Minimum wage going up

3.00pm

The minimum wage is to increase by 5.9 per cent -- much greater than the rate of inflation -- the Government announced today.

Inflation over the past 12 months has run at 1.6 per cent, while private sector wages were boosted by 2.7 per cent in 2003, official statistics showed.

Public sector earnings rose by 4.6 per cent last year.

The minimum adult wage would increase from $8.50 an hour to $9.00 an hour, Labour Minister Margaret Wilson.

The minimum youth wage will increase from $6.80 to $7.20, to keep it at 80 per cent of the adult minimum wage, she said.

The changes would affect the nearly 30,000 people who earn the minimum wage, Ms Wilson said.

"The economy is going well and the labour market is tight, so now is the time to help those at the bottom and encourage people to join the workforce," she said.

The minimum wage had to remain high enough to provide a realistic incentive to work, relative to a benefit, she said.

"We believe we have made a balanced choice that maximises benefits for low-income workers while minimising negative impacts for employers," Ms Wilson said.

Based on Government figures, the changes will land employers with a wage bill increase of about $12,800 an hour -- or $512,000 for a full-time working week.

- NZPA