EMA: Minimum wage hike could 'shut more people out of work'

A snap survey revealed that businesses are planning to reduce work hours or retrench staff

EMA: Minimum wage hike could 'shut more people out of work'

The Employers and Manufacturers Association (EMA) has slammed the government's announcement to increase minimum wage to $21.20 per hour starting April, warning that it could trigger more job losses.

"This has the potential to shut more people out of work than result in people earning more, because business simply can't afford it," said EMA chief executive Brett O'Riley in a statement, citing that it adds to the burden of COVID-19, disrupted supply chains, inability to find skilled workers, and rising inflation. At a time when we're talking to the government about extra financial support as a result of COVID-19, it is unbelievable and frankly cruel that it is going ahead with this additional cost.”

O'Riley warned that if wages go up, so would prices to fuel inflation, adding that are other ways to deal with rising costs to relieve pressure among citizens. The warning was similar from the one issued by Retail NZ, which said in a separate statement that the pay hike "can't come at a worse time for retail businesses that are bruised and bleeding after two years of lockdowns and other COVID restrictions."

"The new minimum wage rate runs the risk of stoking the inflation fire while perversely reducing opportunities for work," said Retail NZ chief executive Greg Harford.

Read more: New Zealand unveils financial aid scheme for businesses

A snap survey carried out by the organisation revealed that most businesses are not in the position to handle the cost increases from the wage hike, according to the chief executive.

"Instead, 63% will be looking to increase prices, 47% will be looking at reducing the hours available for employees to work, and 38% will be looking at reducing the number of people employed," revealed Harford.

According to the chief executive, while the government may have good intentions with their plan, the reality is the decision is "likely to harm the incomes and job security of those the government is most wanting to help."

The EMA and Retail NZ then called on the government to start supporting businesses that are struggling and are employing New Zealand residents. The former also expressed its interest in working with the government, unions, and other business groups on improving productivity and rapidly increasing skills of the workforce as a "pathway to raising wages."

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