The Government's decision to lift the adult minimum wage from $9.50 an hour to $10.25 will harm the economy, says Business New Zealand.
However the Green Party's Sue Bradford described the 75c increase as an "insult".
Labour Minister Ruth Dyson said yesterday that the minimum wage would rise from March
27 next year. The minimum youth wage - for 16 and 17-year-old workers - will rise from $7.60 to $8.20 an hour.
Business NZ chief executive Phil O'Reilly said the increase in the face of an economic downturn would not help growth.
"You can't just legislate higher wages into existence," he said.
"Forcing employers to increase wages by legislation actually harms unskilled people."
He said when the wages of low-skilled people were higher than the value they added to a company, they were less likely to be hired. The rise could also push up other wages.
"The best route to high wages is through higher skills and productivity. Business would rather the Government kept its focus on these important issues ... "
But Ms Bradford said that, while the increase was better than nothing, "for those struggling to adequately feed, clothe and house their families and themselves, a paltry $30 per week before tax is not going to go far".
The Green Party and NZ First want the minimum wage raised to $12 an hour, which the Government aims for by the end of 2008, depending on economic conditions.
NZ First labour spokesman Peter Brown said the increase was a significant move towards the $12 goal.
"Higher wages will improve living standards for New Zealanders and will also encourage greater productivity and investment," he said.
The Council of Trade Unions welcomed the increase.
"Unions will continue to campaign for public support for a $12 minimum wage and the abolition of youth rates," said president Ross Wilson.
The Greens also believe youth rates should not be lower.
A lightning strike was called at a KFC shop in Lincoln Rd, west Auckland, where worker Susan Tuanui said the rise would do little to help her raise five children. About 50 supporters joined the strike as part of a push for a $12 minimum wage.
- NZPA
