The New Zealand PM is coming under increasing pressure to scrap an imminent rise in the minimum wage as hospitality businesses face a collapse in visitation.
Jacinda Ardern has so far refused to backtrack on plans to up the minimum wage next month from $17.70 to $18.90, despite opposition leader Simon Bridges describing the increase as “the final straw” for many small businesses.
“It is much better to have people in jobs in tough times like this than to have them on the dole,” the National Party leader said this week.
The Restaurant Association of New Zealand is seeking tax cuts and financial help from the government after an internal survey showed several members reporting significant losses – some of up to 60 percent – due to the impact of the coronavirus outbreak.
And a Tourism Industry Aotearoa spokesperson said: “TIA members all over the country and in every sector (accommodation, transport, activities and attractions) are being affected by COVID-19.
“We don’t have a lot of hard data but anecdotally we are hearing that visitors from all major markets are reconsidering their leisure travel at this time, and many businesses have a ban on international travel. Forward bookings are also much slower than would normally be expected at this time of year.”
Hospitality NZ chief executive Julie White argues her members are already looking to reduce opening hours and cut staff in a regional picture she describes as “really alarming”.
White is urging the government to consider wage subsidies to help hospitality businesses weather the coronavirus storm. And she is urging a delay in the 1 April-scheduled minimum wage rise.
“The first thing they can control is their staffing costs so they are looking at reducing the number of people employed,” she said.
“We need a bit of assistance from the government.”
It’s a position backed by the ANZ bank’s chief economist, Sharon Zollner, who says a delay to wage increases is a “no-brainer”.
“In this environment, a lift in the minimum wage is more likely to result in higher unemployment than lead to better social outcomes,” she said.
Others believe rolling back the decision to increase wages will put the neediest Kiwis under increased pressure, New Zealand Initiative chief economist Eric Crampton telling Stuff the decision would be “difficult” to reverse.
“Workers on the minimum wage will be banking on that increase and will have based financial planning on it,” he said.
The government has come in for criticism this week for its lack of urgency in dealing with the growing crisis, National’s finance spokesman Paul Goldsmith describing its response as “startlingly flat-footed”.
Ardern has flagged the release over the next few weeks of a ‘business continuity’ package to help support the economy through the coronavirus crisis. Scott Morrison will announce Australia’s stimulus package within days, expected to dedicate up to AU$10 billion to mitigating the effects of the coronavirus threat across the Tasman.
The ANZ is urging speedy implementation of any stimulus and wants to see the NZ government open to borrowing an extra $60b, the equivalent of 40 percent of GDP, to head off recession.
But finance minister Grant Robertson says New Zealand is in a “robust” position to fight the challenges, with the government already dedicating $11 million towards Tourism Australia marketing and providing targeted income assistance to businesses directly impacted by the outbreak.
“New Zealand is well-placed to respond to Covid-19,” Robertson said.
“We have been running surpluses and our net debt position at 19.5 percent of GDP is well below what we inherited, and well below other countries.”
While some hoteliers and tour operators are feeling the pinch of reduced international visitation, others have so far weathered the storm without suffering financial heartache.
Skyline Enterprises chief executive Geoff McDonald told Radio NZ: “Like everyone else we’ve lost some of that Chinese business, but things are not disastrous for us by any means in both Rotorua and Queenstown.”