Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Would raising the minimum wage in NZ cause businesses to fold?

Posted by Steve Koerber on January 19, 2010

The issue of raising NZ’s minimum wage from $12.50 to $15 has been in the news this month.

Whilst I can understand most wage earners desire to be paid more, most wage earners don’t need to worry about the minimum wage. Only 100,000 workers receive it.

Are you being paid $12.50 an hour? Do you know anyone who is? If so, is that person’s contribution to their employer worth $12.50 an hour or more?

If you were starting a business and needed to employ five people to sit and watch a computer screen, would you be comfortable paying them $12.50 to do so? You may want to pay them less, but you’re not allowed to. How would you feel if you were just starting to turn a profit after going deeply into debt to start your business, then the Government told you you had to pay your screen watchers $15 an hour?

American Samoa’s economy is in tatters because the USA recently forced its tuna industry to pay workers a higher minimum wage. The tuna industry there used to provide the USA with 80% of its canned tuna.  The industry employed one third of the working population. Now one of two companies has shut down, automated much of the canning process and moved to the USA. The poorest of the USA’s territories just got a whole lot poorer because of minimum wage fixing above rates that the market could tolerate.

In NZ how many small and medium manufacturing businesses, already struggling, will fold if told they have to pay their workers more. How will this effect the nation’s export earnings? Think of the extra dole payments needed to pay people out of work.

John key should ignore calls to raise the minimum wage because raising it will damage the economy and increase dependence on social welfare.


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