Whanganui businesses face wage pressures as hourly wage rises by record

Wages in the hospitality sector are up 11.8 per cent on last year. Photo / 123RF

Finding and retaining staff has been particularly hard for cafes and restaurants in the region and, as a result, employers say they are having to bump up wages.

They're not alone though as wages have risen in a wide range of industries and one local business advocacy group is concerned businesses are over-committing to get skilled workers.

Figures released by Stats NZ this week had the national average hourly earnings up by 7.4 per cent on last year to $37.86 an hour.

"This is the largest annual rise in ordinary time hourly earnings since this series began in 1989," Stats NZ senior manager Darren Allan said.

But it was the accommodation and hospitality sectors that saw the most growth - up 11.8 per cent on last year, Stats NZ said.

The manager of a cafe in Taihape, who chose not to be named, said finding staff in that town willing to do the work had been a struggle.

She said her cafe was offering about $22 an hour, slightly above the minimum wage, but there was a competing business in the town offering $25 an hour.

"If we can make an environment workable for someone, they're more willing to want to stick around.

"We've got to push and [make] do with what we have."

She did say her cafe was adequately staffed at the moment and did not need new workers.

Caroline's Boat Shed Bar and Eatery owner Caroline Norton said the key strength of her business was the staff.

"We'll pay the best, the most that we can."

Norton wouldn't say what the standard pay was for her workers but it was "above board".

"I know I'm going on about the value of staff but it is what it is. We've got to accept what we've got today and get on with it."

It wasn't possible to raise prices much more because customers would revolt, Norton said, so they had to make cuts elsewhere.

Hospitality NZ's regional manager for the lower North Island, Adam Parker, said he wasn't surprised at the nearly 12 per cent jump in wages for the industry.

He said his and his organisation's view was that current immigration settings and a reluctance by New Zealanders to do hospitality work were drivers of the difficulty getting staff, and also wage inflation.

As a result, Parker said operators should consider putting prices up.

Caroline's Boat Shed Bar and Eatery owner Caroline Norton (right) said the key strength to her business was the staff. Photo / Bevan Conley

"I think that's what a lot of the operators are afraid of. [They're] afraid of losing local and consistent business as a result."

After the first lockdown there was "incredible support and appreciation for the hospitality industry", he said.

But he said that "honeymoon period" had fallen away quickly.

On a recent visit to Hawke's Bay he noticed there was almost nowhere to eat and drink out on a Monday or Tuesday and that was a result of labour shortages.

Other sectors with wage increases of more than 10 per cent compared to this time last year included rental, hiring and real estate services (up 10.8 per cent) and professional, science technology, administration and support services (up 10.1 per cent).

Manufacturing (up 9.5 per cent), retail trade (8.1 per cent), wholesale trade (7.7 per cent) and construction (7.2 per cent) were the industries next on the list for wage growth.

Economic development agency Whanganui & Partners chief executive Hannah Middleton said wage growth had typically been higher in Whanganui compared to the national average since 2019.

While there were no figures available for Whanganui in 2022 in terms of wages, "we expect the trend of upward growth to continue", Middleton said.

"While we don't have local data that supports the Government's report that average hourly wages have increased 7.4 per cent, we have heard of employers offering similar or higher wage and salary rises, along with others offering rises significantly below the inflation rate."

Whanganui Chamber of Commerce chairwoman and recently elected Whanganui district councillor Glenda Brown said she was concerned local businesses were over-committing to get skilled workers.

"We are in turbulent times," Brown said.

"Businesses are finding it difficult to get labour and are pressured to pay premium rates which adds further stress to the bottom line."

She said some businesses were now having to pay back loans taken out as part of the Government's Small Business Cashflow Scheme, which started in May 2020 and after two years has an interest rate of 3 per cent per year applied.

"... and some businesses have had to borrow further funds to ease their cashflow," Brown said.

"If a business is debt-free then they are in a position to offer wage increases relatively easily. These businesses are a minority."

Businesses struggling to fill vacancies due to a lack of skilled labour were having to re-evaluate the goods and services they offered while they navigated the tight labour market, Brown said.

"We are in an environment where an employee can choose, pitch one employer against another, for the return of their skills.

"Employers need to evaluate their budgets and processes and be reasonably confident they are able to pay the extra costs."

While Minister of Finance Grant Robertson said higher wages were a "positive outcome and worth celebrating", Brown said it was not sustainable for businesses.

"For this to change, the Government needs to proceed with haste, and allow immigrants to enter the country at a greater rate of speed, to help fill labour gaps and relieve the labour shortage."

Robertson said the rising wages were helping people meet cost of living pressures.

"We know Kiwis are doing it tough in the face of cost of living pressures, but they do so while in paid work which helps ease some of that pressure that they are under," he said.

"With many forecasters pointing to higher levels of unemployment, the Government will continue to support New Zealanders through this difficult time, including fuel tax cuts, half-priced public transport fares and income increases for seniors, beneficiaries and those on Working for Families."