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Hospitality wage rates highlight impact of Covid-19, minimum wage increase and immigration thresholds

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The Restaurant Association has just released our 2020 Hospitality Remuneration Survey and the results show an average wage rate increase of just under 5 per cent, an rise which it is estimated largely reflects an increase in the minimum wage, as well as immigration remuneration thresholds which have the effect of driving wage rates up. Apart from these factors, many employers have currently indicated to us that pay rises for existing staff are on hold while the industry continues to grapple with the challenges and financial uncertainty of covid-19.

The increase to the minimum wage in 2021 is top of mind for many operators due to the fact that it affects not just those receiving the minimum wage but also those who are paid close to it, as employers increase the wages of workers paid above the minimum wage to maintain wage relativity. This flow-on cost is often reported by our members as a greater burden than increasing the wages of those on the minimum wage. The jump to $20.00 in 2021, along with the rising immigration salary thresholds, is being cited by many operators as serious threats to business viability.

A look at the industry’s wage rate over the past 6 years (2014 – 2020) shows wage rates have grown by 25 per cent on average. From 2019 – 2020 overall hourly wage rates increased by 4.8 per cent (after a 5.4 per cent increase the year previous) while salary rates increased by just over 1.9 percent (after recording a slightly larger increase from 2018 – 2019 of 4.0 per cent).

Perhaps unsurprisingly the highest overall average hourly wage can be found in Queenstown / Southern Lakes, at $22.76/hour, followed by Northland with $22.06, with Auckland helping to set the overall industry average, sitting at $21.20/hour. Further regional analysis shows a Restaurant Manager in Auckland will earn $26.57/hour on average, $25.36 in Wellington and $22.00 in Otago / Southland. A Chef de Partie earns $24.13/hour in Northland and $21.96/hour in Bay of Plenty, while a Bar Manager earns the highest hourly wage in Waikato ($27.00/hour), $3.34/hour more than the average hourly rate for this role of $23.66.

The Survey also forecasts future recruitment trends for the industry and despite the current uncertainty that exists as a result of covid-19 the 2020 Survey found that 51 per cent of employers intend to increase remuneration rates over the coming year (outside of the increases that come as part of the minimum wage going up). Those planning to increase wages are looking to provide a significant jump in hourly rates, with average increases of just under 10 per cent planned. 49 per cent intend to keep remuneration rates the same.

Around 54 per cent of employers also intend to keep staffing levels the same over the next 12 months, rather than increasing the size of their teams. This understandably reflects a cautious approach for operators until conditions begin to resemble pre-covid conditions again.

Key costs have been extremely challenging to meet in 2020, including wages, but also rent and increased supply costs. The increase to the minimum wage in 2021, concern around finding skilled staff with migrant workers visa’s expiring, along with Government proposals to increase sick leave entitlements by an additional 5 days and provide an additional public holiday are all unsettling business confidence. However, operators are still looking to the opportunities available in 2021, looking to become leaner, more efficient businesses, and encouraging opportunities for local job seekers where they are able.

An executive summary with analysis and data showing average remuneration rates for key positions is available here.

A copy of the full survey results, which includes full regional breakdowns is available to order here.

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