Minimum wage rises 50c to $15.25, politicians spit tacks

Monday 29th February 2016

The minimum wage is to rise by 50 cents to $15.25 an hour from April 1 2016.

The increase, announced by Workplace Relations and Safety Minister, Michael Woodhouse, will also see the starting out and training hourly minimum wages increase from $11.80 to $12.20 an hour.

Woodhouse said the move would benefit both individuals and the economy: "An increase to $15.25 per hour will directly benefit approximately 152,700 workers and will increase wages throughout the economy by $75 million per year". He said the increase of 3.4 percent was set against inflation at 0.1 percent and would put more money in workers' pockets.

But Labour leader Andrew Little described the rise as "miniscule". He said the rise equates to $18 a week when set against the growing cost of renting.

"In the last 12 months the average rent in New Zealand rose by $14 a week, $24 a week in Auckland, showing what a drop in the bucket today's increase is," he said.

The Public Service Association welcomed the increase, but said it still fell short of what New Zealanders needed to live a decent life. National Secretary Glenn Barclay said any increase for our lowest-paid members is a good thing but "$15.25 an hour still leaves many New Zealand families struggling to cover even the most basic costs. Many of our members, especially thousands of home support workers, say it's tough to make ends meet - and this won't do much to help".

One union went further saying the government had missed a trick to jump start the economy. FIRST Union general secretary Robert Reid said New Zealand needed to raise the minimum wage to $19.46.

“With a low CPI and the threat of deflation, New Zealand is in a unique situation. It could have substantially increased the minimum wage to boost spending in the economy (as the Reserve Bank has called for); reduced inequality; and given working people the peace of mind that they cannot be paid less than they need to live,” Reid said.

However ACT leader David Seymour criticised the increase, saying it would impose a heavy burden on regional employers. “In Auckland, $15.25 might not sound like much, but small businesses in the regions who generally charge less will struggle to bear the cost. Hikes to the minimum wage will discourage new employment, and lead to more lay-offs and business failures. This is a wage set for the distorted Auckland economy. Why should the rest of the country have to bear the same costs?”

The government is keen to press its case in raising the minimum wage. It argues that by raising the minimum wage from $12 to $15.25 it has increased wages for the low paid by 27 percent compared to inflation of around 11 percent. In that time Statistics New Zealand figures show average hourly earnings have risen from $24.67 to $29.38, a rise of 16 percent, meaning the relative position of minimum wage earners has improved since National took office.

However a 2013 Ministry of Business, Innovation and Employment report warned that the higher the minimum wage is relative to average wages then the number of workers affected by the rises increases, potentially leading to employers making staff redundant or holding off taking new workers on.

BusinessDesk.co.nz

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