Govt sends ‘mixed messages’

A hospitality business owner says the Government is sending mixed signals after ignoring advice about delaying the minimum wage increase and recommendations for a smaller rise after Covid-19.

The minimum wage report by the Ministry of Business, Innovation and Employment (MBIE) published in December advised delaying the increase until October, and by 25 cents due to the economic uncertainty.

However, the Government ignored this advice and confirmed the minimum wage would rise by $1.10, or 5.8 per cent, to $20 an hour from April, sticking to its election promise.

Auckland cafe owner Chris Monaghan said 2020 was a tough year for every hospitality business, and the 5.8 per cent increased wages would add greater pressure on the sector.

He supported an increase in the minimum wage but as the cost of goods and rents increased, owners would feel the pinch.

‘‘There’s conflicting messaging being sent to small business owners. We’ve gone through a difficult 2020 and will go through another difficult 2021,’’ Monaghan said.

‘‘From a hospitality perspective we’re not trading at a level anywhere near sustainable. It’s really up to the Government to see those impacted and read the room.’’

MBIE’s report said increasing the minimum wage would be unaffordable for some businesses, which could lead to greater unemployment for low paid workers.

Monaghan said many businesses could be forced to trim labour costs by hiring fewer staff.

‘‘In hospitality you require a certain number of staff to operate unlike, say, a fashion store. You can’t just have one person at a cafe or restaurant. In a slow period, we still require four staff members to open the doors and operate.

‘‘It will become a very difficult environment to trade.’’

Hospitality worker and workers’ rights advocate Chloe Ann-King said raising the minimum wage was crucial for the already low-wage industry.

While she welcomed the increase, it came with a caveat as business owners would hire fewer staff, putting increased pressure on existing workers.

‘‘I always advocate for higher wages but there is a Catch-22. When the minimum wage is increased we see workers’ hours cut, or they lose their jobs,’’ AnnKing said.

Retail NZ chief executive Greg Harford said it was disappointing the Government ignored advice from its own employment agency.

Harford said the medium term impact would likely result in a jump in extra costs without driving productivity.

He said that along with fewer people being employed, businesses will move faster towards automation.

Harford said while the retail industry had been more resilient than was expected, the good performance over the last three months was still very fragile.

‘‘Those results won’t be sustainable,’’ he said.

‘‘I always advocate for higher wages but there is a Catch-22.’’ Workers’ rights advocate Chloe Ann-King