Minimum wage rise an additional burden

10 February 2012

Minimum wage rise an additional burden on small business says Motel Association of New Zealand

The latest rise in the minimum wage is yet another burden being heaped on small businesses at a time when they can least afford it, says the Motel Association of New Zealand (MANZ).

A larger wage bill adds to the pile of increasing compliance and business costs which are pushing some motel-owners close to the brink, MANZ Chief Executive Michael Baines says.

“The rise in the minimum wage translates to a pay cut for many of our members. It’s as simple as that,” Mr Baines says.

A survey of MANZ members found that when faced with a rise in the minimum wage, 82 per cent said they would have to take a cut in their own income as a result of the increased wage bill. The remaining 18 per cent said they would decrease the amount of hours worked by their staff in order to keep the wage bill the same.

The survey also showed that 72 per cent of respondents said the move would have an impact on their business, while the remaining 28 per cent said it would not.

“Raising the minimum wage may be a minor thing for the government to do, but it will have a profound effect on many small businesses,” Mr Baines says. “This comes at a time when motel-owners are already struggling under the increasing weight of compliance costs, many of which are being imposed by local and central government.”

Rather than adding to the burden of small businesses who are struggling through the tough economic times the government should be looking at ways to encourage growth.

“It seems that small businesses such as motels are viewed as a never-ending source of cash, able to absorb any expense thrown at them. This couldn’t be further from the truth, and we urgently need to see this trend reversed before small businesses start to fold under the pressure of rising costs,” Mr Baines says.

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