Minimum wage increase will cost jobs, say employers

Businesses surveyed on the proposed 25 per cent increase in the minimum hourly wage rate say it will have negative consequences, among them the reduction of staff numbers and hours.

The minimum wage will be increased from $9.50 per hour to $12 over the next three years.

A survey carried out this week by the Employers and Manufacturers Association (EMA) revealed 70 per cent of businesses believed the increase would affect them "badly" or "very badly".

The survey attracted 860 businesses responses, EMA's employment relations manager David Lowe said.

"Eighty per cent of participants pay all their staff above the minimum wage, and many of them are concerned about the flow-on effects of the 25 per cent increase to the minimum wage being promoted by NZ First and the Greens," Mr Lowe said.

"Some businesses said they would have to reduce employees' hours of work, or the number of staff they would employ, if they faced this level of increase.

"Employers take a chance on some of the people they employ, and at $12 an hour they are going to think twice about giving people that chance."

Mr Lowe said it was significant that 60 per cent of businesses would be prepared to accept an increase in the minimum wage to $10 an hour.

"It's equally clear the 20 per cent of employers paying minimum rates are those most directly affected, and it's long been our view that employers and employees should set wages, not governments.

"The Government has given itself wriggle room in its desire to increase the minimum wage to $12 an hour by 2008 since it is to be 'subject to economic conditions'.

"Government might want to consider how it can wriggle more cleverly to balance the 25 per cent increase against its commitment to lift economic growth," Mr Lowe said.

- NZPA