The New Zealand Government made an announcement that minimum wage will rise to $22.70 per hour from 1 April 2023. This
is an increase of $1.50 per hour from the current hourly rate of $21.20. While this is seen and a major step forward for
countless employees; small business owners across the country are wondering about the ripple effects it may have.
Wage bills are one of the biggest costs of running a business. With inflation hitting its highest level in 33 years,
Employsure says it will be small business owners who will feel the greatest impact. This will impact all businesses,
across all industries, who pay at the current minimum wage. Many small business owners will be thinking about their own
prospects of continually being able to operate a small business. It’s not hard to imagine the added stress and burden on
their shoulders as they grapple with the increase.
“It’s easy for some to say the impact of a wage rise is inconsequential, but it is small and medium businesses who
struggle to offset the costs, especially those who have been decimated by the events of the past three years,” said
Laurence McLean, Employsure New Zealand Associate Director.
“We receive thousands of calls to our employer advice line every month, and many of these calls are regarding employee
entitlements, and we anticipate our call volume to now increase following this minimum wage announcement.”
“The cost of doing business just become even more challenging as mandatory wage increases are introduced, and small
business employers sometimes may need to reduce the number of staff to keep up with rising costs or increase their
prices.”
“As we’ve seen with recent rising inflation, this increase combined with other business pressures; could have a domino
effect with product and service prices being eventually passed onto customers. Essentially making goods and services
more expensive and putting small businesses at risk of fierce competition.”
“Regardless, over the next month and a half; we recommend employers educate themselves on the changes to the minimum
wage, and update their payroll systems and processes to avoid the risk of underpaying employees when the increase kicks
in. If they have trouble understanding what employees are entitled to, contact Employsure,” Mr McLean concluded.
Any increase in the Minimum Wage has an impact on all wage rates, not just those at the bottom. However, the additional
reality is that any increase at the bottom evidently increases all rates that are then just passed onto the consumer.