The Tauranga Chamber of Commerce chief executive says implementing a "living wage" in the city would be devastating to local businesses.
Unions around New Zealand are asking companies to voluntarily implement a living wage of $18.40 an hour, the minimum to provide for a family with two children based on an Otago University study.
Chief executive Max Mason said while most people would agree $18.40 was a reasonable estimate of the income needed to sustain a basic quality of life, raising the minimum wage to this would devastate Tauranga's local business sector, which employs 48,000.
"It is sobering to reflect that 44.4 per cent of people in Tauranga have an annual income of $20,000 or less.
"Yes, there are plenty of part-timers, but this statistic shows how incredibly important it is for us to work hard at raising our productivity so we become a higher-wage economy."
Mr Mason said raising the minimum wage to "unrealistic levels" wasn't the answer. Instead people should aim to raise their own productivity through education and skills development.
"I know it's really hard - especially for young people in a fickle economic environment - but, in a general sense, the more skills and education you gain the more you will earn.
"It's also hard for older people to start learning again, but there is no getting away from it that lifelong learning is a fact of life."
The living wage campaign has been supported by First Union. Its Tauranga organiser, Kirstin Miller, said low pay particularly affected retail workers in the region.
"It is hard for workers in the Western Bay of Plenty to find meaningful, full-time work. Retail workers regularly report that they need more hours, because their current hours don't provide enough income to live on.
"Many retail workers are on minimum wage and just scraping by. If their hourly rates were increased to a more liveable income, this would take some pressure off these workers."
A living wage would be really helpful for parents, she said.
"Parents on low incomes are often too busy at work trying to make ends meet, and a better income would enable them to participate more fully in activities like their children's schools, camps and sports activities."
The owner of a Tauranga cleaning company, who wanted to be known only as Robyn, said while she thought some of her clients would pay more for her services, there would be many who would not and her staff's hours would drop.
"Their hours would go down and I think they wouldn't have any more income than they have now.
"I reckon all the prices would go up everywhere for everything, especially groceries and petrol. It will make employees worse off."
She said businesses weren't being greedy by paying low wages, they were doing the best they could.
"I know my girls struggle, but I do the best I can. When I can, I give them an extra buck or so."
Hospitality New Zealand regional manager Alan Sciascia said the effects of implementing the $18.40 an hour living wage would be "considerable" on the hospitality industry.
"Most frontline staff, bar tenders and waiters, are probably earning about $14 to $16 an hour, anything above that is going to come out of any profit the businesses might make - and they're not making much in the industry at present. Business owners will be expected to dip into their pockets to find the difference, and there isn't much in those pockets."
He said some businesses would find it impossible to raise their pay to the living wage.
"It's all very well for an entity like a local council to implement the living wage; their money comes from rates."
If a business raised its prices, customers would go elsewhere.