Election Focus: minimum wage rise

Tauranga’s reputation for low wages could change if Labour is elected into government on November 26, but restaurants and retailers could bear the brunt of the adjustment.

Labour policy is to increase the minimum wage to $15 an hour, a 15 per cent increase from the current $13 an hour wage.

Labour candidate for Tauranga Deborah Mahuta Coyle says if Labour is elected Tauranga will no longer be known as $10 Tauranga, but instead will become ‘$15 Tauranga’.

“At the moment there is an imbalance here between doing a decent day’s work and getting a decent wage.”

Labour says the increase will boost the economy by giving people more money in their pockets.

“We think the greatest need at the moment is with families and we need to put more money in their pockets to meet living costs.

Coupled with the Labour policy to scrap GST on fruit and vegetables, Deborah says families will be better able to cope with the rising costs of living.

“For a family of five, with mum and dad on the minimum wage, both of these policies together will result in an added $157 extra a week.”

She says Tauranga’s reputation for low wages is partly attributed to the number of seasonal workers in the agriculture industry.

“A lot of workers in the kiwifruit industry are low skilled workers and this does have an overall impact on the wage there.”

However, National says raising the minimum wage to $15 will mean employers will bear the cost and will be forced to cut jobs.

Tauranga electorate National party candidate and incumbent MP Simon Bridges says National is not opposed to raising the minimum wage and will look to increase it, but only to a level that small and medium businesses can sustain.

“National will put up minimum wage, but only when the economy can take it.”

He says in the present economic climate $15 is too high and raising it to this amount will mean 6000 job losses nationwide.

“I have talked with a number of small business owners and they have told me if the minimum wage was raised to $15 they would be forced to lay off a proportion of their staff as they would not be able to pass on the added cost to customers.”

Deborah disputes claims raising the minimum wage will end in job losses and says Labour consecutively raised the minimum wage every year for nine years from 1999 to 2008 when it was in government.

Instead of raising the minimum wage, Simon says wages can be increased by creating an environment of business confidence where employers are more willing to take on staff.

“The 90 day trial period allows businesses to take on staff they normally wouldn’t – this gives them the opportunity to see their skills.”

National will continue to look at Resource Management Act reform and Simon says in Tauranga this will result in more employment opportunities, particularly in the construction and trades industries, and work to keep people in employment in the region.

“There are a number of building projects happening here. We want to put in place a maximum consent time in councils of six months for medium sized projects. This will speed the process up and get more people in building jobs in Tauranga.”

NZ First candidate Brendan Horan is in favour of raising the minimum wage to $15 an hour.

“We have to become a higher wage economy, but we also have to make it viable for businesses to be able to do that.”

Brendan says there will be a cost to businesses if the wage is increased, which will need to be offset.

“We want to implement changes that allow businesses to make that change. This includes tax breaks and lower compliance costs, doing away with secondary tax.”

Tauranga Chamber of Commerce chief executive Max Mason says raising the minimum wage will impact Bay of Plenty businesses, especially the retail and hospitality sectors.

“Business conditions are pretty tough in the Bay currently, and raising the minimum wage to $15 would impact on the ability of some firms to survive.

“This applies especially to sectors with high numbers of lower waged staff such as retail and hospitality.”  

Max says the proposed 15 per cent rise will equate to a $24,000 increase in the annual wage bill for a restaurant with six full time minimum wage workers.

“That’s unsustainable for many businesses.”

Bay of Plenty Restaurant Association President Andrew Targett says restaurants employ a range of skill levels and increasing minimum wage to $15 could result in more youth unemployment.

“If you end up paying your dishwasher $15 an hour then you have to pay your junior chef $17 and it will flow all the way up – you will end up increasing everyone’s wages, and then it will increase everyone’s costs.”

“Times are pretty tough. There would be a few businesses that would struggle to do that.”

Andrew says restaurants will end up employing higher skilled people who will be required to do junior jobs as well.

“So it might see youth unemployment rise due to the fact that you will take on someone who can do the dishes as well as the chef’s work themselves.”

Waikato University professor of strategy and human resource management Mark Harcourt says research indicates raising minimum wage has little or no effect on unemployment.

“The effects of raising minimum wage are overstated. No-one has really found any affect on adult unemployment.”

Mark says raising the wage can also be positive for the economy.

“If you raised the minimum wage by 10 per cent for teenagers there could even be get an increase in jobs for employment.

“Minimum wage earners typically spend all of the money they earn.

“Particularly in a downturn economy, they need more spending power and end up spending the extra – whereas others are more likely to save it and not spend it.”

Mark says firms simply absorb the extra costs and in some cases will raise the price of products.

“Because minimum wage people are paid an incredibly small proportion of the income of the economy, that increase is generally absorbed relatively easily – only a few prices are affected.

“You may see a slight increase in the price of a cup of coffee, that’s the primary price effect. There may be a very small effect also on restaurant prices.”