The April increase in the minimum wage will be an added expense for some Rotorua businesses that are already struggling and the cost is likely to be passed on to consumers.
This week's announcement by Labour Minister Kate Wilkinson that the minimum wage will rise by 50c to $13.50 an hour has met with mixed reactions. While most people would like to see minimum wage earners' incomes lifted, some business owners said they could not afford to absorb yet another increase in costs.
Rotorua Chamber of Commerce chief executive Roger Gordon said the change would not affect all businesses in the district, but would have an impact in sectors such as hospitality.
"We are certainly in a very soft business environment - particularly in Rotorua - and some of our retailers and other businesses are struggling."
Gordon said many sectors paid well above the minimum of $13 an hour because of labour market forces and these would remain relatively unaffected by the lift to $13.50.
"If they want to attract good staff, they have to pay the wages that will attract those staff. I would not see this having any impact on somebody earning, say, $18 an hour."
But he said the 3.8 per cent rise would affect employers paying at or near the minimum wage.
"People earning 50c above the minimum could expect that differential to be maintained when the minimum comes up to what they are earning."
Gordon agreed with the Government that a more abrupt rise to $15 was unrealistic.
"A 16 per cent increase? That would have a huge impact in the market. A lot of people accept, as far as New Zealand is concerned, we need to raise overall income levels, but it has to be done over time."
Hospitality New Zealand president Adam Cunningham says the 50c increase, coming into effect on April 1, would result in price increases across the board for consumers as hospitality businesses were reporting surpluses of less than 5 per cent and operators had no choice but to pass costs on to consumers.
Deputy president Reg Hennessy, of Rotorua's Hennessy's and The Shed bars, agrees the industry cannot afford to absorb the additional costs.
"It will affect us and force us to pass that cost on to the customers. Someone has to pay for it and a lot of the hospitality industry is struggling enough at the moment."
Rotorua Association of Motels chairwoman Fiona Suurenbroek, of Cedarwood Lakeside Holiday Resort, said times were tough in the tourism sector and members could not raise room rates when tourists were cutting
costs.
``The general feeling is that we will be hit with this and the effect could be doubled as many of our
suppliers will be increasing their wages bill and passing those costs on.''
Suurenbroek said the rise in wage costs would be multiplied on statutory holiday weekends, which were often their busiest times when they have the most staff on, working the longest hours.