Minimum wage hike could make it harder to hire migrants - restaurant owners

Businesses raise cost pressure concerns over minimum wage hike. Photo / 123RF

There are fears this year’s inflation-aligned 7.1 per cent minimum wage hike will indirectly make it harder for businesses to hire migrants.

Restaurant Association of New Zealand chief executive Marisa Bidois is worried such a large increase will push up the median wage, which is tied to the Accredited Employer Work Visa.

This visa is valid for up to three years if the visa holder is paid above the median wage, and two years if they’re paid below the median wage.

Bidois believed the Government’s decision to hike the minimum wage by $1.50 an hour from April 1, to $22.70, would push the median wage well up from where it’s at now, at $27.76 an hour.

The issue is two-pronged. For a business to hire someone via this visa pathway, they may have to pay them well above the market rate.

Then there’s the flow on effect. If a migrant worker is paid the median wage for doing a job a local worker is being paid the minimum wage to do, the local worker will understandably want a pay rise.

Bidois said restaurant owners were crying out for staff, having contended with rising costs and disruptions due to flooding and Covid-19 in recent years.

She recognised the tight labour market meant some low-skilled workers were already being paid more than the minimum wage, so questioned why the Government had to force the minimum up so much when the market was delivering higher wages anyway.

Bidois said restaurants were reducing their hours, temporarily closing their doors, or cutting back their offerings to keep their heads above water.

OneStaff recruitment agency chief executive John Ives was concerned about how this dynamic was affecting New Zealand’s productivity.

Ives said that if businesses believed the cost of employing a worker wasn’t worth the productivity gain, they simply wouldn’t make the hire. So, they’d pull back, coast along, and fail to maximise their potential.

National’s immigration spokeswoman Erica Stanford called for the Government to drop the median wage requirement from the Accredited Employer Work Visa.

She said the Government had “noble” intentions when it came to hoping higher wages would push businesses to innovate and invest to become more productive.

But the reality was that businesses were signalling their intentions to pare back on capital investments, as confidence is low and interest rates are high.

Immigration Minister Michael Wood told BusinessDesk National hadn’t learned anything from its time in government when chronically low wages caused some of the skill shortages it’s now complaining about.

“The only way to build sustainable workforces is to ensure there are sustainable pay and conditions. National’s proposed sugar hit of low-wage labour, as well as being bad for migrant workers, would take us in the wrong direction,” Wood said.

Advice the Ministry of Business, Innovation and Employment (MBIE) gave the Government ahead of it deciding to lift the minimum wage by 7.1 per cent is yet to be made public.

Last year, MBIE’s report, which recommended the Government didn’t lift the minimum wage as much as it did, was released more promptly.

MBIE’s fears higher wage costs would increase unemployment didn’t materialise. The unemployment rate remained exceptionally low last year.