''The last straw'' and ''pouring petrol on the inflation fire''.
That's how some business leaders are describing the rise in the minimum wage from $20 an hour to $21.20 from April 1. They say the extra cost could be the tipping point for struggling business owners hit hard by the pandemic.
However, other business owners, such as Our House and The Rotorua International on Eat St director Tim Smith, support the move and believe more employers should be paying the Living Wage of $22.75.
Smith said times were tough ''but it's most tough for those at the bottom''.
''Despite difficult times as a proud living wage employer, I encourage businesses to get out of the minimum wage mentality and pay their staff a living wage.''
He said people on minimum wage felt the pinch of global inflation at the supermarket and petrol pump.
Trevelyan Pack & Cool managing director James Trevelyan also supported the Living Wage and said it was the starting rate for seasonal workers at most kiwifruit packhouses.
He said Trevelyan's, which was family-owned, valued and appreciated its staff.
Trevelyan acknowledged it ''is hard for those in the lower bracket of the wage system''.
''The kiwifruit industry is privileged to be in a position to treat them fairly and reasonably. There is enough fat in the system to do that, which is great.''
However, Rotorua Chamber of Commerce chief executive Bryce Heard said the timing of the change lacked empathy and understanding for the circumstances of some businesses.
He said few people would disagree that the minimum wage was low and needed to move up over time.
However, many businesses were currently suffering as a result of the economic impact of the pandemic.
The red traffic light setting had caused a slowdown and for some a cessation in income for tourism, hospitality, travel, events, and related industries, he said.
''This is now hitting home. In Rotorua, we have a growing list of 'the forgotten casualties of Covid' manifesting in closures of some of our iconic and longstanding core businesses.''
Some businesses were operating at well below survival levels and this could be the ''last straw''.
Tauranga Chamber of Commerce chief executive Matt Cowley said the rise in the minimum wage was ''pouring petrol on the inflation fire''.
''Inflation is happening across key costs including fuel, shipping costs, rents, and now staff. Raising the minimum wage triggers people on slightly higher wages to also ask for more.''
''Costs to running a business is rising like an incoming tide.''
It could be the tipping point for local hospitality and tourism businesses who were robbed of a prosperous summer thanks to Covid, he said.
In Cowley's view, there were other ways to support those impacted by inflation, including adjusting income tax brackets and boosting the supply of housing.
Priority One chief executive Nigel Tutt said Tauranga had a lower than average wage, which combined with higher costs of living ''causes us problems''.
''Raising wages over the course of time is very important to our community.''
''We must strike a balance though, many businesses are facing severe inflationary pressure, with wages adding to increasing costs of supplies. The steep increase of this will make it difficult to businesses, who will generally seek to pass these increases on to customers.''
Retail NZ chief executive Greg Harford said $1.20 was another massive increase and could not come at a worse time for retail businesses that were ''bruised and bleeding after two years of lockdowns and other Covid restrictions''.
A snap poll of its members showed 84 per cent of retailers disapproved of the move while a number of members were considering closing stores.
He was calling for the Government to pause increasing business costs and to start supporting the businesses that employ most New Zealanders.
According to Harford, more than 220,000 New Zealanders work in retail.
New Zealand Taxpayers Union spokesman Louis Houlbrooke said someone working 44 hours a week on the minimum wage would now be paid annually $48,505.60, placing them in the 30 per cent income tax bracket.
"The real killer here is the way tax bracket creep destroys the incentive for New Zealanders to do better. Minimum wage workers will now have nearly a third of the reward for upskilling, working overtime, or achieving a promotion nixed by the taxman."
The New Zealand Council of Trade Unions said the increase would ensure that minimum wage workers did not fall further behind other workers and meant their incomes were protected in real terms.
President Richard Wagstaff said unemployment was at record low levels and employers primary concern in surveys was the inability to access labour.
''Despite suggestions to the contrary, international and New Zealand evidence suggests that increasing the minimum wage does not increase unemployment.''
Announcing the wage increase, Workplace Relations and Safety Minister Michael Wood said many Kiwis earning the minimum wage had gone above and beyond in the fight against Covid and were being called on again for Omicron.
He said they deserved a payrise, and the move would benefit 300,000 workers and help stimulate the economy as many workers would shop with the money, supporting businesses.
"For someone working a 40-hour week on the minimum wage, this increase will see them earning an extra $48 a week, and almost $2500 more each year."
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