The ripple effect of increasing the minimum wage has meant some business owners already struggling post-lockdown may reduce staff hours or cut jobs to help manage extra costs, business leaders say.
Business owners say those extra costs will naturally fall on customers.
The adult minimum wage increased to $20 from$18.90 per hour on April 1, 2021. The starting-out and training minimum wage rates have also increased to $16 from $15.12 per hour.
The Ministry of Business, Innovation and Employment said about 12,300 Bay of Plenty workers were impacted by the minimum wage rise - about 9.7 per cent of the region's employees.
According to MBIE, the pay rise meant a full-time employee working 40 hours a week on the previous $18.90 per hour minimum wage would receive an extra $35.69 per week after taxes.
Retail NZ's latest Retail Radar report revealed two-thirds of retailers nationwide said the minimum wage increases would impact their businesses.
The report showed 37 per cent of retailers were less able to reward employee performance, 34 per cent will decrease the number of hours of work they offer employees - and 30 per cent were expecting to decrease the number of people they employ over the next three months.
Retailers also reported price increases and less ability to hire unskilled staff and many will be making commensurate (in proportion) wage increases to staff not on the minimum wage to ensure the increases were fair.
Retail NZ chief executive Greg Harford said small business owners struggling to pay themselves the minimum wage needed to take steps to manage cost increases.
Rotorua Chamber of Commerce chief executive Bryce Heard said wages were set to recognise experience, qualifications, job size, and responsibilities but the $20 per hour was still a "very low" income.
Hospitality New Zealand Bay of Plenty regional manager Alan Sciascia said many businesses had gone into debt to keep operating after an "extremely difficult year" and now they were incurring extra wage costs and staff expectation of a commensurate increase.
"Customers should expect to pay more when businesses incur additional operating costs."
Hospitality New Zealand Bay of Plenty regional manager Alan Sciascia. Photo / Supplied
Holland Beckett Law partner Christie McGregor said the challenge for employers was ensuring parity for lower-paid or junior staff.
"In our experience, overwhelmingly employers do want to do the right thing and ensure their employees are fairly paid. Ultimately costs that cannot be absorbed would need to be passed on to the consumer."
E tū and the Council of Trade Unions both commended the minimum wage rise and hoped it would continue to increase yearly to help lift more New Zealanders out of poverty wages.
Holland Beckett Law partner Christie McGregor. Photo / File
Prime Minister Jacinda Ardern announced the minimum wage increase last month and said it represented "real and long overdue changes".
Watchdog Security Group chief executive officer Brett Wilson said most of his staff in Rotorua and Tauranga will be receiving a pay rise.
"It's about maintaining parity ... There is an expectation. In our industry, it is a tough job and getting tougher. Our staff really deserve it [pay rise]."
However, Wilson said the timing was "not quite right" post-lockdown and extra costs would naturally fall on the clients.
Domino's Pizza Koutu owner Liam Stops, who owns the store with brother Kaedyn Stops, said the store was struggling to hire more staff and hoped the new minimum wage would encourage more school-leavers to seek employment.
"It's a pretty good incentive to come into work for $20 an hour, have fun and earn some pocket money."
Rotorua brothers Kaedyn and Liam Stops own Domino's Pizza store in Koutu. Photo / File
