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The Green’s Minimum Wage Proposal is Not Infeasible

The Green’s Minimum Wage Proposal is Not Infeasible

By Matthew Neumann
4 September, 2014

The average wage in New Zealand is by no means unimpressive. It’s also completely irrelevant when the median income is around a lacklustre $30k. This makes the Green’s proposal to lift the minimum wage from $14.25 to $18 by 2017 an appealing one.

Various independent organisations including the Family Centre Social Policy Research Unit have concluded that $18+ is the minimum wage a person can live off without teetering precariously on the poverty line. Making sure every New Zealander is provided with the means to live adequately should be high on any governments agenda, and the proposed minimum wage increases would certainly be a step in the right direction in that regard.

However, its implementation isn’t without difficulty. Whilst John Key’s assertion that even Labour’s more moderate minimum wage increase would result in the loss of thousands of jobs is speculative at best, it’s not controversial to state that businesses would take a hit; a hit some may not be able to withstand.

Yet neither the Green’s nor Labour’s minimum wage increases are not undoable; it’s merely a matter of compensation. If wages are increased, and corporate tax is sufficiently decreased, it will alleviate the financial burden of higher wage costs.

This would of course negate the two billion dollar increase the Green’s purport the government would receive from income tax, which would instead compensate somewhat for the loss of corporate tax revenue. But it would ensure that New Zealand businesses continue to flourish, even when paying staff more.

This may be an unattractive proposition to those who would like to either see corporate taxes stay as they are, or rise, but businesses, big and small, from which many of us receive our livelihood, are the backbone of our economy. Their continued stability and growth is in the best interest of all New Zealanders, and minimum wage increases without sufficient cover may well undermine the health of many New Zealand businesses.

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