Pay hike to push up prices
Price increases, job cuts, and increased wages across the board - that’s what Far North businesses predict will happen with the minimum wage hike.
New Zealand’s minimum wage is set to increase to $20 by 2021 under a new coalition deal. The increase will occur in stages, starting in April 2018 when pay for workers on the lowest income will rise from $15.75 to $16.50.
Kawakawa Hammer Hardware owner Malcolm Francis says every business will have to increase prices to make up for the wage increase, though small businesses will be hit harder.
‘‘You’ve got to change the GP [gross profit] to suit because if you don’t you’re down the gurgler. It’s especially hard for the small businesses because wages represent about 30 per cent of our costs. So if you go from $15.75 to $20 it’s going to add another fair whack.
‘‘If you’ve got a big store it’s a different story because they’ve got a bigger turnover. They’d survive it better.’’
Kerikeri resident Therese Wickbom says she feels ’’conflicted’’ about the wage increase.
She works with many people on minimum wages through the charity group she founded, Bald Angels, which helps struggling Far North families. For them, the increase can only be a good thing, she says.
But as a small business owner she says it could mean job cuts or price increases.
‘‘I’m not sure what difference it’s going to make. If you could simply increase the minimum wage to $20 and nothing else changes in the world that’s wonderful.
‘‘But the reality is everything else is going to change. You can’t run a business without making profit...and if employers now can’t afford to employ people then those workers are out of a job.’’
Whangarei based Northland Cleaning Supplies operations manager Trent Beilby says the move won’t be good for small businesses in New Zealand.
While only a couple of his staff are on the minimum wage ’’it will affect us in the long run’’.
‘‘It’s going to flow on through everyone else. Others will expect their wages to increase. The minimum wage is $20 so people on $30 will say we should be on $40. It’s taking money from small business and that’s what New Zealand is built on.’’
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Kawakawa Hammer Hardware owner Malcolm Francis says the increased minimum wage will push up prices for customers.