Key Takeaways
- The adult minimum wage in New Zealand will increase by 2% to $23.95 an hour from April 1 next year.
- The starting-out and training minimum wage rates will be set at $19.16, which is 80% of the adult minimum wage.
- The opposition parties have slammed the increase as "piddly" and "measly", claiming it does not keep up with the rising cost of living.
- The Government believes the increase strikes a balance between keeping up with the cost of living and not adding further pressure on the costs of running businesses.
Introduction to the Minimum Wage Increase
The New Zealand Government has announced a 2% increase in the adult minimum wage, which will rise to $23.95 an hour from April 1 next year. This increase is part of the Government’s annual review of minimum wages, which is required by law to take effect on April 1 each year. The starting-out and training minimum wage rates will also be increased to $19.16, which is 80% of the adult minimum wage. According to Minister for Workplace Relations and Safety Brooke van Velden, this new rate will benefit around 122,500 working New Zealanders and strikes a balance between keeping up with the cost of living and not adding further pressure on the costs of running businesses.
Government’s Rationale for the Increase
Van Velden stated that the increase aims to help minimum wage workers keep up with the cost of living, with inflation projected to remain relatively stable at around 2% from June 2026. She also mentioned that youth unemployment and wage compression were considerations when setting the minimum wage. Van Velden believes that the moderate increase will help young people gain employment, as they are more likely to earn at or below the minimum wage. Ensuring a balanced minimum wage rate enables young people to have access to entry-level jobs that can set them up for greater future success.
Opposition’s Reaction to the Increase
The opposition parties have slammed the 2% increase as an "effective pay cut" for New Zealand workers. Labour described it as a "piddly" wage bump and not keeping up with the rising cost of living. Labour workplace relations and safety spokesperson Jan Tinetti said that the Government’s minimum wage bump is weak and shows just how out of touch they are. The Green Party also criticized the increase, calling it "measly" and "another blow for workers". Green Party workplace relations spokesperson Teanau Tuiono said that raising the minimum wage by less than inflation is a political choice that will mean more people will face mounting debt and struggle to cover the basics.
Unite Union’s Response to the Increase
Unite Union, which represents hospitality workers, said it was "appalled" by the proposal, which is $4 below the Living Wage of $28.95. National secretary Shanna Olsen-Reeder stated that the increase will mean things get harder for many working people and their families. She also said that the Government continuously demonstrates it does not care about cost of living pressures. The union believes that a 45 cent increase on April 1 demonstrates a serious disconnect between the Minister for Workplace Relations and the working public.
Conclusion and Future Implications
The minimum wage increase has sparked a heated debate between the Government and the opposition parties. While the Government believes the increase strikes a balance between keeping up with the cost of living and not adding further pressure on businesses, the opposition parties claim it is not enough to keep up with the rising cost of living. The increase is expected to benefit around 122,500 working New Zealanders, but it remains to be seen whether it will have a significant impact on the cost of living crisis. As the country continues to navigate the challenges of inflation and economic management, the minimum wage will remain a crucial aspect of the Government’s economic policy.
