Minimum wage rate to rise 1.5% next year to $23.50: Unions say it’s stingy, EMA says it’s fair

Brooke van Velden says the increase is appropriate given the state of the economy. Photo / Mark Mitchell

The minimum rage will go up slightly, from $23.15 an hour to $23.50 an hour next April.

Workplace Relations and Safety Minister Brooke van Velden made the announcement this morning.

A trade union coalition said the increase was effectively a pay cut and the Greens said the move would do nothing to stem the brain drain but a major employers’ group said the increase was a fair reflection of current economic realities.

“1.5% will be a wage cut in real terms for tens of thousands of people on the minimum wage,” Council of Trade Unions acting president Rachel Mackintosh said.

“There’s no evidence at all that increasing the minimum wage has a negative effect on employment.”

She told the Herald the increase was miserly and indicated the governing coalition was not looking out for working people.

“It’s unfair and unequal.”

Teanau Tuiono, Green Party MP and workplace relations and safety spokesman, said the 1.5% increase would not be in line with inflation.

“If you’re a worker and you’re renting and rents are going up 4.1% from November last year to November this year, it’s not keeping up.”

The Stats NZ consumers price index was up 2.2% in the September quarter compared to a year earlier.

Greens co-leader Chlöe Swarbrick and MP Teanau Tuiono, who says the minimum wage increase will fail to keep up with inflation or stem emigration. Photo / Mark Mitchell

Tuiono said the Greens supported a guaranteed minimum income, which during last year’s election campaign it calibrated as being $385 a week for individuals.

He told the Herald too many people were leaving the country partly due to better wages abroad.

“We’re seeing people upping sticks and heading over to Australia. This Government isn’t serious at all. They’re dreaming, mate.”

But the Employers and Manufacturers Association (EMA) said it was a realistic increase.

“It suits the times really. For a while there it was going up in quite large increments,” said EMA head of advocacy Alan McDonald.

He said the coalition was smart to give employers more notice about the wage changes than they’d received in previous years.

“Probably the best thing about it is it’s been flagged early. Most businesses work on a financial year from April 1.”

Some prior wage increases were announced only about two months before taking effect, which McDonald said made budgeting difficult.

Van Velden said the increase reflected the current economic climate.

”The New Zealand economy is still recovering from a sustained period of high interest rates and recessionary conditions,” the minister said.

“In that context, delivering a modest increase in the minimum wage strikes the right balance between supporting workers and limiting further costs on business,” van Velden added.

She said the Government had made significant progress tackling inflation.

Van Velden in a statement said the 1.5% wage increase would help employers and businesses to keep growing and providing job opportunities.

She also said the move would support plans to cut the number of people on jobseeker benefits.

”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 minister said she was giving employers more advance notice of the wage increase than they’d had in the past.

Labour Party workplace relations spokesperson Camilla Belich said the coalition’s priorities were wrong.

“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,” she said in a statement.

“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.