Labour promises $2 boost in minimum wage

Labour Party leader David Cunliffe. File photo / Brett Phibbs

A $2-an-hour boost to the minimum wage, scrapping the 90-day work trial, and a Commission of Inquiry to set industry standards are part of the Labour Party's work and wages policy, launched today.

Labour leader David Cunliffe said within the first 100 days of taking office, he would repeal the 90-day trial for new workers, implement the Living Wage for public servants, and raise the minimum wage to $15 an hour, and to $16.25 in early 2015.

Business New Zealand chief executive Phil O'Reilly was quick to dismiss the policy as anti-growth - though he supported a Commission of Inquiry.

Mr Cunliffe said a minimum wage of $16.25 an hour would put nearly $4000 a year into the pockets of a minimum wage earner.

"That will make a huge difference to their families, make a major contribution to reducing child poverty, and strengthening incentives for people to get into work."

When asked about the cost to businesses, he said it was an increase that the economy could afford.

"When low-wage workers have more money in their pockets, they spend every dollar they earn. That ends up in the corner dairy, the panel-beater shop, the business down the road. In the end, it's win-win for business as well as workers."

Mr Cunliffe said 46 per cent of all wage earners had no pay increases last year, despite the economy growing by about 3 per cent.

"It is a travesty that 40 per cent of children growing up in poverty are living in working households."

A Commission of Inquiry would look at wage setting and industry standards. It would have a three person panel, including investigative staff.

Council of Trade Unions president Helen Kelly said industry standards were needed, especially in the forestry, farming and construction sectors.

"The booming sectors in the economy are paying some of the lowest wages, dangerous wages and longest hours - wages went down in farming last year.

"When Charles Finlay died in the Tokoroa Forest and was on $16 an hour after 27 years in the bush, people were shocked by that. These workers don't have a voice, and those stories need to be told to show that industry standards are affordable, and to paint a picture of what work is like without them."

The commission would lay bare the extent of the problems, she said.

"It will show up long hours, and increasing hours, it will show up insecurity -- thousands of workers are not on permanent hours or regular shifts -- it will show up a lack of investment in training."

She said higher wages would boost economic growth.

"$28,000 a year is 50 per cent of people in the Wairarapa are earning. You cannot run an economy [like that] ... The whole area is suffering from that."Labour also wants an aspirational goal of fixing the minimum wage to two-thirds of the average wage by the end of its second term, which would currently be about $18 an hour.

Mr Cunliffe made the announcement alongside MPs Andrew Little and Darien Fenton, before a small crowd of union workers at the Porirua Union & Community Health Service.