Workplace minister Michael Wood says minimum wage hike will boost local economy

Workplace Relations and Safety Minister Michael Wood. Photo / RNZ, Richard Tindiller

By RNZ

From April 1, 2021, the minimum wage will rise to $20 - up from $18.90. The boost is expected to lift the incomes of almost 200,000 people.

For someone working 40 hours on minimum wage, the boost means $44 extra in the bank each week.

Workplace Relations and Safety Minister Michael Wood said the rise would boost wages across the economy by $216 million.

He said signalling the minimum wage increases over three years helped give businesses much-needed certainty.

He told Morning Report that the Government looked at a range of factors, including a report from MBIE and the timing.

"We've seen that the economy is in a stronger position than many people predicted and after the year of Covid we also think that those hardworking cleaners, security guards, checkout workers deserve a good pay rise."

He said the MBIE data did not hint at how many jobs might be lost due to the hike, but it did suggest fewer new jobs - about 8000 to 9000.

It would help boost the local economy and employment because "people on the minimum wage go out and they spend their wage on local goods and services".

Businesses were given three years to plan for this wage increase, he said.

"We want businesses to be sustainable and to be able to support employees with a decent wage. I think for too many years New Zealand has been something of a low-wage economy. That's not who we are as a people, that's not who we want to be. And actually, it's not the way towards a really productive economy that's good for everyone."

Wood will next year outline further changes the Government plans to make.

He has not ruled out lifting the minimum wage in line with the living wage of $22.10.

National predicts more job losses

National Party finance spokesperson Michael Woodhouse told Morning Report if an increase in wage led to an increase in spending locally, a $40 minimum wage would create "a utopian economy".

To ensure people spend, it was important that they had jobs, he said.

He would not increase the minimum wage to $20 "and certainly not right now".

Woodhouse said the Government was ignoring the economic situation small businesses were in.

"It's not just the minimum wage, it's total cost of doing business including doubling sick leave, an extra public holiday and the possibility of fair pay agreements going ahead will all act as a handbrake on businesses' ability and willingness to employ more staff."

The last minimum wage increase "came at a cost of about 6500 jobs, this one will do that same, in just the time when we need business to employ as many people as they can".