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Employers to bear the brunt of one of the sharpest minimum wage rises in history

Published February 10, 2022 (last updated on June 14, 2024) | Adam Wyatt - Copywriter and Content Creator

Employers still recovering from the pandemic will soon be hit with another financial blow, with the national minimum wage soon set to rise by a steep 6% – a .2% increase from last year’s increase.

From 1 April, the adult minimum wage will rise from $20 per hour to $21.20, for all employees over the age of 16 – equating to an average weekly pay rise of about $48. This will impact all businesses, across all industries, who pay at the current minimum wage. The starting-out and training minimum wage will also increase from $16 to $16.96 per hour.

With inflation hitting its highest level in 30 years, and Omicron forcing many businesses to temporarily shut their doors and miss out on crucial revenue, Peninsula, New Zealand’s largest workplace relations advisor, says it will be small business owners who feel the greatest impact.

“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 two years,” said Peninsula Advice Manager Henri Viljoen.

“We receive thousands of calls to our employer advice line every month, and many of these calls are in regard to employee entitlements such as wages. We anticipate our call volume to now increase following this minimum wage announcement.

“The cost of doing business becomes more challenging as mandatory wage increases are introduce, and small business employers often 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 could have a domino effect with product and service prices passed onto customers, essentially making goods more expensive and putting small businesses at risk of fierce competition.

“We are calling on the Government to introduce more financial support for businesses affected by this upcoming increase. Further increasing wage subsidies for employers is a better alternative to increasing the minimum wage in future. We’re already seen initiatives introduced over recent years such as Short-Term Absence Payments, Resurgence Support Payments and the Leave Support Scheme.

“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 Peninsula,” Mr Viljoen concluded.


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Matthew Bridges

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