Rob Drower and John Cleghorn
Managing Partners – Prime Strategies Group

The minimum wage has increased to $16.50 as of April 1st. At 4.76 percent, it is the largest minimum wage rise in over a decade. SME’s in New Zealand make up a large portion of the New Zealand economy and political decisions like this can have a huge effect on those businesses.

Morale is an issue. Many of your more experience staff will not see their pay packet increase. Will they be looking for a similar percentage increase? They certainly would have a good case if they have greater knowledge and take on more responsibility than your minimum wage earners.

It would be prudent for business owners to look closely at the current wage rates of their staff earning between the minimum wage rate and $20 per hour and assess each staff member individually, taking stock of their worth to the business. A proactive approach is than a reactive one.

Actions we may see businesses take include:

  • Leave things as they are, accepting a further reducing business profitability overall
  • Increase prices, gambling that the market can absorb increases
  • Aim to increase productivity
  • Create redundancies,
  • Work to reduce costs in other areas

Business owners need to be aware that their suppliers are facing the same issue, and their solution may be to increase product price to cover their increased costs. This will result in a double whammy for small businesses.


If your profit margin is not increasing every year in line with inflation and cost increases, a wage increase will add to that.

The approaching wage rise may be the catalyst to look at your current financials and take strategic action to identify new opportunities and improve your business efficiencies in other areas as well.

A Business Advisor can bring significant wider experience into a business and work in partnership with you to refine your business processes and systems and reveal new opportunities for growth. With the end of the financial year approaching along with the new minimum wage rate, this is the perfect time to take stock of how your business can be fine-tuned to work smarter rather than harder.

If you would like to leverage decades of personal experience and proven business management methodologies, contact our nationwide team of Business Consultants at Prime Strategies Group. Our team will be only too happy to give insights and advice on how your business can deal with the minimum wage rise, and with 2018 in general!