Focus on SMEs: Help staff feel valued in face of minimum wage rise

Business owners may face trouble if they do not assess the wages of their staff in response to the minimum-wage rise that kicked in on April 1.

The minimum rate for employees over age 18 is now $13.50.

Carol Shepherd, human resource adviser with BDO Gisborne, said the key issue for employers was affordability in an economic environment in which they could not pass increased labour costs on to their customers. For employees, it was keeping up with the rising cost of living.

"In industries that have a lot of employees earning wages around that minimum threshold, maintaining relativity becomes an issue," said Shepherd. She believed people could feel aggrieved if minimum-wage increases eliminated a wage rise given for extra responsibility, for example.

"It is not necessary to raise the wages for all staff, but assessing your employees who sit between $13 and $14 per hour would be prudent. If the relativity gap has decreased, some employees will be aggrieved that they have fallen behind. They may warrant a similar increase to keep their relativity."

David Lowe of the Employers and Manufacturers Association agreed it was a problem because the minimum wage had been going up more rapidly than wages in general, from $10.25 an hour in 2006.

"People who, a number of years ago, were nowhere within the range of the minimum wage are now finding they are relatively close to it."

He said some would want to restore the margin between what they earned and the minimum wage from a few years ago, and employers would have to be practical about that.

"Some of the increases have been quite significant and I think to expect the margin to be restored is a big ask in the current environment."

Lowe said employers needed to make sure any other wage increases they implemented were sustainable. There were ways employers could help workers feel recognised without a pay rise, he said.

"Employees are talking about their sense of how they are valued and their sense of worth.

"If they find themselves having been well ahead of the minimum wage and now round about it, that does make them think they are not worth as much now as they used to be."