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
87 Comments
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)
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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?
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?
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.
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
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.
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.
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".
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