Concerns Voiced over Minimum Wage Rise

February 13, 2012 New Zealand Finance

poverty wage?New Zealand’s minimum wage is going up, but business associations and some politicians have already said that the increase is not appropriate in the current economic environment.

From April 1st 2012 the minimum wage rate in New Zealand will rise by NZD 0.50 to NZD 13.50 per hour, and the minimum wage for trainees and new entrants will also increase from NZD 10.40 to NZD 10.80 per hour. When the raised rate is fully implemented, a full time worker who is earning a minimum wage will see their pay increase by NZD 20 per week, equivalent to approximately NZD 1000 per year.

The Labour Minister of New Zealand Kate Wilkinson said that the new wage rate “… strikes the right balance” between improving the livelihoods of low paid workers and ensuring that there is no negative impact on employment levels. However, the increase is already being regarded as inadequate by opposition MPs.

Leader of the NZ First Party Winston Peters has called the increase a “pittance”, saying that the government favours the richest taxpayers in the country and not low income workers. The co-leaders of the Maori Party Tariana Turia and Pita Sharples said that the increase does not go far enough, and the minimum wage should be raised to at least NZD 16.00. The Labour Party spokesperson on labour issues Darrien Fenton said that the minimum wage needs to be at least NZD 15.00.

However, some national business associations are already voicing their concern with the minimum wage increase, saying that the extra costs will be passed on to consumers and will have a negative impact on the national economy. The president of Hospitality New Zealand Adam Cunningham explained that businesses in the hospitality industry with low profits would be likely to pass off costs to consumers, as they could not absorb the extra wage expenses. The chief executive of the Motel Association of New Zealand Michael Bains also said that a recent survey has shown that following the rate increase nearly 82 percent of motel owners would be forced to absorb the new costs personally, as there was no room left in their budget and little opportunity to raise the price of rooms.

Photo by jez s