An Evaluation of the Implications of a Rise in the National Minimum Wage for Hotel Stakeholders


An Evaluation of the Implications of a Rise in the National Minimum Wage for Hotel Stakeholders

The following paragraphs offer a brief summer of the likely impacts in the New Zealand  Minimum national wage would have on the following hotel incredible stakeholders respectively  (1) Employees; (2) Human Resources(3) Owners (4) customers

1.    Employees
 Positive: as 55 would be earning more, they would likely be more motivated which in turn would be quality of customer service and overall efficiency
 Negative: Fear of losing their job as staff cutbacks may be likely in order to reduce the added wage costs and resulting drop in profits This would also affect moral resulting in a loss of efficiency and productivity

2.    Human Resources
 Positive: better wages attracts more skilled and qualified staff therefore a better quality of staff to choose from
Negative: potential cut backs in staff numbers would result in (a) worried about losing their job; (b) pressure for HR to work out what staffing is required and how to staff the hotel so that it works effectively with fewer staff (c) pressure on HR to increase staff training in order to increase productivity and pay for the extra cost in wages

3.    Owners
 Positive: Knowledge that employees are happier and more content in their work which may also result in better efficiency and productivity generally
 Negative: Prospect of cutting jobs to counter balance the new costs, or spend more money on (a) more efficient plant machinery to cover extra cost on the medium to long term (b) training current staff to be more efficient and efficient and productive therefore earning more money to help offset the new wage costs; and, (c) reduce spending on for example, marketing and quality of product - on the long term this may result in the hotel’s reputation suffering.
 Neutral: Alternatively, the owners may decide to enter to new markets or introduce innovation to become more competitive thereby attracting new, a rise in wage costs

4.    Customers
Positive: if staff are paid more they may well be happier and more motivated therefore giving a giving a better service.
 Negative: if staff is worried for their jobs, productivity overall service quality may suffer. Similarly if there have been staffs cutbacks, the remaining overall service quality may suffer

5.    Competitors
The need for more profit to cover the increase in wage costs may result in other business   competitors becoming more creative in attracting developing new markets through innovation.

Background of, and Justification for, the New Zealand Government's Proposed Increase to the National Minimum Wage
In recent months, the Opposition Parties and consumer groups have been calling for a raise in the national minimum wage from NZ$12.50 to NZ$15.00 (Mallard Puts Up Minimum Wage Bill, 27 June 2010). However, the National Government has instead proposed a NZ$0.25 to $12.75 (Wilkinson, 2010). The following paragraphs will outline the National Government's justification for this.

Currently, the Opposition and consumer groups argue that a NZ$2.50 rise in the minimum wage would: (1) reduce the wage gap between Australia and New Zealand thereby reducing immigration to Australia and enhancing New Zealand's' national economy (Richie, 2009); (2) increase industry efficiency and productivity as it would need to invest in better equipment and training to cover the extra cost (Richie, 2009); (3) discourage unemployment through better pay (Richie, 2009); and, (4) protect and enhance the living standards and quality of life for the poorest within society which, in turn, would aid the economy through increased spending (Richie, 2009).

The National Government argues, however, that raising the minimum wage by more than an Index linked NZ$0.25 (Minimum wage rise hits sour note with Maori Party, 28 January 2010) would force industry to cover the extra cost by (1) hiring fewer staff and thereby increasing unemployment; and, (2) raising prices thereby contributing to inflation (Mallard Puts Up Minimum Wage Bill, 27 June 2010).

Clearly this issue will continue into the future but, for now at least, from April 2010, the minimum wage will be NZ$12.75.
Mallard Puts Up Minimum Wage Bill (27 January, 2010). Dominion Post. Retrieved on 27 January 2010, from"   

Minimum wage rise hits sour note with Maori Party (28 January 2010). Otago Daily Times. Retrived on 02 March 2010, from:

Richie, K. (2009). New Zealand to bridge the wage gap between Australia and NZ. ABC News. Retrieved 02 March 2010, from:   
Wilkinson, IC (2010). Minimum Wage Increased to $12.75. Retrieved 2nd March 2010, from:      


The question belongs to Human Resource Management and it is about change in minimum wage rate and its implication on various stakeholders in an organization. The question is particularly about the implementation of minimum wage rate policy in New Zealand and it takes into account the implication for employees, owners, human resources, customers and nevertheless competitors as well. The solution gives detailed account of how each of the above mentioned groups would react.

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