The minimum wage will increase on April 1 next year, the Government announced this morning.
The adult minimum wage will move to $23.50 an hour – a 1.5% increase on the current rate of $23.15 per hour.
The starting-out and training minimum wages will increase to $18.80, remaining at 80% of the adult rate.
Workplace Relations and Safety Minister Brooke van Velden confirmed the change today.
She said: “Cabinet’s decision reflects the current economic climate and labour market conditions.
“The New Zealand economy is still recovering from a sustained period of high interest rates and recessionary conditions. In that context, delivering a modest increase in the minimum wage strikes the right balance between supporting workers and limiting further costs on business
“This increase also reflects the significant progress the Government has now made on inflation, which has now returned to the Reserve Bank’s target band for the first time in more than three years,” van Velden added.
The Government is also prioritising reducing the number of people on the Jobseeker Support benefit, the Minister said.
“To do this, we need to ensure employers and businesses can continue to grow and provide employment opportunities – which could be put at risk with a disproportionate increase in the minimum wage,” she continued.
“Young people are more likely than other demographic groups to be earning the minimum wage, and it is important to ensure they are not locked out of jobs as the minimum wage rises.
“The experience and life skills that young workers can gain in these minimum wage jobs can set them up for greater future prosperity and success.”
Announcing the move now give businesses time to prepare for the change, van Velden said.
The NZ First-National coalition agreement included a commitment to “moderate increases to the minimum wage every year”.
The Minister for Workplace Relations and Safety is required by law to review the minimum wages annually, to take effect 1 April each year.
Minimum wage announcement ‘effective pay decrease’ – Labour, Greens
The Opposition has described the minimum wage increase as an “effective pay decrease” and a “real terms pay reduction for many”.
Labour workplace relations and safety spokesperson Camilla Belich said the decision to only lift minimum wage by 1.5% while inflation is 2.2% means that “take home pay goes backwards”.
“The groceries and other goods they’re purchasing rise with inflation, so the money is worth less. The Government has announced an effective wage cut, right before Christmas.
“Many lower paid New Zealanders would’ve been hoping they’d be back on the up come April next year, given the government cut their wages in April this year too. Despite advice that recommended a 4% increase to the minimum wage, they chose to only lift it by half that.
“This Government dished out $2.9 billion to landlords and $216 million to tobacco companies this year, but have only found 35c for a minimum wage worker. They also scrapped the top up for workers with disabilities. They are looking after the wrong people.”
Green Party workplace relations spokesperson Teanau Tuiono described the announcement as “another blow to workers” and “insult to injury” for workers.
“While the Government claims this move supports its objective of reducing the number of people claiming the Jobseeker benefit, it fails, miserably, to address the reality for many workers.
“The assertion that work is the pathway out of poverty rings hollow when minimum wage is no guarantee of the ability to pay rent, feed a family, or pay for essential things like healthcare.”
He said the decision to raise the minimum wage by less than inflation means more would face debt and would struggle to cover the basics.
“The Government’s decision today does not reflect what New Zealanders deserve. It’s time for bold action that prioritises the well-being of workers and their families, not more pandering to the rich at the expense of the rest of us.”
