Next week, New Zealanders will celebrate Matariki as a public holiday for the first time, but official estimates say it will cost some workers $7 million in lost income.
That’s on top of the $436m cost to public and private sector employers in paying for lost productivity and time-and-a-half for those rostered to work the holiday. Human resources consultants and small business owners such as ACT MP Chris Baillie are warning this is an added burden on struggling SMEs.
Because the holiday will always be on a Friday – a busy day for hospitality and retail businesses – the cost will be higher. The usual Monday public holidays have less impact, because many restaurants, in particular, are closed on Mondays.
In a submission to MPs, the PSA state sector union expressed its support for the new holiday, but also concern for the 43,000 casual workers who officials say will miss out on a day’s paid work.
“Casual workers are only paid for days worked,” says PSA senior advisor for policy and strategy Andrew McCauley, speaking this week to Newsroom. “The volume of workers affected highlights the pressing need for the Government to do further regulatory work around casual labour, to ensure that workers are only on casual contracts when their work is genuinely of a casual nature.
“It also highlights the issue of insecure and precarious work more generally: casual workers have less security, less say and are more vulnerable. Ensuring strong rights for all workers should be a continuing focus for the Government.”
McCauley says he hopes Government-led work around casual and contracted employees may help address this anomaly in the Holidays Act.
“Because things are so tight out here at the moment, and people don’t seem to be going out, it’s a perfect storm. We’re a hospitality business and we can’t just close up shop – so we have to take it on the chin.”
– Chris Baillie, ACT MP and publican
The Ministry of Business and Innovation, in its regulatory impact statement, says some employees may have reduced hours of work and experience loss of income if business owners decide to not open on the public holiday.
And in addition: “For casual workers, the additional leisure time provided by the day off would reduce their income as they are only paid for those days worked.”
For an additional Monday public holiday, about 39,000 people would have been affected – but because it was on a Friday, MBIE calculated about 43,000 casual workers could be affected at an estimated cost to their earnings of $7m for the day.
MBIE also estimates an additional public holiday will reduce New Zealand’s GDP by about $358.8m a year. “This would come in the form of foregone production due to businesses and other employers choosing not to operate resulting in net economic loss for New Zealand.”
On the flip side, MBIE says overseas research shows there are social capital gains to individuals and the community from observing public holidays. “While leisure time can be provided through other forms of leave, the provision of public holidays is associated with additional benefits due to the co-ordinated nature of the leave.”
Studies suggest the individual value of leisure time could range from 50 to 100 percent of average earnings. That means the individual benefits in the form of additional leisure time would be worth between $163.7m and $327.5m for the day, MBIE estimates.
In a notice this month, Employment NZ says Matariki will always fall on a Friday: “Employees who work over the Matariki public holiday must be paid at least time and a half. If the Friday is a normal working day for them, be given a paid day off at a date agreed by both parties.
“I am a small business owner and in the current economic situation the last thing we need is to pay for another public holiday.”
– Stephen Murphy, employer
“They are not entitled to a day in lieu if they only work on public holidays [or] they were on call but didn’t have to work, and being on call did not stop them doing what they wanted to do with their day.”
For example, the notice says, a doctor on call is not able to drink.
Employer Stephen Murphy made a select committee submission opposing the Matariki stat day. “I am a small business owner and in the current economic situation the last thing we need is to pay for another public holiday,” he argues.
ACT Party small business spokesperson Chris Baillie is another employer who says the added red tape and costs are all becoming too burdensome. He employs 25 to 30 staff – ranging from managers down to a couple of students on minimum wage – at The Honest Lawyer pub in Nelson.
He’ll be flying home from Parliament first thing next Friday, and going straight to his business to lend a hand washing dishes, to try to save on labour costs. “I’ve got fantastic staff, all of them. From my managers down to the cleaners of the rooms and stuff, they actually understand more about running a business than a lot of politicians do.”
The Honest Lawyer, on a headland south of the city’s airport, has a pub, restaurant, function room and 13 rooms for accommodation. It does up to 100 covers on a good night.
“I’ve just got off the phone to the bank manager, trying to get more funds,” Baillie says. “That’s just typical of businesses, all over the country, who really struggled to try and survive all of the other extra costs.”
Act doesn’t oppose Matariki, but argues it should replace another holiday – Baillie suggests getting rid of the regional anniversary days.
His manager calculates the new public holiday will cost the business an extra $5000 on top of a typical Friday. “Coming out of Covid, with everything else being being lumbered on businesses like the increase in the minimum wage, which affects a lot of businesses because it’s really hard maintaining a margin above that.”
“It is highly likely that the number of redundancies will start to increase due to Covid, particularly with the latest lockdowns, and adding further costs to businesses will only increase this.”
– Lisa Mackay, HRToolkit
He’s also watching nervously to see how his outsourced payroll system handles the first additional public holiday since 1974; he says he won’t know for certain until the following week.
“Friday nights are normally big days for us. Our staff get very well paid on a holiday: they’ll be getting time-and-a-half and a day in lieu which they can take off whenever they want during the year.
“What we hope is that more people will go out next Friday, to cover the additional costs. But because things are so tight out here at the moment, and people don’t seem to be going out, it’s a perfect storm.
“We’re a hospitality business and we can’t we just close up shop – so we have to take it on the chin.
“A couple of cafes in my hometown down here have recently closed the doors because things are just too tight. I know a lot of publicans who are really struggling at the moment, because of the times and everything’s going up, and you can’t just carry on increasing the price of a meal or a bed. So every time, the margins are getting slimmer.”
Lisa Mackay, whose firm HRToolkit has 320 customers around New Zealand, agrees that the Matariki holiday should replace another stat holiday (she would happily lose Queen’s Birthday) rather than being added to the burden on small businesses.
She was one of the few people to oppose an additional holiday, in submissions to a committee of MPs considering the bill.
“Though I support the celebration of Matariki, I do not support this being brought in as an additional public holiday,” she argued. “This is yet another significant cost on businesses, in particular at a time when many businesses are already struggling to meet the significantly increasing costs. The hidden costs of ACC, annual leave, sick leave, KiwiSaver and public holidays already amounts to 21 percent over and above the hourly rate of pay.
“Minimum wage has increased by 13 percent, an additional five day sick leave entitlement has arisen, expanded bereavement leave, in addition to dealing with all the Covid issues. It is highly likely that the number of redundancies will start to increase due to Covid, particularly with the latest lockdowns, and adding further costs to businesses will only increase this.”
Now, she has several clients who are looking to wind up their businesses, because the regulatory costs have become unmanageable. Among them is a four-partner consultancy. “They got together 10 to 15 years ago,” she says. “Now they’re saying, well, we’ve built up the practice, but actually we’re better to get rid of staff and just go out back on our own.”
“Another is a physiotherapy company that opened just before Covid. They’ve been fighting really hard to make a go of it, and they’ve gone, ‘I don’t see it improving. And I’m banging my head against a brick wall’.
“My experience is that employers were desperately trying to do the right thing by staff, through Covid. But it was their own mortgages on the line.
“For my small business, I’ve had up to seven staff. But if I went to the bank for any borrowing. I couldn’t borrow against the company. Even though I had a good solid steady turnover, I had to borrow against my house.
“There’s got to come a point where you just go, well, how much more money can we throw into this particular pit? When I’m not actually getting very much out myself? The average income for a small business owner is about $50,000.”
She says some so-called casual workers have regular days, so they should get paid. But for “genuine casuals”, they weren’t guaranteed that day of pay, she argues, “so they haven’t missed out on anything because they’re casual”.
“For those who do have regular days, then they should be being paid for the day. That’s what the model is at the moment. I confess, I know that many business owners get that wrong. They don’t really understand what casual is.
“I would much rather see us move to the system that the UK has, whereby they have 28 days leave per annum, but that is inclusive of the stat days. So there’s no discrimination for anybody who works part-time, they get 28 days pro rata-ed.”
Payroll systems are “always a nightmare”, she says, and businesses won’t know how their systems have handled the additional holiday until they try to reconcile pay and leave the following week.