30 January 2002 Media Statement

Minimum wage to increase – fairer deal for low-paid workers and youth

Low paid workers will receive a boost in income following changes to minimum wage rates announced today by the Minister of Labour, Hon Margaret Wilson.

The Government has agreed to increase the adult minimum wage rate by 3.9 per cent from $7.70 per hour to $8.00 per hour, in line with annual average wage growth. The annual average wage grew 3.4 per cent in the year August 2000 to August 2001, implying a minimum wage rate of $7.96. Rounding this up to $8.00 will make it easier for employers by minimizing compliance costs and at the same time help increase recognition of the minimum wage rate. The increase will apply to all workers aged 18 years and over.

The youth minimum wage rate, applying to 16 and 17-year-olds, will increase from $5.40 to $6.40. The larger increase in youth rates reflects the Government’s earlier decision to increase the youth minimum wage rate from 70 per cent to 80 per cent of the adult rate.

It is estimated the increase in the adult minimum wage will affect 5,500 adult workers. The increase in youth minimum wage rates is estimated to affect about 6,900 16 and 17-year-olds.

“Since taking office the Labour/Alliance Government has made significant progress in ensuring minimum wages are fair,” Ms Wilson said.

“Since the start of 2000 the Government has brought the youth minimum wage into closer relativity with the adult minimum wage, lowered the age of eligibility for the adult minimum wage from 20 to 18 years in line with other policy areas, and restored the value of the adult minimum wage relative to the average wage.”

Following this year’s increase, minimum wages for youth will have risen by $2.20 per hour since the start of 2000 (from $4.20 to $6.40 this year). For adults the increase has been $1.00 per hour from $7.00 at the start of 2000 to $8.00 this year. Those aged 18 and 19 years have benefited to an even greater extent in making the jump from youth to adult minimum wages in 2001.

This year will also see the implementation of the training minimum wage once the Minimum Wage Amendment Bill comes into force. This will remove the current training exemption requiring the payment of minimum wage rates and replace it with a training minimum wage in line with the youth minimum wage of $6.40. This will apply if an employment agreement includes a certain level of relevant training towards a qualification registered on the National Qualifications Framework.

This year’s changes to minimum wage rates will come into force on 18 March 2002.

ENDS

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