PM indicates the minimum wage will go up again next year

Business

Prime Minister Jacinda Ardern indicates COVID-19 won't prevent a minimum wage hike next year

29th Mar 21, 5:23pm by Jenée Tibshraeny

Image sourced from Flickr

Prime Minister Jacinda Ardern has indicated the government will increase the minimum wage again next year.

The minimum wage is going up from $18.90 to $20 an hour on Thursday. The starting-out and training minimum wage rates will also increase from $15.12 to $16 an hour.

The change will mean a minimum wage worker who works 40 hours a week will earn an extra $44 a week before tax.

Asked at a press conference on Monday afternoon whether people could expect another hike as at April 1 next year, Ardern said: “You won’t find a year where Labour governments haven’t moved the minimum wage. What I’m not committing to is what that rate will be.”

Asked to be clearer as to whether she was saying the minimum wage would rise in 2022, Ardern said: “What would be a change is if you didn’t see a change in minimum wage.”

She made the point it was normal for both Labour and National-led governments to increase the minimum wage every year.

Some employers have protested the latest 5.8% rise, arguing cost pressures are biting more than normal due to COVID-19.

What’s more, at $20, the minimum wage will be 27% higher than when Labour came into government in 2017.

Labour campaigned ahead of the 2020 election on following through with the pledge it made in its coalition agreement with NZ First to progressively increase the minimum wage to $20 an hour.

'Businesspeople deserve an opportunity to catch their breath'

ACT Party leader David Seymour was quick to release a statement after the press conference, opposing a minimum wage hike in 2022.

“At best this will duplicate wage increases that were already happening; at worst they’ll push wages up ahead of productivity growth and destroy jobs," he said.

“Businesspeople deserve an opportunity to catch their breath off the back of the minimum wage increasing $4.25 an hour since 2017, especially as they cope with the impact of COVID-19.”

Employers’ and Manufacturers’ Association (EMA) CEO Brett O’Riley called for the Government to slow or halt some of the legislative changes it's making that affect businesses.

On top of the minimum wage rise, O’Riley cited sick leave being extended by five days this year, Matariki becoming a public holiday in 2022, Fair Pay Agreements, easier access to pay equity negotiations, some new higher wage rates for immigrant works, and the move by more government agencies to make their contractors pay the living wage.

8,514 fewer people on Jobseeker Support now than in January

It’s difficult to know whether fewer people would've lost their jobs or had their hours reduced in the past year if the minimum wage wasn't hiked, and the government didn't pen in another hike for this year.

Businesses have been hiring more staff since the start of the year. According to the Ministry of Social Development, there were 8,514 fewer people on Jobseeker Support as at March 19 compared to the beginning of January.

However there were still 203,925 people on Jobseeker Support - 58,920 more than in mid-March 2020 - indicating New Zealand is far from out of the COVID-19 woods.

Businesses are relatively upbeat according to ANZ's February Business Outlook Survey. A net 10.6% of businesses surveyed had a positive outlook when it came to their employment intensions.

However looking at the retail sector specifically, which employs a number of low-wage workers, a net 4.4% of businesses had a negative outlook when it came to their employment intensions.

Pre-COVID-19, the unemployment rate was rock-bottom, despite there being decent minimum wage hikes and low business confidence.

Adult minimum wage as at April 1:
2021: $20
2020: $18.90
2019: $17.70
2018: $16.50
2017: $15.75
2016: $15.25
2015: $14.75
2014: $14.24

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87 Comments

by J.C. | 29th Mar 21, 5:28pm 1616992135

Hmmm....instead of minimum wage increases, how about food vouchers?

by JohnTrz | 29th Mar 21, 8:01pm 1617001285

The minimum wage must be raised to the recognised Living Wage (now $22.10/hour I think) and maintained thereafter to keep up with the cost of living. To pay less is injustice.

by sadr001 | 30th Mar 21, 7:50am 1617043842

Living wage is set at a level capable of supporting a family. No reason a high schooler working part time at Maccas needs to be at that level.

by youngdumbandbroke | 30th Mar 21, 8:29am 1617046141

If they're performing the same role and responsibilities, why not?

by sadr001 | 30th Mar 21, 8:50am 1617047457

Exactly, we should allow kids to make a lower wage than what is necessary to support a family and if those looking to support a family perform the same role then we pay them the same (maybe add a working for families tax credit?). So you get roles for kids and roles for those looking to support a family and they are distinct (maybe family supporting roles require a level 5 certification ~ between a high school cert and a degree)

by youngdumbandbroke | 30th Mar 21, 9:27am 1617049652

Sounds like you're picking winners there. If someone chooses not to have a family, why should they be financially penalised?

by refactornz | 30th Mar 21, 10:30am 1617053424

This thread is talking about minimums. Minimum wage, Living wage. There is nothing to stop a talented young person from earning more than the minimums.

by youngdumbandbroke | 30th Mar 21, 9:27am 1617049652

Sounds like you're picking winners there. If someone chooses not to have a family, why should they be financially penalised?

by Lanthanide | 30th Mar 21, 11:03am 1617055437

Flip the question on its head.

Teenagers are typically less reliable than those who are older in these sorts of jobs. Not all teenagers, but most. Some will ditch a roster at short notice, instead deciding to go to the beach or whatever else. Some will turn up drunk or stoned. It happens. Again, not all teenagers will have these issues, but most teenagers will have some sort of reliability issue, compared to older (20+) workers.

So why is a company like McDonald's going to pay the same amount of money for someone who is, on average, less reliable? If people never get a chance to get experience - because employers prefer to pay the same price for someone more reliable - who is ultimately being hurt?

Now, I think some sort of starting out wage is appropriate, but it shouldn't last forever. Something like 90 days discount, if at the end of 90 days someone can't do the job to the standard you expect, then they shouldn't be hired in that job.

And I'd say something like a permanent discount for 16 and 17 year olds, so as to encourage employers to give them the opportunity to get job experience in the first place.

by Hamish | 30th Mar 21, 4:02pm 1617073327

I've come across plenty of adults who are paid well more than min wage, are unreliable and often incompetent to boot. And some high enough up the hierarchy to do some real damage.

by b21 | 30th Mar 21, 8:48am 1617047315

Smells like ageism?

by sadr001 | 30th Mar 21, 8:51am 1617047519

Allow those looking to support a family to take the same roles as high school kids but just pay them the same lower wage. That should incentivise them to look for higher skill work on their own.

by b21 | 30th Mar 21, 9:20am 1617049238

In the real world people take the jobs they need, not everyone has the priviledge to choose.

by DonJ | 30th Mar 21, 8:11am 1617045113

Well if someone wants to earn that amount they should go get a job that pays that

by AKLCrusader | 30th Mar 21, 8:26am 1617046012

The living wage is a political measure, not a function of the value of a role or whether it can be afforded - or should all those business just 'transition' to use Hipkins words from their first term. It appears that Queenstown is 'transitioning' at this very moment, thanks Stuart.
Watch for massive inflation to come through if that happened, hurting those very people.

by Burni | 31st Mar 21, 6:54am 1617126896

So whats a living pension i wonder?

by CWBW | 29th Mar 21, 5:31pm 1616992267

No reason why people can't cope with rent increases.

by J.C. | 29th Mar 21, 5:33pm 1616992412

Trolling?

by thinktank | 29th Mar 21, 6:22pm 1616995366

He’s not wrong though.

by GV 27 | 29th Mar 21, 6:26pm 1616995566

Everyone else in the economy deciding to clip the ticket at the same time?

by Small Kev | 29th Mar 21, 6:51pm 1616997062

To pay for rent increase....all part of the plan.

by rastus1 | 29th Mar 21, 5:39pm 1616992771

So the govt is making it illegal for people to be employed based on their worth to an employer. If I were a young person with no skill who could into get a job I would be so angry. Angry that i cannot offer myself for what I am worth (i.e produce), get a start in life, gain some skills and improve the value of myself as an employee.

Thus the scrap heap for many youth.

by boreddad | 29th Mar 21, 5:54pm 1616993676

So you believe there shouldn’t be a minimum wage at all?

by rastus1 | 30th Mar 21, 8:47am 1617047273

You cannot legislate productivity. Minimum wage at $40k per year means the kid will need to generate $60K or so for the employer.
How realistic is that?

by Advisor | 30th Mar 21, 9:46am 1617050763

People don't seem to get that simple logic through their heads.

Most employers hiring workers at minimum wage are already scrambling due to close borders and falling discretionary spending. Amid this economic onslaught from COVID, comrade Ardern believes its a wise decision to slap a cumulative 13% increase (and more to come) on their wage expenses.

by Mr_Jolly | 30th Mar 21, 2:21pm 1617067293

When has she ever come close to remotely understanding how basic business works?

by Rosenstein | 30th Mar 21, 11:50am 1617058244

Well, that depends on the purchasing power of the NZD. Numbers matter very little. It's relative to what that counts. You've got China next door churning out high quality consumer goods for a few bucks an hour, and you have NZ chasing paper wealth through a greater fools strategy with property. We can't compete. There's too much money in the system. We're underprepared to defend our supply chains. We're woefully unself reliant. Raising the minimum wage is trying to paper over these structural deficiencies, but will raise unemployment among under educated and youth, meaning RBNZ fails it's maximum employment mandate which keeps interest rates lower which scours the investment into productivity, which makes us more uncompetitive, cycle repeats.

by scarfie | 29th Mar 21, 8:08pm 1617001689

Isn't that supposed to work by their being so many well paying jobs that a young person can pick and choose? The existence of the minimum wage is actually a failure of the market to supply this.

by murray86 | 30th Mar 21, 10:23am 1617053013

Bang on Scarfie. But it is also more complex than that. It is also in part a result of lazy employers taking the easy route to cut costs, rather than lift productivity. But your point hits at the heart of the matter - entry level jobs for the average, unqualified school leaver do not exist any more because the modern free market economy saw most exported.

by Yvil | 29th Mar 21, 5:43pm 1616992990

"the minimum wage has gone up by 27% since Labour came into power in 2017"

How many other comments here have received a 27% wage rise in 3 1/2 years ?

by Sam Hill | 29th Mar 21, 5:55pm 1616993748

Sounds like an awfully similar figure to how much rents have increased.

by thinktank | 29th Mar 21, 6:24pm 1616995490

My government organisation has had a formal pay freeze since February 2020 and an informal one since 2018. 15,000 public sector workers being told they need to tighten the purse strings.

by Whatwillhappen | 30th Mar 21, 8:20am 1617045601

The way around that is to get a new job. It's not a pay rise!

by morepork | 29th Mar 21, 6:30pm 1616995854

In absolute terms its up about 9000/year since 2017 for someone working full time. Not bad, but over 4 years I'm sure many here have got a lot more.

Btw, I have had a larger pay increase both percentage wise and in absolute terms but only by changing jobs. It's good to get into the habit of applying for a new job every year or so to check your market value, in my experience businesses have a bad tendency to underpay people who stick around.

by youngdumbandbroke | 29th Mar 21, 7:09pm 1616998140

I’ve received a 80% increase in my home’s paper value?

by Burni | 31st Mar 21, 6:57am 1617127044

So you can raise a reverse mortgage to exist given the cost increases.

by al123 | 29th Mar 21, 7:28pm 1616999329

More pertinent question: how many people have got a payrise worth more than $44 a week before tax?
I dont know why people get so hung up on percentages. If you start with with wildly different salaries (say 50k and 100k) the differential between them is only going to get bigger if they both keep going up by the same percentage.

by Palmtree08 | 30th Mar 21, 7:32am 1617042732

Yep, increasing inequality is built into the system, is glaringly obvious, yet for some reason, every bean counter seems to have the part of their brain that could comprehend exponentialism, lobotomised.

by dollar_bill | 29th Mar 21, 9:30pm 1617006613

how much have your rents gone up?

by Solve_it | 29th Mar 21, 10:02pm 1617008564

I guess I have now I think about it. I am not on minimum wage however

by bloodymigrant | 29th Mar 21, 11:03pm 1617012216

Well said. You took my words.

by AKLCrusader | 30th Mar 21, 8:29am 1617046157

Unions are pushing for it but no other waged people are getting increases like this. It's completely separated from reality, but that's a luxury when you are spending others money, something Cindy is an expert at. She won't care when it drives businesses to the wall in a crisis, they don't vote for her.

by RickStrauss | 1st Apr 21, 11:00am 1617228050

but that's a luxury when you are spending others money

That's the model of our socially subsidised and protected property investment market.

Minimum wage is barely crumbs spared for the poorer in NZ society. And this is in exchange for work, not just monopolising assets they got cheap.

by b21 | 30th Mar 21, 9:21am 1617049315

Real estate investors? 27% of a low number is still a low number BTW.

by b21 | 30th Mar 21, 9:23am 1617049393

Real estate investors? 1.27 times a low number is still a low number BTW.

by Sam Hill | 29th Mar 21, 5:54pm 1616993661

This government just keeps tinkering, they don't have any coherent philosophy. They are driving New Zealand businesses into the ground.

People will say "if you can't afford to pay x amount then you shouldn't run a business." Well that's exactly what will happen.

This is why people buy investment properties instead of starting a business.

by AKLCrusader | 30th Mar 21, 8:37am 1617046638

Coherent? - LOL, they're just not definitive enough

by linklater01 | 30th Mar 21, 11:13am 1617055980

Sam Hill,

Do you have evidence to back your claim that people are buying properties insread of starting a business? Frankly, I doubt it.

My son is GM of an NZ business employing 50 people. Everyone, including apprentices, is paid more than the minimum wage.

by Matua | 30th Mar 21, 1:13pm 1617063231

There isn't going to be evidence of it as it would all be anecdotal, it obviously can't be captured when someone invests in property that they've made that decision to buy vs starting a business. But historically the incentives have been very much skewed towards property investment as a low risk high (tax free) return. Why would you invest $200k in starting a business with a high risk it will fail when you could just invest in an investment property?

Do you have any evidence to back your claim that people aren't buying houses instead of starting a business? I doubt it

by RickStrauss | 31st Mar 21, 10:10am 1617138658

The last couple of decades in NZ provides plenty of evidence. The lamenting of the lack of capital available to businesses, vs. the overabundance of capital and debt shoved into housing. The Reserve Bank providing funds for lending that rather than stimulate business, flow straight into asset prices.

by julian | 30th Mar 21, 1:34pm 1617064463

That's effectively what I'm doing. Started buy properties a few years ago and looked in buying a few business a bit later. Have now firmly decided to stick to what I'm doing.

by Laywoman | 29th Mar 21, 6:11pm 1616994684

F#@k all + 27% still equals f#@k all. What are we talking $1/hr raise each year? So 2k p.a over 4 years for a 40 hr week? I reckon most people have seen such increases, well for my fellow 60,000 nurses we have seen more than this :)

by AKLCrusader | 30th Mar 21, 8:31am 1617046261

Government workers might have all had big % increases, but for those of us working in the private sector, we haven't. The last 4 years haven't been easy years.

by Averageman | 29th Mar 21, 6:21pm 1616995290

Wow. Anything to protect the rent ponzi. The usual will be along to claim rent increases.

by redcows1 | 29th Mar 21, 6:53pm 1616997188

Really means asking employers to help the govt which pays accommodation supplement to be kind to landlords ;)

by General Comment | 30th Mar 21, 8:42am 1617046944

I fully expect the government to announce an increase in the accommodation supplement to cover the inevitable increase in rents, and that this will be paid for by the increased tax income from removing interest deductibility on rental properties. And so the money-go-round continues.

I get the feeling it's not about putting the right amount of money in the right bank accounts, it's all about the velocity of money, endlessly chasing its own tail.

by PandaMonium | 29th Mar 21, 6:24pm 1616995448

Yay, more ill thought out policies on the way!

by Yvil | 29th Mar 21, 6:43pm 1616996636

I'm an employer and I have some lower wage staff (cleaners). I actually don't mind the minimum wage increasing by 27% in 3 1/2 years. I want the system to favour people working over being on the benefit

by Foxglove. | 29th Mar 21, 7:12pm 1616998348

The wider problem is that this nation needs workers for unsexy basic tasks such as sweeping the bus stations, emptying litter bins, clearing gutters and drains, and on and on. If that work is not done all and sundry will soon complain including the fat cats in their penthouses. The renumeration and bonuses of “high executives” has sky rocketed most obscenely this century and more. To put it figuratively those in the penthouse play lavishly while those in the basement toil unremittingly to tend the boilers and take out the trash ending up,for all their effort, little above subsistence. It is a huge, ghastly and undemocratic disparity in fair and measured equality, and as much as I doubt and distrust this government, better rewards for the bottom line workers in our society is neither a unworthy nor extravagant cause.

by Omnologo | 30th Mar 21, 7:01am 1617040866

You forgot to mention property investors also need those employed in unsexy occupations to pay the rent, which is also about to increase.

by LouB | 30th Mar 21, 7:57am 1617044249

Here, here

by npc | 30th Mar 21, 12:03pm 1617058983

You're right, it does need workers for those unsexy tasks. If people are unwilling to do the work, the employers will have to increase the remuneration on offer.

"High executives" take on a great deal more stress and have a skillset which is far more rare. They're also capable of enormous transformation of organizations. See Bezos, Musk - they're worth every cent.

by Foxglove. | 30th Mar 21, 4:08pm 1617073713

Yes & no. The two large NZ corporates Fletchers & Fonterra have been extraordinary successful lobbyists and influencers at government level particularly during that of the last National lot. Subsequently though, hardly a shining example on performance being illustrated on the balance sheet. My suggestion would be that the high ranking executive and CEOs played a greater part in that than the minions down on the shop floor.

by RickStrauss | 1st Apr 21, 11:03am 1617228193

And Theo Spierings

by Kate | 30th Mar 21, 10:09pm 1617095397

Well said.

by bw | 29th Mar 21, 8:05pm 1617001558

The problem isn't the level of the minimum wage - it's what that wage can buy.
And in a society where we legislate a goal of 2% minimum CPI rise per annum, we are just shooting ourselves in both feet every year.
Efficient businesses and countries create more product of a better quality at a lower price. Yet by mandating 'inflation' we will never achieve those goals.

If we aimed for 0% or minus CPI 'growth' whatever the minimum wage is, or whatever anyone earns goes further; we buy more, we make more and employ more workers in the process.
But sadly, our debt soaked society(s) can't handle any of that.

One day we'll realise that 'Inflation targeting' has had its day, and as it has been for some goodly time now, is highly counter-productive.
Only by returning value to money (i.e. what a wage can buy) can we assist those who need it. But that means a higher price for money (% rate) and cheaper goods (lower asset prices) and that will be fought by the sheer mass of the indebted - private and public - every step of the way.

by Rob Reid | 29th Mar 21, 9:14pm 1617005692

Yes, continual tuning to pressure us to bring forward expenditure (borrow) has played out to a choke point.
Combine that with societies that increasingly bleat for govts to fix stuff and save everyone and we get what we deserve.

by Squishy | 29th Mar 21, 8:11pm 1617001895

Makes sense to me, if the government wants to normalise asset (housing) prices it needs sustained inflation and the only way it gets sustained inflation is increasing wages. We'll probably get a real bump next year when borders reopen anyway, why not ride the wave?

by cjmain | 30th Mar 21, 10:24am 1617053059

Business got huge Covid support, time for them to pay it forward

by npc | 30th Mar 21, 11:58am 1617058709

You cannot be serious. The government forced a lot of businesses to cease to do business, then offered limited compensation.

by cjmain | 30th Mar 21, 12:40pm 1617061226

13.1 Billion and saved them by keeping Covid out. So yeah serious.

by Matua | 30th Mar 21, 1:18pm 1617063529

What about the hundreds of businesses that have failed because they were forced to close for lock-downs etc and the only real support they got was for wages that went directly to staff

by RickStrauss | 1st Apr 21, 11:06am 1617228389

Can you look at COVID-19-related economic impacts and business failures in the open for business USA and still think it's the fault of the lockdowns not the pandemic? And coverage that has highlighted that New Zealand has had less bad economic impacts than countries that have not had as effective non-medical interventions?

by Pusheen | 29th Mar 21, 11:43pm 1617014614

Yaay.. opportunity to increase rents, proportion to that increases.. No govt willing to impose prolong rent freeze & DTI for all - The numbers must be up, because in the current environment. Numbers instill the confidence.

by nktokyo | 30th Mar 21, 7:18am 1617041923

That should cover the increased cost of food. Cheers gummint

by npc | 30th Mar 21, 11:59am 1617058782

..which will further increase due to increased staffing costs, which in turn will hurt those on minimum wage with lower disposable incomes.

by murray86 | 30th Mar 21, 8:43am 1617046988

Fundamentally anyone who is against a 'living wage' being set at a reasonable level, is essentially voting for some form of slavery/bondage. A lot of the modern franchise chains are very good at this, e.g. the 'zero hour' contracts.

by nigelh | 30th Mar 21, 8:53am 1617047624

There is nothing wrong with zero hour contracts provided you are not tied to one employer. If that employer picks up the phone and says i need you and you indicate you have other work at the time, tough on the employer.

by refactornz | 30th Mar 21, 10:25am 1617053158

murray86 the cost of living quite obviously varies in different parts of the country yet there is a single "living wage" set for the whole country. As other posters mentioned there are also big cost of living differences between e.g. a teenager living at home and a sole breadwinner supporting a family. The concept of a standard national "living wage" is a joke.

by rastus1 | 30th Mar 21, 2:46pm 1617068813

Murray you cannot vote to be more productive. You need to upskill and up educate. Watch the youth unemployment stats start to rise.
NZ business inc should fund a kid to take a legal case against this govt. The argument would be that I can't get a job because you are penalizing employers by pricing me out of the market. Freedom of choice to provide my services for a $ that I am okay with.
Freedom verse socialism

by murray86 | 31st Mar 21, 8:33am 1617132792

Productivity is an often misunderstood concept in the work environment. Fundamentally an individual can only do so much, this can be supported by good training, practice and functional work layout. But for a business it is more than this. It is about investing in tools, machinery and technology to enable their staff to do more. A company I used to work for making safety helmets spent in the vicinity of $30K on a big press which was used to cut blanks for visors and other items. One of the owners told me it stretched them to find the money to do it but the uplift in productivity meant that the press paid for itself in under six months instead of the expected three years. They told me it was the best investment they had ever made. So you are right, you cannot vote to be more productive, but you can individually and as a team, and business work to support productivity. Just exhorting people to do more is not doing this.

and your law suit would fail because 'This Government' didn't create the situation NZ is now in. The Lange Government of 1981 did when they introduced Rogernomics, and no Government since has been prepared to admit it wasn't working.

Interestingly David Lange was rabidly anti-American, and I often wonder that if he had known that Rogernomics was an economic model created by Milton Friedman and heavily pedalled by the Americans across the world, would he have agreed to it's implementation here? Regardless it is clear that at that time across the world no one understood what the consequences of that model would be.

by nigelh | 30th Mar 21, 8:51am 1617047495

Some odd comments about rent increases and upping the minimum wage. Rent increases are part of the overall housing situation caused to a large extent by Labour's and the previous Nat govt housing policy. Minimum wage is to ensure "slave" wages aren't paid and cover CPI increases. Not because rents have gone up. Next those who tie minimum wage to rent increases will conveniently forget if rent goes down. Bit like Unions who demand wage increases citing a companies high profits but keep quiet when profits are down.

by Fonzy8 | 30th Mar 21, 10:08am 1617052103

This could well be the straw that breaks the camels back for all those little business's who have been hit so hard by government-imposed lockdowns. I see further exodus from the CBDs, with resultant vacancies and ghosttownisation...

by npc | 30th Mar 21, 11:57am 1617058630

Increased costs will be passed on to the consumer. Relatively, this harms those on minimum wage more, just like the increased rents will. That's assuming those individuals still have a job. Minimum wage workers are generally easier to outsource or automate, if their employer survives the increased costs.

This government is determined to create more poverty while giving the appearance of "helping". A process of increasing the size of their base - low information and gullible voters and those that want more "help".

by Matua | 30th Mar 21, 1:20pm 1617063653

"Increased costs will be passed on to the consumer." Except where that will make them anti-competitive so they really can't

by CWBW | 30th Mar 21, 5:15pm 1617077710

Let's hope Labour raise the minimum wage to $21.90 or more- it'll be good for everyone.

by Back 2 Basics | 1st Apr 21, 10:35am 1617226540

Increasing the minimum wage is a cost to employers and workers. Any increase gives the government more tax revenue! If the government is so concerned on people’s living condition why not give a tax free threshold like many other countries including Aus & Uk ?