Just how far will wage increase go?
Calls for Govt to take advantage of Covid-19 to push reset button
The Workplace Relations Minister is not ruling out lifting the minimum wage in line with the living wage. A new report from the Helen Clark Foundation and the New Zealand Institute of Economic Research is calling for the increase, saying it would boost productivity and create a more inclusive economy.
The Opposition says the report is misguided, and piling more costs on businesses will lead to job losses.
NZIER deputy chief executive Todd Krieble said that in the wake of Covid-19, the Government should take advantage of the chance to push the reset button.
“We’re not going to be able to rely on migration, at least not for a while, and we have incredibly cheap borrowing at the moment, it’s really the first time in our history that we’ve had that sort of alignment. It’s an opportunity to invest in our people and be more inclusive with growth,” he said.
Krieble said lifting the minimum wage to the level of the living wage of $22.10 would boost productivity.
“It would encourage investment from employers in skills, either technical skills or soft skills, and it would help employees to hang around.”
The Government increased the minimum wage three times last term, moving from $15.75 to $18.90.
During the election, Labour promised to raise it to $20 next year.
Minister of Workplace Relations Michael Wood said after that, he would take stock and decide what to do next.
He was not ruling out matching the living wage.
“Well-remunerated workers live better lives, are able to meet their basic needs better and there’s very strong arguments to say that’s better in terms of workplace maintenance, building a skilled and productive workforce, those are compelling arguments,” he said.
“But then we get to the crunch point of where do we draw the line in terms of where wages should sit. So I’m not closing off that option, I’m saying I want to look at the full range of factors before making decisions.”
National Party small business spokesman Todd McClay said the report was misguided and it would lead to increased costs to consumers — and more job losses.
“What the business community needs at the moment is policies to help them grow the economy and create jobs, not greater costs that will slow the job market down, and unfortunately I think the suggestion from the [Helen Clark] Foundation will have the opposite effect than they’re hoping for,” he said.
Business New Zealand chief executive Kirk Hope said the Ministry of Business, Innovation and Employment’s advice to the Government was that a living wage would reduce the number of available jobs by 30,000.
Hope said young people would be the most affected.
“The demographic of those people that lose their jobs are disproportionately young people, 18 to 24, because they are often the lowest skilled people.”
However, Krieble said that was short-sighted — and Covid-19 had already caused 11,000 vulnerable jobs to go.
“The jobs that were going to be lost have gone and I would back employers, I think we should back ourselves as a country to make the right sorts of investments that would lift productivity,” he said.