Yesterday’s announcement of a cautious increase is a welcome return to moderation:
The adult minimum wage rate will increase by 2 per cent to $23.15 an hour from 1 April 2024, Workplace Relations and Safety Minister Brooke van Velden announced today.
“This Government is committed to striking the right balance between protecting the incomes of our lowest paid workers and maintaining labour market settings that encourage employment,” says Ms van Velden.
“The economic context has changed significantly over the past year. While unemployment is currently low, the labour market is softening due to high net migration rates, constrained consumer spending and subdued economic growth. Given these economic headwinds, a cautious approach to the minimum wage is required this year.
“New Zealand’s minimum wage is one of the most generous in the OECD in terms of relativity with the median wage. As a ratio to the median wage, the minimum wage has increased from 62 per cent of the median wage in June 2017 to 72 per cent in June 2023. This has made it harder for businesses to issue pay rises or take on more staff.
“An increase to $23.15 will benefit between 80,000 and 145,000 workers and will give our lowest paid workers more money in their pockets, without hindering job growth or imposing unreasonable costs on businesses.
“Increases to the minimum wage under Labour far outstripped CPI. Between June 2016 and June 2023, overall, the minimum wage increased at nearly twice the rate of inflation, with a 48.8 per cent increase in the minimum wage and a 25.1 per cent increase in CPI. This Government’s approach sets the balance right.
“Moderate annual increases to the minimum wage reflect this Government’s commitment to growing the economy, boosting incomes and supporting job growth throughout New Zealand.
“The increase announced today takes into consideration the current economic conditions and the historically large increases to the minimum wage that have distorted relativities with other wage-earners. . .
. . . BusinessNZ Chief Executive Kirk Hope said the Government’s cautious approach to minimum wage-setting takes into account the inflationary pressures and general economic conditions that businesses are grappling with.
“Minimum wage increases coming too hard and too fast tend to impact very heavily on business, especially if they are unable to pass on their increased costs,” Mr Hope said.
“Small businesses in particular will be relieved to see the moderation in this latest rise.
“The significant increases introduced since 2017 have brought the minimum wage very close to the level of the median wage, at significant stress to small businesses.”
BusinessNZ’s briefing to the incoming government called for minimum wage-setting to be moderate, stable and predictable.
Retailers are relieved that the minimum wage increase has been limited to 2%, Retail NZ Chief Executive Carolyn Young says.
“Our latest Retail Radar quarterly survey of Retail NZ members, released yesterday, shows that wage increases are one of the major concerns for retailers right now,” Ms Young says.
“During these challenging economic times, every cost increase has to be passed on to consumers. So it is a relief that the Government has announced the adult minimum wage rate will increase by only 2% to $23.15 an hour from 1 April 2024.” . .
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The steep increases to the minimum wage over the past six years helped fuel inflation.
The irony in that is that the people the government was attempting to help were hurt by much higher costs and less jog security.
Moderate increases to the minimum wage can be managed, steep increases caused more problems than they solved.
Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.
3 comments:
The NZ minimum wage and many benefits are absurdly high. It dispirits me that the lumps of uneducated lard loafing about as cone shepherds, library, Winz, court etc security guards earn as much as I did as a degree level qualified engineer when I retired.
Mr Arthur , A date when you retired would assist in relevancy. Surely as I presume, extended retirement would assist the incontinence of early retirement.
>As a ratio to the median wage, the minimum wage has increased from 62 per cent of the median wage in June 2017 to 72 per cent in June 2023.
Are minimum wage earners included in the calculation of the median wage? They ought not to be, as this raises the issue of the sensitivity of the ratio to the proportion of workers on the minimum wage. In some countries, very few people earn the minimum wage; in some, most people do.
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