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Government outlines planned hikes in minimum wage

By Rebecca Howard

Dec. 19 (BusinessDesk) - Workplace Relations and Safety Minister Iain Lees-Galloway has outlined planned increases to the minimum wage between now and 2021.

The coalition government campaigned on increasing the minimum wage and formally agreed to reach $20 an hour by 2020. The first lift came this year when it rose 75 cents to $16.50 per hour on April 1.

Lees-Galloway today said the minimum wage will increase to $17.70 an hour from April next year – an increase of $1.20 per hour.

“The increase to $17.70 per hour will benefit approximately 209,200 workers and their families, lifting wages throughout the economy by $231 million per year and making a big difference for families. About a quarter of those earning the minimum wage – 36,000 people – are parents, with children," he said.

The minimum wage will then increase to $18.90 in April 2020 and to $20.00 the following year.

"These indicative rates are subject to each year’s annual review, in accordance with the statutory process, which will take into account the economic conditions at the time," he said.

Council of Trade Unions president Richard Wagstaff said "coming at Christmas, the announcement will be a huge relief for so many struggling people working out how they will make rent and juggle work and unpaid responsibilities next year. It is particularly heartening to see that there are further planned increases through to 2021 to provide certainty about minimum wages in the future."

According to Lees-Galloway, "with the labour market tight and unemployment at the lowest since 2008 at 3.9 percent, now is the right time to lift the wages of our lowest paid New Zealanders."

Strong immigration in recent years has meant any wage increases have remained muted and the lack of wage inflation is one of the factors that has kept interest rates at record low levels.

Earlier this month, the Treasury forecast relatively strong annual increases in hourly wages, peaking at 3.5 percent in the year to June 2021.

Underpinning those wage increases are expected pay equity settlements, the negotiation of new Fair Pay Agreements under labour market reforms that have yet to be legislated, and minimum wage increases already announced.



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