The minimum wage is going up faster than the average wage but unions are still unimpressed.

Workplace Relations Minister Michael Woodhouse has announced that the minimum wage will go up on April 1 from $14.75 to $15.25 an hour, a 3.4 per cent rise which compares with a 2.1 per cent rise in the average wage in the past year.

But Council of Trade Unions president Richard Wagstaff said the increase was just "treading water".

"Increasing the minimum wage by $0.50 to $15.25 an hour, or $610 a week (which is what a 40 hour week gross earnings would be), is simply not enough to sustain a family on," he said.


"The minimum wage should be enough to take your family to the doctor, buy nutritious groceries, replace your washing machine if it breaks down. The minimum wage should be a wage you can live on, not just exist on.

"In 2009 working people were campaigning for a minimum wage of $15. It's taken seven years to get to $15.25. $15 was a fair minimum wage in 2009, it's not a fair wage in 2016."

Labour leader Andrew Little said the "minuscule" rise of just $18 a week in take-home pay "will barely cover rent rises and shows how little the Government cares about growing inequality".

"In the last 12 months the average rent in New Zealand rose by $14 a week, $24 a week in Auckland, showing what a drop in the bucket today's increase is," he said.

This time last year the Ministry of Business, Innovation and Employment advised that a minimum wage increase of up to 3.5 per cent would not affect "overall employment growth".

Mr Woodhouse said in a paper to today's Cabinet meeting that an increase to $15.25 would lift wages for 152,700 low-paid workers but would have "negligible impact on employment growth".

The median wage -- the wage where exactly half the workforce earns more and half earns less -- is currently growing faster than the average wage, meaning that lower-paid workers are closing the gap with those earning around the average wage.

The median wage rose by 4.1 per cent to $22.92 an hour in the last NZ Income Survey for the year to last June, whereas the average wage rose by only 2.5 per cent to $27.49.

A separate survey, the Quarterly Employment Survey, shows that the rate of increase in the average wage slowed to 2.1 per cent for the year to December.