Min­i­mum wage hike stirs up cost of a cof­fee

Will we see a rise in prices as a re­sult of work­ers be­ing paid more? Julie Iles re­ports.

Sunday News - - NEWS -

THE first round of min­i­mum wage in­creases is poised to hit some con­sumers where it hurts – their cof­fee cups.

Signs on the coun­ters of ma­jor cof­fee chain Mojo warn cus­tomers the cost of its cof­fee and food has gone up in the wake of a 75 cents in­crease to the min­i­mum wage on April 1 to $16.50.

The grad­ual rise will even­tu­ally take the min­i­mum hourly wage to $20 by April 2021 and train­ing wages to $13.20 an hour.

Mojo has 31 out­lets, and its mar­ket­ing man­ager TayLann Mark said that the pub­lic had had a ‘‘mixed’’ re­ac­tion to the price hike, which will lift the price of a small flat white from $4.50 to $5.25.

‘‘When we found out about [the min­i­mum wage in­crease] we had a meet­ing with all of our man­agers and it was a cel­e­brated thing. Some of our cus­tomers have posted on so­cial me­dia that this is a great thing, and then some not so.’’

Other cof­fee mak­ers say the wage in­crease wouldn’t af­fect their prices.

Peo­ples Cof­fee mar­ket­ing man­ager Jesse Finn said the hike would not in­crease the price of a cof­fee there.

‘‘For us, we want that point be­tween what the min­i­mum wage is and what our start­ing wage is to be a de­cent amount, so we’re def­i­nitely look­ing at it but we don’t have any sort of firm plans to sit down and see what that means.’’

In­fo­met­rics chief fore­caster Gareth Kier­nan said the min­i­mum wage in­crease was not rais­ing wages as quickly as the Labour Gov­ern­ment did be­tween 2004 and 2008.

‘‘I don’t re­call a lot of busi­nesses com­plain­ing about the wage back then be­cause the labour mar­ket was ex­tremely tight, that to at­tract new staff they were hav­ing to pay sig­nif­i­cantly more any­way.’’

He said the labour mar­ket now was not as tight but it was ex­pected to be­come tighter in the next cou­ple of years.

Kier­nan said it was fair for more skilled em­ploy­ees to also want a wage rise.

‘‘If you’ve come in at min­i­mum wage and earned an in­crease over the past six months and you’ve got a bit more skills, then I think it’s fair to want to be paid a bit above the min­i­mum wage to re­flect that.

‘‘It’s im­por­tant to pre­serve that rel­a­tiv­ity.’’

Kier­nan said the pol­icy could have a big­ger im­pact on man­u­fac­tur­ing than hos­pi­tal­ity firms.

‘‘It could ac­cel­er­ate the move away from labour to­wards au­to­ma­tion and cap­i­tal.’’

Mod­el­ling from the Min­istry of Busi­ness In­no­va­tion and Em­ploy­ment (MBIE) found the wage hike could lead to the loss of 3000 jobs.

Man­u­fac­turer’s As­so­ci­a­tion spokesman Di­eter Lund said most of the as­so­ci­a­tion’s mem­bers had few if any min­i­mum wage jobs.

‘‘Most of the low-value jobs in the sec­tor have al­ready moved over­seas.’’

But Lund said busi­nesses were ‘‘se­ri­ously con­cerned’’ about the ‘‘up­ward pres­sure’’ of the wage hike.

De­spite this, re­search done by CTU has found the flow on from past min­i­mum wage in­creases has not been all that notable.

Those in the wage bracket above min­i­mum wage saw the low­est growth in wages over a 20-year pe­riod, while growth in the low­est waged bracket matched the high­est.

Re­tail NZ spokesman Greg Har­ford said smaller busi­nesses would be the most af­fected by the new pol­icy.

‘‘Over time, es­pe­cially smaller busi­nesses will look at their costs ... this could mean cut­ting jobs or cut­ting hours. But anec­do­tally, I un­der­stand re­tail work­ers’ wages tend to float slightly above min­i­mum wage.’’

Smaller busi­nesses will look at their costs ... this could mean cut­ting jobs or cut­ting hours.’ GREG HAR­FORD

Mojo blamed the rise of the price of a cuppa on the min­i­mum wage in­crease.

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