1 April 2023 will see the adult minimum wage increase to $22.70 per hour from the current hourly rate of $21.20 – a 7.1% increase. With this, the training and starting-out minimum wages will also both increase to $18.16 per hour – a rise from the current minimum rate of $16.96 per hour.
Whilst many believe that it is quite a significant jump, others consider it fair as it keeps in line with inflation.
Economic and political commentator Bernard Hickey believes that previous minimum wage hikes over the last five years have been “double inflation”, whereas this year will be more in line with the rate of inflation, adding that: “In real terms, this is actually a slow-down in the minimum wage increase.”
Overall, minimum wages have steadily increased from $16.50 in 2018 to $22.70 in 2023 and while this must be a relief for minimum-wage workers, some might argue that this rise, combined with the recent floods, as well as the aftermath of Covid-19, might place significant strain on some small business owners who are hanging onto their companies and livelihoods for dear life.
Further to the above, a survey conducted by Retail NZ, recently revealed that 57% of retailers will reduce the work hours available to their teams while 41% plan to reduce staff numbers. Others are planning on increasing retail prices, reducing store hours, with a small percentage even considering shutting down their businesses entirely.
According to this survey, the wage hike will impact employees “at every level, not just those on the minimum.”
As one retailer said, “Most of my staff are paid above the new minimum wage, but they too, will expect an increase to maintain the differential. That’s where the expense comes in. I don’t think the government understands the expectations of employees already above the minimum wage.”
These views suggest this increase might place unplanned strain on certain businesses, and quite possibly the mental wellbeing of these business owners.
This wage increase might mean massive relief to struggling families. Whilst it might be inevitable and in line with inflation, taking into consideration the financial year-end and the fact that April is right around the corner, more warning time could have given small businesses the opportunity to better prepare for this “hairy” jump in wages, as it has been referred to on a few occasions.
* Sources: 1news.co.nz, Human Resources Director NZ