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SMEs “collapsing” under strain

9 March 2006

SMEs “collapsing” under strain of additional labour costs

A number of small and medium sized businesses are literally collapsing under the strain of additional labour costs, and the Government should focus attention on them.

That’s according to Susan Hornsby-Geluk, a partner at Kensington Swan and Chair of a major industrial relations and employment conference currently underway in Auckland.

The 20th annual BrightStar Industrial Relations conference features representatives from unions, law firms, district health boards and universities among others.

Susan Hornsby-Geluk says despite New Zealand having one of the lowest rates of unemployment in the world, it is clearly a difficult time for employers.

“Employers are facing higher wage claims as a result of collective bargaining, additional costs from health and safety compliance, an increase to four weeks annual leave from next year, and the payment of time and a half on statutory holidays.

“And there is more in the pipeline, such as increasing the scope of employment protection provisions, the flexible working hours legislation and the abolition of minimum youth rates.

“In addition, many unions are becoming more militant than in the recent past, and insisting on wage increases of no less than 5%.

“There won’t be any winners if our small and medium sized businesses pack up, and the bigger ones move offshore,” she says.

Susan Hornsby-Geluk says it is time for the Government to revisit some of the assumptions underlying the Employment Relations Act legislation.

“It would appear that at present it is not employees who lack bargaining power.

“We have many employers who are now on the breadline and may be in a worse position as economic conditions deteriorate.

“The Government needs to re-consider the impact of the legislation on them as we move forward,” she says.


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