Minimum wage earners will take home almost $2500 more a year. PHOTO/STOCK.ADOBE.COM
The minimum wage increased by $1.20 yesterday, putting almost $2500 more into the pockets of New Zealand’s lowest-paid workers each year.
However, a Wairarapa chartered accountant said the increase from $20 to $21.20 an hour may also put pressure on small businesses.
“I’m not denying that anyone deserves it, but there are big knock-on effects,” Osborne Group managing director Jason Osborne said.
Osborne said some employers would bear the brunt of the rising wages.
“They’re going to wear a lot of the cost and the pressure.”
He said some small business owners worked 60 to 80 hours a week and did not earn the minimum wage themselves.
“It puts a lot of mental strain on them as well as financial strain.”
Many employers increased pay not only for those on the minimum wage but also for those on higher pay brackets to maintain pay relativity within the company.
Osborne said larger companies could either absorb that cost or pass it on to their customers, but smaller companies could not always afford to do this.
Alongside the scheduled wage increase, businesses were grappling with the uncertain impacts of covid-19 and the war in Ukraine.
“It’s probably a good time for people to sit down and look at their next 12 months, work out where they want to be and how they are going to get there,” Osborne said.
He said businesses that kept their records up to date would better understand their financial position and recommended that people talk through their plans with a business adviser.
“If people put their heads in the sand, they might not realise for many months or even a year that they are going the wrong way.”
Osborne said that despite the challenges thrown at them, Wairarapa businesses were generally resilient.
“We’ve got quite a big rural background, and we’re seeing an increase in population. We’re seeing people coming in from other regions, which is making the towns a bit busier, and potentially there are more people buying more things.”
Minister for Workplace Relations and Safety Michael Wood said that the minimum wage increase would benefit about 300,000 workers.
“For someone working a 40-hour week on the minimum wage, this increase will see them earning an extra $48 a week, and almost $2500 more each year,” Wood said.
People on benefits also had more money in their pockets from yesterday.
Main benefit rates increased by from $20 to $42 an adult a week compared with July 1, 2021. Rates for families with children increased by an additional $15 an adult a week.
New Zealand superannuation rates increased by $52 a fortnight for people living alone or $80 a fortnight for a couple.
Student allowance and living costs increased by $25 an adult a week.
The base rate of the Orphan’s Benefit and Unsupported Child’s Benefit would increase by $34.84 for children up to four years old or $10 for children aged five and older.
Working for Families tax credits also increased by almost $15 a week for the eldest child and about $13 a week for subsequent children.
