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Home / Hawkes Bay Today

Greens' wage policy slammed

By Patrick OSullivan
Hawkes Bay Today·
8 Sep, 2014 05:00 PM4 mins to read

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Hawke's Bay growers say a strong hike in the minimum wage will do the industry more harm than good. PHOTO/FILE

Hawke's Bay growers say a strong hike in the minimum wage will do the industry more harm than good. PHOTO/FILE

The Green Party's policy to raise the minimum wage 26 per cent is not affordable, says Hawke's Bay Fruitgrowers Association president Leon Stallard.

The party said it would raise the minimum hourly rate of $14.25 to $18 by 2017.

Mr Stallard said harvest production bonuses were based on the minimum wage and he estimated the increase would cost the average orchardist up to $120,000. "That money has to come from somewhere.

"It doesn't come from profit, it comes from the cost of production - we don't make that type of profit.

"It means increasing debt, just to stay in business."

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He said it was a fallacy that most workers were on minimum wage but a rise would mean higher-paid workers would also expect an increase, to reflect their responsibility, effort and expertise.

"It has a flow-on effect right throughout the whole industry."

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said low wages and unskilled workers in the horticultural sector were a challenge the industry must face.

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"A lot of the jobs are relatively unskilled and low paying and they are not able to generate enough revenue overseas to pay high wages," he said. "That begs the question: How sustainable are these industries in New Zealand?"

He said all New Zealand industries could not compete against other countries on low-wage efficiencies.

The policy affected more than just the lowest paid.

"When you raise the minimum wage it can have costs for youth unemployment because young people without skills tend to find it very difficult to compete."

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Central government needed to understand a minimum wage rise affected regions differently.

"Quite often people think minimum-wage rises will only affect cleaners in Auckland, forgetting there are all these other industries that rely on relatively low-paying jobs. But they are very important jobs if we are going to take advantage of the natural resources available in places like Hawke's Bay."

He said, historically, minimum-wage rises were not inflationary because few received the rate: "If done gradually it doesn't tend to matter."

Green Party Napier candidate Paul Bailey said the party had consulted widely to make sure the policy was sustainable.

It would work to increase grower returns, with declaring New Zealand a GE-free nation a possibility, Mr Bailey said.

"That is a really easy thing to put into place. If the growers have more money in their back pocket they will be able to meet the wage increase."

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He said most small businesses already paid above minimum wage because they wanted to attract and retain the best workers.

"The businesses that are mostly paying minimum wage at the moment are the large corporates who can well-afford an increase.

"The other thing to bear in mind is it is not going to happen in one hit, it is going to happen over a number of years so it is going to give everyone an opportunity to work it through their systems.

"There is a lot of evidence offshore that increasing the minimum wage has no effect on the jobless rate.

"As soon as people on the minimum wage have more money, they spend more in the local economy, which obviously increases business profit."

Te Mata Mushrooms owner Michael Whittaker said many Bay businesses would not survive the increase: "Hawke's Bay, being predominantly a low-wage economy, would suffer greatly under such a policy. This really is a serious issue - it could set the region back overnight and have the opposite effect of what was intended.

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"I fully understand the concept of more money to employees, hence more money to spend, more tax paid etc, but that is all predicated on the basis that a business can stay in business long enough to pay the increased wages. Many simply cannot lift their prices to cover such a mammoth increases in overhead."

The Greens also said publicly listed companies would have to publish pay information about the highest, middle and lowest paid for both genders to help close inequities. It would scrap youth wages and 90-day trials for new workers, and public-sector workers would receive the living wage of $18.80.

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