The government has announced a 50c increase to the minimum wage from $14.75 to $15.25 an hour effective on April 1.
Workplace Relations Minister Michael Woodhouse says an increase to $15.25 per hour will directly benefit approximately 152,700 workers and will increase wages throughout the economy by $75 million a year.
“With annual inflation currently at 0.1%, an increase to the minimum wage by 3.4% gives our lowest-paid workers more money in their pocket, without imposing undue pressure on businesses or hindering job growth,” he says.
The starting-out and training hourly minimum wages rates will increase from $11.80 to $12.20 per hour.
The government has increased the minimum wage every year since it has been in power, with the hourly rate at $12 in 2008.
Today’s announcement comes in above expectations, with Mr Woodhouse himself previously saying the government was considering increasing the minimum wage to at least $15 an hour.
Employment and Manufactures Association (EMA) chief executive Kim Campbell has been a long-standing critic of increases to the minimum wage.
Last year when asked about the increase in the minimum wage, Mr Campbell called it nutty” and maintained that attitude when asked about the possibility of a hike late last month.
“The minimum wage is not the default setting. It should not be the default setting for all wages but, unfortunately, that’s what it’s become,” he said.
He is concerned the minimum wage hike will make New Zealand “uncompetitive,” as pressure on the lower end will, in turn, lead to headline wages going up.
Traditionally, wage increases are tied to inflation. With consumer price index inflation at all-time lows – falling 0.5% in the December quarter of last year – there will be many scratching their heads over the increase in the minimum wage.
Green Party workplace relations spokeswoman Denise Roche says $15.25 is not good enough.
“Our policy is that the minimum wage should progress to keep pace with the cost of living, and inflation,” she says.
She says the Greens' policy at the last election was to gradually increase the minimum wage to a living wage, which would be $19.25 an hour.
“The minimum wage is still not enough to live on,” she says.
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