Minimum wage to be increased in New Zealand

December 18, 2006

The minimum wage in New Zealand will be increased by 9.8% on 1 April, 2007, the biggest increase in New Zealand for seven years.

The announcement was made today by Labour minister, Ruth Dyson, and will make the current minimum wage for workers over 18-years NZ$11.25 per hour, an increase $1.00 from the current wage of $10.25. Youth workers and youth workers being trained aged 16-years and 17-years will see an increase of $0.80 to $9.00, remaining at 80% of the adult minimum wage.

Ms Dyson said: "The boost in the minimum wage will ensure that lower paid workers share the benefits of economic growth, encourage people to join the workforce and provide protection for some of New Zealand’s most vulnerable workers."

The Green Party of Aotearoa New Zealand has welcomed the announcement. Sue Bradford, spokesperson for the Greens' Industrial Relations, said: "There is no better time than during a strong economy for New Zealand to boost the current poverty level minimum wages."

Ms Bradford said: "The rise announced today is not overly generous. When cost of living adjustments are taken into account, the $12 an hour minimum wage level called for by the Greens during the 2005 election campaign, has now moved to just over $13 per hour. If one applied the European Union social standard - which sets the minimum wage at two thirds of the average wage - we would be setting New Zealand's minimum wage at $13.66."

However HealthCare Providers New Zealand is criticising the wage increases as currently the difference in minimum wage and the average caregiver wage rate is 10% ($10.25 and $11.33 respectively). Martin Taylor, chief executive officer, said: "If more funding is not made available then the government is agreeing to caregiving becoming a minimum wage occupation."

Mr Taylor said: "We believe caregiving is an important job that deserves better wages, but you cannot pay out more than you are funded for. This sector is depended on government funding and we have already been waiting 9 months for DHBs to agree to our funding claim for the last minimum wage increase."

The government believes that the change will benefit 110,000 adults of which the majority are woman, and 9,200 youth workers.

"With four months till the changes come into effect, businesses will have time to prepare. The date of 1 April was chosen to reduce compliance costs for businesses as it will coincide with the implementation date of four weeks’ annual holidays," Ms Dyson said.

The government wishes that by the end of 2008 they will be able to increase the minimum wage of adults to at least $12.00 per hour, however the government will be keeping a close eye on the economy.