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Minimum wage versus living wage.

Minimum wageJune 26, 2017

Minimum wage versus living wage.

Guest blog by Pran Rawal, Employsure Business Sales Consultant.

Anyone looking to join the workforce or start a business is generally aware of the minimum wage in New Zealand. However, from my experience working at Employsure I’ve found that most business owners are either not sure about the minimum wage job requirements or they are unable to decide on the competitive wages based on industry standards.

The debate around minimum wage has been splashed across the news for the past six months, this was after huge publicity when Auckland Council voted to increase their minimum wage to the living wage of $20.20 for more than 2,000 employees.

People fighting for the minimum wage increase say that the living wage is the minimum wage a worker needs to pay for necessities of life and participate as an active citizen in the community. This amount is sometimes significantly more than the current minimum wage.

So far 64 businesses have adopted the living wage which has caused a lot of uncertainty among business owners, especially when other industries look to be following the trend. The healthcare industry, City Councils, Unions and Universities are some of the big players considering the increase.

When I speak to business owners and employers about the changes they seem very stressed and do not know what to do. Many small business owners tell me they are thinking about selling their business, going solo, struggling to pay themselves or shutting down completely given the circumstances.

What I found to be the reason behind it was the fact that a small business owner not only has to pay employee wages but also the running costs of the business, and uncertainty about what those costs might be is what keeps small business owners up at night.

I’ve also found that business owners are spending a lot of time worrying about wages, how much they are legally required to pay, and what is standard for their industry. In my role, I tell clients about the assistance we provide to employers that keep an employer legally compliant and at par with industry standards, giving business owners peace of mind.

What are the specifics for minimum wage?

The current minimum wage that is mandatory to be paid to an employee irrespective of the hours worked or job responsibilities stands at (before any tax and effective since 01 April 2017):

Adult minimum wage – $15.75 per hour.

This wage is the most commonly used by kiwi businesses and applies to all the employees who are 16 years of age or older. Provided they are not involved in training or supervising other employees.

Starting-out wage – $12.60 per hour.

Workers aged 16-19 who are entering the workforce for the first time are the only type of employees entitled to starting-out wages.

Training minimum wage – $12.60 per hour.

This category of wage applies to employees aged 20 years or over who are completing recognised/accepted industry training involving at least 60 credits in order to become qualified.

Exemptions.

A small amount of people hold an exemption from the minimum wage, e.g. prison inmates and some apprentices.

Minimum wage exemptions for people with disabilities: Every employee over 16 year of age must be paid the relevant minimum wage unless they have a minimum wage exemption permit.

It’s my job to be aware of the debate surrounding employment issues as well as the legislation, this way I can better help employers create a fair and safe work environment. A fair and safe work environment in turn creates more productivity at work and efficient work processes that ultimately yield higher profits for the business. Hence, in my view every business owner must pay fairly and be compliant with the new legislation to achieve higher profits.


Employsure

Pran Rawal

Pran Rawal is an experienced sales and customer service professional with over 7 years of experience in B2B and B2C sales. He is a firm believer in relationship based selling and is motivated by introducing small business owners to an essential service that can give them peace of mind when it comes to compliance and advice.


 

 

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