurants that are temporarily closed because they haven’t got staff, which used to be backpackers and other foreign workers.

The town is still great for tourists but business owners have been under financial pressure for 14 months and certainly won’t be cheering about a cost increase.

On the flipside, suburban businesses have been living the life of Reilly, with so many new customers coming from the work-from-home brigade. As someone who goes to work, I don’t have time to get on the morning queue for coffee but plenty of my neighbours, who no longer go to the CBD, happily wait for their ‘hits’.

My local deli-owner says his sales are up 30%, so he won’t be worrying about this pay rise but my city-based coffee shop owner who makes my coffee will.

The Reserve Bank wants higher wages and will be happy about the pay hike and the Treasurer won’t be publicly criticizing the increase, as lower income workers spend most of their income to make ends meet. So many of the businesses in retail and food will see increased sales but it won’t help accommodation services, which largely cater to a higher income client.

Also this sector sorely misses its foreign customers, who don’t look likely to show up until mid 2022. Most economic decisions create winners and losers and this pay rise is no different. Importantly, this wage hike adds pressure on the Morrison Government to come up with an overdue better performance with its vaccination programme. This would be the economic growth game-changer we have to have to offset any negatives for specific businesses from the Fair Work Commission decision.