Pay rises could be pricey

"The biggest cost is wages and most good operators pay above the minimum rate already." David Stones, Hospitality NZ Taranaki president

An increase in the minimum wage will result in wage increases for skilled workers, price rises for the consumer, and staff laid off, a small business owner has warned.

‘‘When the minimum wage goes up you will be paying your other staff more as well, that will bring higher costs to the business which will be passed onto the customer,’’ Chaos Cafe owner Kerry Vosseler said.

Vosseler, a 15-year veteran of the hospitality industry in Taranaki, employs 12 staff at her busy New Plymouth cafe.

Around 25 per cent of the businesses turnover is paid in wages, she said.

‘‘I pay within my capacity, and all my staff are paid above the minimum wage,’’ she said.

‘‘The hospitality industry is low paid but no one here is on the minimum wage.’’

The minimum wage is currently $15.75, rising to $16.50 in April 2018.

The incoming Labour/NZ First/Green coalition government plans to increase the hourly rate incrementally over the next three years to $20 per hour - a 27 per cent increase.

Venture Taranaki’s June business survey showed 28 per cent of business owners in the region had difficulty employing skilled staff. The survey also showed wage rates and staff costs were the second biggest concern, after increased competition, for Taranaki businesses.

Vosseler said it was logical that more skilled staff on the payroll would want to be paid more if lesser skilled staff were getting a pay increase.

‘‘Everyone will want an increase, including the guy who delivers the milk, and costs will go up if the business cannot absorb the increase.’’

If the business cannot control the cost rises, the alternative will be to lay off staff, she said.

‘‘You have to be realistic. If you can’t afford to pay staff you have to reduce the payroll, or put up your prices, or jobs will be lost.’’

Hospitality New Zealand Taranaki president David Stones said the industry backed any increase in the minimum wage rate but the coalition government’s proposal was too rushed.

‘‘The industry strongly believes minimum wage should go up but the timing of this is going to be tough for many,’’ he said.

Stones said the minimum wage had increased slowly over recent years.

‘‘The hospitality industry in Taranaki has gone through some tough times in recent years but we are slowly making good progress,’’ he said.

‘‘The biggest cost is wages and most good operators pay above the minimum rate already.’’

‘‘But a 27 per cent increase by 2021 on a weekly basis is going to set some alarm bells ringing for many operators.’’

HNZ regional manager Chris Hince agreed an increase in the minimum wage would put pressure on wage rates.

‘‘It’s not unreasonable for workers to expect to earn a decent wage and the industry supports that,’’ he said.

Hince did not believe a minimum wage increase would stop bad operators paying below the minimum rate.

‘‘It’s a different matter because those operators are breaking the law, they will always pay below what they have to.’’