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Minimum wage move 'threat' to small businesses

Heat Pumps NOW
Heat Pumps NOW director Blaire Ashdowne says a planned minimum wage increase will hurt small businesses.  Laura Cunningham

A small business owner says Labour's minimum wage increase will "send some companies under".

The Labour-led Government plans to increase the minimum wage from $15.75 to $16.50 in its first 100 days , and increase it to $20 by 2021.

Christchurch’s Heat Pumps NOW director, Blair Ashdowne, said there was no doubt a minimum wage of up to $20 would hurt some small businesses and their employees.

"This is a huge challenge for the country," Ashdowne said.

He said newer businesses would have to increase the cost of their service to pay for the higher wage, and businesses that relied on cheaper labour would be sent under.

He said the potential 25 per cent increase might not help who it was supposed to.

Ashdowne said the option to employ a lower skilled worker for less would be gone and higher skilled competition would more likely to get a job.

"The people we are most trying to target with the support may not necessarily get the benefit."

He expected increased unemployment rates, as businesses would not hire unless it was completely necessary.

He said tax cuts for businesses would have allowed businesses to offset the wages bill.

Watch or read more from Blair Ashdowne here:

Business NZ chief executive Kirk Hope said minimum pay rates of up to $20 an hour would mean more money in circulation and could boost the economy.

"This could put pressure on the bottom line for some small businesses that may need to increase prices."

He said businesses needed to make sure they had enough capital to absorb the wage increases.

Hope said small businesses would be after stability and certainty during Labour’s term.

One week out from the election, the Mind Your Own Business (MYOB) Colmar Brunton Business Snapshot survey showed 44 per cent of small business owners favoured National.

Labour had jumped in support from 10 per cent to 29 per cent over the past year.

MYOB New Zealand general manager Carolyn Luey said National traditionally had small business owner voters locked up, but Labour’s leadership change "definitely closed the gap".

Workplace Relations Minister Iain Lees-Galloway said National’s latest 3.3 per cent increase from $15.25 to $15.75 was not enough to keep up with increased living costs and failed to create a productive economy.

"A 3.3 per cent increase in wages is nothing when rents went up by 5.8 per cent last year and house prices rose by 12.5 per cent."

He said a minimum wage of up to $20 would ensure all workers got decent pay for a decent day’s work.

National’s Workplace Relations and Safety spokesman Michael Woodhouse said there must be "the right balance between protecting our lowest paid workers and ensuring jobs are not lost".

Woodhouse said National’s latest 50 cent increase in January gave that balance.

New Zealand’s current Living Wage has been set at $20.20.