New Zealand’s minimum wage is to rise by 9.8% on 1 April, 2007, the largest increase the country has seen in seven years. Announcing the change today, Labour minister Ruth Dyson said that the minimum wage for workers over 18 would go up by $1.00, from its current level of NZ$10.25 to $11.25 per hour. Youth workers aged 16 and 17, including those in training, will receive a rise of $0.80, bringing their rate to $9.00 and keeping it at 80% of the adult minimum wage.
According to Ms Dyson, the boost “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 welcomed the announcement. Sue Bradford, the Greens’ spokesperson on industrial relations, argued that “there is no better time than during a strong economy” to lift what she regards as poverty-level minimum wages. Even so, she did not consider the rise overly generous. Once cost of living adjustments are taken into account, she said, the $12 an hour that the Greens called for during the 2005 election campaign now corresponds to just over $13. Were New Zealand to apply the European Union social standard, which sets the minimum wage at two thirds of the average wage, the figure would be $13.66.
HealthCare Providers New Zealand, by contrast, criticised the increase, pointing out that the gap between the minimum wage and the average caregiver wage rate currently stands at just 10% ($10.25 and $11.33 respectively). “If more funding is not made available then the government is agreeing to caregiving becoming a minimum wage occupation,” warned its chief executive officer, Martin Taylor. While insisting that caregiving is an important job that deserves better wages, Mr Taylor stressed that providers cannot pay out more than they are funded for. The sector depends on government funding, he explained, and it has already waited nine months for DHBs to agree to its funding claim for the previous minimum wage increase.
The government estimates that 110,000 adults, the majority of them women, and 9,200 youth workers will benefit from the change. Ms Dyson noted that, with four months to go before the changes come into effect, businesses would have time to prepare, adding that 1 April had been chosen to reduce compliance costs, as it coincides with the implementation date of four weeks’ annual holidays.
Looking further ahead, the government hopes to raise the adult minimum wage to at least $12.00 per hour by the end of 2008, although it will be keeping a close eye on the economy.
