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Minimum wage debated as 'immense step forward' for workers, 'hell of an April Fools' joke' for businesses

An Auckland supermarket worker balancing work and study says he wouldn't have been able to make ends meet for university next year on yesterday's pay.

Steve Maran. Source: Supplied

However, with a boost to minimum wage coming into effect today, Steve Maran says it allows a bit more breathing room.

The 17-year-old is one of 175,000 minimum wage earners to get an extra $1.10 an hour from today. 

For an employee who works 40 hours a week, the minimum wage rise to $20 per hour means that they’ll earn an additional $44 per week before taxes.

Maran, who works at the checkout and deli section at Countdown Sunnynook, told 1 NEWS he works between six and 12 hours a week, but balances his hours with study.

"I am in my last year of school at Rangitoto College and next year I am going to university. With the salary I am getting at the moment, I don't think it will be easy to make ends meet next year," he told 1 NEWS in an interview before the increase.

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The minimum wage is going up to $20 per hour. Source: 1 NEWS

"To combat this, I save or invest 60 to 70 per cent of my salary into a savings account or the stock market. This makes things really tight for the short term. So no expensive gadgets or eats with mates. 

"Countdown is a great employer but I do struggle quite a bit during lockdowns as I basically get paid the same minimum wage but with a significantly higher workload."

However, Maran says today's wage increase might not sound like much to some people, but it will make a difference.

"With this new wage increase today I will get $1 more per hour, which may seem insignificant at first, but over the year I can be able to save more for university or spend on myself a little bit more."

His story is like many people, especially young workers in retail, trades and hospitality sectors.

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EMA chief executive Brett O'Reilly and YWRC business manager Tony Stevens speak about the $1.10 hourly increase to the minimum wage. Source: 1 NEWS

But Employers and Manufacturers Association (EMA) chief executive Brett O'Reilly says the wage increase today is "a hell of an April Fools' joke" for many businesses struggling amid the Covid-19 pandemic - especially in those sectors.

"Anything that has a material impact on a businesses bottom line and their cost structure, it is something that's not welcome, even taking into account that we would all aspire for New Zealanders to earn more money.

"I think it has been incredibly tough for businesses in Auckland. If you look at the New Zealand economy, the fastest growing part of the economy over the last decade has been the non-tradable sector, so that's basically your service sector."

O'Reilly said those areas had been badly impacted by Covid-19, including job losses and businesses closing down.

"Everybody is up against an economy where costs have increased. We've seen freight costs go up for businesses who are exporting, we've seen the impacts of rising prices in a number of areas, again, much of that because of Covid.

"We're sympathetic to the view that we want New Zealanders to have higher wages but we've always said that those wages should be as a result of increases in productivity, increases in business performance, not just a cost imposition on businesses and on business owners when they are already up against it, and a lot of other costs increasing as a result of changes in Government regulation and Covid.

"We said to the Government and we said publicly that we felt that these straightened times for many businesses and their workers would maybe make the Government think about a smaller minimum wage increase just to take into account the fact that people were really under the gun."

However, Young Workers' Resource Centre (YWRC) business manager Tony Stevens isn't buying it.

"I don’t think I can remember a time when employers haven't griped about a minimum wage increase. This is just another fresh excuse for them to whinge about the minimum wage increase. 

"Our view is that if you can't pay a living wage, not just a minimum wage but a living wage, you’re not actually operating a sustainable business model. Paying wages should never be a race to the bottom. 

"As far as the Covid situation, there are other mechanisms that are being put in place for struggling businesses but working people are struggling just as much, if not more, than those businesses. 

"What we do know is that higher minimum wages stimulate the economy. We know that the lowest paid workers, we know they spend every dollar they earn because they have to."

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The minimum wage is going up to $20 per hour. Source: 1 NEWS

For New Zealand's lowest paid workers, often working long, hard hours under such tough conditions, Stevens said the extra pay would go a long way – especially for students juggling their workload.

"You often have young workers that are supporting their family as well, they have to go and get a job to contribute to the family income. 

"It's quite a significant increase, it'll be a huge help for them at a time when the economy is reeling from the Covid landscape so I think it'll be an immense step forward."

Despite the extra boost to pay, though, Stevens said he wanted to see youth rates axed – which he said allow employers to "legally discriminate against workers" - and the minimum wage become the living wage.  

"Even with this increase, it's still not enough for a decent life, it's still too low, it's not enough for people to flourish and participate in society in a meaningful way. It's still just sort of getting by."

Chloe King, of Raise the Bar, worked in the hospitality sector for 16 years and struggled with unions to get fair pay and working conditions during that time.

She said the industry is often described as unskilled or low skilled.

However, she disagreed, saying many have bartending, barista and other skills, as well as working "incredibly hard" without proper breaks and all with a smile of their face in front of those who think they are less important.

King also said at times workers don't get breaks or aren't paid annual leave and are in an "incredibly unsafe" environment, with violent and sexual assaults frequently in the job.

The show of recogition in the minimum wage increase, while it's not the living wage, would mean a lot, she says.

However, she said that if employers are "griping' about the extra $1.10 an hour they shouldn't be in business.

"I think it speaks volumes about how little they care."

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1 NEWS answers five questions about the minimum wage increase.

But Workplace Relations and Safety Minister Michael Wood says the Government wants to recognise workers "going above and beyond", especially amid the pandemic.

"There are many Kiwis who earn the minimum wage who have gone above and beyond in our fight against Covid. I think everyone agrees those who served us so well during lockdown – including supermarket workers, cleaners, and security guards – deserve a pay rise," he told 1 NEWS.

"When making this decision, we took into consideration all the other work that we’re doing to get more people into work and support businesses. For example we have already extended the Small Business Cashflow Scheme for a further three years and extended the interest-free period for another year, and will investigate permanent financing for smaller businesses.

"We are also helping to reduce costs for businesses by regulating the bank payment system, and reducing merchant service fees on debit and credit cards."

Wood says the rise to $20 per hour is estimated to boost wages across the economy by $216 million.

Send your news tips to Rebecca.Moore@tvnz.co.nz