Warnings minimum wage increase could decimate employers

Newstalk ZB / NZ Herald,
Publish Date
Tue, 31 Mar 2020, 6:53PM
(Photo / Getty)

Warnings minimum wage increase could decimate employers

Newstalk ZB / NZ Herald,
Publish Date
Tue, 31 Mar 2020, 6:53PM

There are renewed calls for the Government to defer a $1.20 increase to the minimum wage on the eve of it coming into effect.

Tomorrow the minimum wage is set to move from $17.70 to $18.90 - this would see fulltime low-income workers take home an extra $48 a week before tax.

One union says the increase is vital for the hundreds of thousands of workers doing it tough and whose lives are hard at the best of times.

But business groups and the Opposition say employers are struggling to keep staff on under the Covid-19 lockdown, let alone pay them, as many sectors had zero revenue.

E tū assistant national secretary Annie Newman said low-wage workers spent the largest chunk of their wages in the local economy which would be vital for stimulating the economy.

And increasing the minimum wage would help many of the essential workers on the Covid-19 frontlines, like security and cleaning staff.

"These workers get up every day to make sure our communities are safe and healthy. Yet they are paid as low as they legally can be.

"It's an injustice."

Newman said the groups that argued against minimum wage would do so "in any weather" and that the increase still would not see workers get the Living Wage.

But Business New Zealand said the minimum wage increase should be delayed for nine months or until recovery from the Covid-19 pandemic was confirmed.

It said when the Government's wage subsidy scheme - which tops-up employees' pay-packets to 80 per cent of their regular incomes - ended, businesses would suffer.

"Once the wage subsidy period finishes, employers will face an increase in wage costs at the same time as they are facing altered and reduced trading circumstances.

"This will delay the trading and economic recovery from the Covid-19 emergency."

The Employment and Manufacturers Association (EMA) said employers were under stress, especially those in the tourism, accommodation and hospitality sectors which had zero revenue and little prospect of recovering quickly.

Those industries were also high users of minimum wage employees, said EMA chief executive Brett O'Riley.

"We're taking up to 1500 calls and emails daily from employers desperately trying to keep their staff, and even just keep their doors open, while facing the prospect of very little or no revenue during lockdown.

"In some cases they face watching years and even decades of work in building up their businesses come to nothing over the next month, and beyond."

O'Riley said the EMA understood increasing minimum wage was a key policy platform for the Government but "a minimum wage increase of this scale at such a critical time just does not make sense".

Opposition leader Simon Bridges said businesses were already facing huge financial struggles under the Covid-19 lockdown and the rise would "hit them hard".

He called for a six-month delay so the affordability of the increase could be assessed.

"Everyone wants to see higher incomes, but governments need to be responsive to the realities on the ground.

"Many businesses are struggling to stay afloat and keep employing workers right now. Adding more costs is not the solution."

He said the focus right now should be keeping people in jobs and increasing the minimum wage made that difficult.

Act party leader David Seymour said the Government needed to ease the burden on businesses trying to keep people employed by delaying or stopping the minimum wage increase.