With the minimum wage rise in April this year, there was much discussion around the impact this would have on hospitality businesses who typically employ a number of workers on the minimum wage, or just above. Changes to the level of the minimum wage affect 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. Often this flow-on cost is reported by members as a greater burden than increasing the wages of those on the minimum wage.
“With minimum wages going up it requires for all wages to go up and it is making it increasingly difficult to keep wage costs at a manageable level eg less than 40%. It is always a hard balance as we want to be able to pay well but remain a viable business at the same time. With wage costs going up, we, as owners, are gradually taking less.”
MEMBER RESPONSE, 2019 REMUNERATION SURVEY
The 2019 Hospitality Industry Remuneration survey helps to analyze the impact of the minimum wage rise, as well as other economic impacts, providing insightful data on wage and salary rates for over 100 hospitality positions across 11 regions nationwide. The survey is drawn from over 700 businesses, who employ over 12,000 people. Although several factors are threatening to push wages in foodservice businesses up the survey confirms that currently, wage rates for most positions are rising at a steady pace.
The 2019 remuneration survey indicates that over 5 years (2014 – 2019) wages rates have grown by 20 per cent. From 2018 – 2019 overall hourly wage rates increased by 5.4 per cent (after a 4.75 per cent increase the year previous). Salary rates also increased by just over 4.0 percent (after showing a small decrease from 2017 – 2018 of -1.9 per cent).
At a glance of the 101 positions which were also surveyed in 2018, 80 achieved increased hourly rates in 2019. These rates included a 4.66 per cent increase for a bar manager, a 9.41 per cent increase for a Maitre D’, and a 3.65 per cent increase for Head Chefs, who earn on average $33.74/hour in 2019.
The highest overall average hourly wage can be found in Queenstown / Southern Lakes, at $21.48/hour, followed by Auckland with $21.07. Further regional analysis shows a Head Chef in Canterbury will earn $27.49/hour on average, $26.17 in Auckland and $24.36 in Otago / Southland. A Head Waiter earns $22.70/hour in Wellington and $18.88/hour in Bay of Plenty, while a Bar Person earns the highest hourly wage in Northland ($19.29/hour), $0.56/hour more than the average hourly rate of $18.73.
“We pay above minimum wage but can’t quite afford the living wage yet. We do believe that we need to pay workers in this industry more. But the costs have to be managed very carefully.
Around 30 per cent of full time hospitality workers and 18 per cent of part time workers are on a visa. Migrant workers are seen as an essential part of New Zealand’s hospitality industry, with many comments made in the survey that highlight frustration with the visa application process and visa wait times.
The Survey also addresses forecast trends with operators. The 2019 Survey found that 54 percent of employers intend to increase remuneration rates in 2019 (outside of the increases that come as part of the minimum wage going up). Those employers will increase remuneration rates at an average of 5.6 percent overall.
Around 58 percent of employers also intend to keep staffing levels the same over the next 12 months, rather than increasing the size of their teams. This reflects a degree of caution for operators. Key costs have risen significantly for hospitality businesses, including wages, but also rent and food costs, and this is affecting business confidence.
“Based [where we are], with the extra pressure of seasonality, finding quality staff is almost impossible and competition for roles has pushed remuneration rates up. Minimum wage increases with no compression into senior roles has also factored into this. Weekly staffing costs increased by 3% last year with a similar turnover.”
Seven new hospitality businesses open every day of the year (and six close) in New Zealand so there will continue to be many new opportunities for those employed in the industry. The challenge for operators is around finding the key staff, with the right fit, for their business.
FOR MORE INFORMATION: Download the 2019 Remuneration Survey Executive Summary here.
A copy of the full survey results, which includes full regional breakdowns can be purchased here.