COVID 19 Coronavirus: Business Owners Bracing For An Increase In Minimum Wage

Published March 31, 2020 (last updated November 18, 2020) Author: Employsure
employers calculates the increased minimum wage

New Zealand business owners are being reminded that the minimum wage will increase from April 1.

The new national adult minimum wage is being lifted to $18.90 for all employees who are 16 years of age or older. It will result in employees earning an additional $1.20 per hour, or $48 per week before tax for an employee who works 40 hours a week.

The starting-out wage for first time workers aged 16 to 19 who satisfy certain conditions will also rise to $15.12. The training minimum wage, which applies to employees aged 20 or over who are completing recognised industry training involving at least 60 credits per year in order to become qualified, will also rise to $15.12.

As New Zealand enters a four-week government lockdown to slow the spread of COVID-19, it means cash-strapped small business owners may feel the pressure by increasing wages, according to Employsure, New Zealand’s leading workplace relations company.

“The minimum wage increase may prove to be a dilemma for employers, as they may have less financial resources to reward their best staff given the current situation,” according to Employsure Senior Employment Relations Adviser Ashlea Maley.

“It’s going to place additional strain on the already stretched budgets of employers,” she said. “Employers are in a tough spot about how to keep their businesses afloat during the pandemic, while potentially absorbing the additional cost of a minimum wage hike.”

A recent survey of Employsure clients has revealed the most common practices used by businesses to try and retain their employees. The results showed that non-financial incentives are often the most popular and effective.

38 percent of respondents suggested that providing flexible a working arrangement was the best approach to retain staff.

20 percent believed it comes down to offering a pay increase or bonus, while 16 percent attributed training as a successful method.

“Flexible and remote working options may be a good way to find a balance between retaining your top employees who are looking for additional flexibility, without stretching the bottom line even further during lockdown,” Maley added.

“If you’re looking to retain and engage staff beyond the typical retention rates, particularly in the downturn brought on by the coronavirus and the pressure of increasing wages, there are several tools you could use.

“Employees tend to stay longer if their role has a purpose, so it’s important work remains challenging. Setting goals to achieve can help with this. The lockdown could be an interesting way to explore new ways of defining work and particular roles that can help maintain productivity.

“Investing in their professional development can keep staff engaged and motivated, and internal promotions will maintain a high performer’s desire and need to succeed continually, which ultimately benefits the business. There are a number of online training options that would be perfect in our current environment.”

Read more on ways to reduce costs with the minimum wage increase here.

Resource Hub For Employers

To help employers meet this unprecedented challenge, Employsure has built a free Resource Hub, containing workplace policies, communications, checklists and FAQs. All information is free for business owners and can be found at employsure.co.nz/coronavirus

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