Minimum wage to rise to $20/hr

The Government has confirmed it will raise the minimum wage to $20 per hour from April 1 next year.

Workplace Relations and Safety Minister Michael Wood said, as New Zealand recovered and rebuilt from Covid-19, the Government was committed to supporting New Zealanders by raising wages.

‘‘There are many Kiwis who earn the minimum wage that have gone above and beyond in our fight against Covid. I think everyone agrees those who served us so well during lockdown – including supermarket workers, cleaners, and security guards – deserve a pay rise.

‘‘This minimum wage increase will lift the incomes of around 175,500 New Zealanders – which means $44 more each week before tax for Kiwis working 40 hours a week on the minimum wage.’’

There has been debate in recent weeks between those who think the minimum wage should increase to the level of the living wage, at just over $22 an hour, and those who think that the increase this year to $18.90 should be unwound in light of the pandemic.

The Ministry of Business, Innovation and Employment had estimated a minimum wage of $18.90 would result in a ‘‘restraint on employment’’ of

6500, although it later said the impact of Covid-19 would probably have increased the effect.

‘‘The rise in the minimum wage is estimated to boost wages across the economy by

$216 million, giving New Zealanders more money to spend at local businesses. Increases to the minimum wage can also promote productivity, which is good for businesses too,’’ Wood said. ‘‘We’re taking a balanced approach and supporting both

employees and employers through the pandemic.

‘‘We’ll be providing access to a short-term absence payment to support employers to ensure their employees are able to follow public health guidance while waiting for a Covid-19 test. In the event of Covid-19 resurgence, we have put in place a new resurgence support payment to help firms cover their fixed costs and committed to the wage subsidy scheme for alert level 3 and above.

‘‘Signalling the minimum wage increases over three years has helped give businesses much needed certainty.’’

The starting-out and training minimum wages will also rise to $16 per hour, 80 per cent of the adult minimum wage.

‘‘The rise in the minimum wage is estimated to boost wages across the economy by $216 million.’’

Michael Wood Workplace Relations and Safety Minister