Employment law changes are worrying exporters, according to ExportNZ. The organisation has published a profile of exporters’ experience of recent employment changes, following a survey of 400 exporters that showed this is a top concern.
The profile shows many exporters are facing increased costs as a result of employment and minimum wage changes, and can’t recoup the costs by increasing prices. Businesses with between 75 and 120 staff say minimum wage increases mean they will have to find an extra $120,000 to $800,000 in additional wages every year.
ExportNZ Executive Director Catherine Beard (pictured) says exporters are unable to put up prices in response to employment changes because it would make them uncompetitive in overseas markets. “It matters because if you’re trading internationally, competitiveness is everything.”
Beard said many exporters already paid above the minimum wage, but increases to its level caused all pay rates to rise to maintain relativities, and meanwhile other costs would rise because of changes to meal breaks, union rules and others.
“Employment changes have been designed with good intentions towards employees but are making the job of exporters more difficult. Exporters must absorb the extra costs or invest in technology to reduce staff numbers – an unfortunate outcome for this important sector.”
Issues affecting exporters include:
Rising minimum wage causing relativity wage increases:
“Once the minimum wage goes up, everyone is going to want their pay to go up.”
“As an exporter we can’t just put our prices up, so it is hard for us to maintain our profitability.”
“Companies exporting to Australia already face a freight barrier which is the equivalent of a 10 percent penalty. After wage increases it will be cheaper to manufacture in Australia and our competitive advantage in New Zealand will be gone.”
“If all our workers had to have their lunch break together, it would really slow down our productivity…sometimes our start times are dependent on weather, so we might not start until 9.30 some days, and then to have a 15 minute break at 10 am would be really impractical.”
When asked how they would meet the challenge to stay competitive, those companies that can afford it plan to invest more in technology and automation, reducing staff costs that way, or in one case looking to expand staff numbers in Australia where they consider it is going to be cheaper to manufacture than New Zealand.