Minimum wage increase expected to hit fruit exporters

Newstalk ZB,
Publish Date
Wednesday, 13 February 2019, 7:00a.m.
The minimum wage increases could see fruit growers go out of business. Photo / Getty Images

The minimum wage increases could see fruit exporters go out of business because they can't pass the costs on in the international marketplace, Horticulture NZ is warning.

The Government has committed to increasing the minimum wage to $20 an hour by 2020 with the next increase of $1.20 in April this year.

However, it is expected to hurt businesses.

Export New Zealand says the next increase will force businesses with between 75 and 100 staff members, to come up with an extra $120,000 to $800,000 a year in wages.

Horticulture NZ chief executive, Mike Chapman told Kate Hawkesby it is really concerning for labour-intensive exporters.

"It really impacts a lot. We employ a lot of people in horticulture and we trade in the global marketplace so...we can't raise our prices just because we have cost increases back in New Zealand."

"This country relies on our overseas trade. What this does is it puts pressure on the business and some businesses will really start to suffer."

If you can't increase your prices you're getting overseas and your costs are increasing, that means you might go out if business."

He said the minimum wage isn't the only thing creating extra costs.

"We have got the minimum wage increase, we have got other labour law changes, we have got increased compliance and this all costs time and money."

Solutions like automatic packhouses also pose challenges for businesses because of the cost of the equipment, Chapman said.

"That in itself costs money as well and, of course, the technology has to be available that you can easily adopt or make it work."

"There will be automation progressively coming in, but it's not the answer to how you will survive this year and next year," he said.

"In five years there might be a lot more automation, [but] it's a bit of a fallacy to say that automation will solve this problem."

He said it is also important that they aren't taking employment away from New Zealanders.

"It's really important that we employ people so there is good employment across New Zealand."

"We need a Government that supports our businesses, especially as we go into what looks like a global downturn, so that we can keep the businesses going and keep employing people," he said. 

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