With many aged care and home care providers already struggling to afford the newly increased caregiver wages as a result of pay equity, the increase in minimum wage is likely to place additional strain on those employing cleaning, laundry and kitchen staff.

E tū’s National Secretary, Bill Newson says the extra money will be very welcome for these workers. Next year’s increase from $15.75 an hour to $16.50 will mean more than $20.00 extra a week for minimum wage workers doing a 40-hour week. The minimum wage will gradually increase to $20.00 by April 2021.

But Shona Rishworth, manager of Ascot House in Devonport says it’s getting increasingly tough for small facilities to meet these wage costs.

“Again, another balancing act we are not funded for.  It’s getting harder and harder for small providers to meet the wages costs full stop.”

Cecily Munro, owner of Malyon House in Mount Maunganui agrees.

“Those of us who are still in business will just have to suck it up!  Mind you, it will seem less in comparison to the current imposition, so perhaps there will be fewer complaints.”

There are already reports of some employers in other sectors trying to avoid the upcoming minimum wage increase by building workers’ allowances for things like service, travel time and shift work recognition, into their basic hourly pay.

E tū is currently bargaining with two employers about this issue and has warned other employers: “don’t do this”.

Newson acknowledged that businesses might not be happy but in fact they will benefit as workers spend the extra money on local goods and services.

“Good business is about employing good people. Good business is about retaining good people. And good business is about paying people a decent wage, so this new minimum wage is good for business and workers.”

However, the Employers and Manufacturers Association have warned that the minimum wage increase will “bring the economy to a grinding halt”.

New Zealand Initiative economist Dr Eric Crampton recently shared some concerns on Newstalk ZB about the impact of increasing the minimum wage to levels that could see people lose their jobs. Crampton said improving productivity is the only thing that improves wages in the long run, rather than increasing the minimum wage.

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