Minimum wage increased by 50c an hour

The minimum wage will increase from $9 to $9.50 an hour from March next year, Labour Minister Paul Swain announced today.

The minimum hourly rate for workers aged 16 and 17 will move from $7.20 to $7.60 an hour, to keep it at 80 per cent of the adult minimum wage.

The changes, which will benefit about 35,000 adult workers and 6500 youth workers, will take effect on March 21, 2005.

Mr Swain said the Labour-led Government had increased the minimum wage every year since 1999.

"It is important that minimum wage rates remain high enough to provide a realistic incentive to work, relative to a benefit," Mr Swain said.

"We believe this increase provides the right balance between benefits for low-income workers while minimising negative impacts for employers."

Council of Trade Unions (CTU) president Ross Wilson said the increase was a signal to employers to follow the Government's lead on wages.

"The Government has increased the minimum wage by 5.6 per cent today, yet private sector employers are slow to recognise the need to increase pay -- despite persistent skill and labour shortages," Mr Wilson said in a statement.

The minimum wage was frozen at $7 per hour under the last National government. Labour had increased it a total of 36 per cent since 1999, Mr Wilson said.

Increases in the minimum wage alongside low unemployment showed that employer predictions of a rising minimum wage increasing unemployment were wrong, he said.

"The CTU is pushing for it to be lifted again to around $11 per hour -- based on restoring the minimum wage to just over 50 per cent of the average wage as it was in 1987."

Unions were also calling for the youth rate to increase to $10 per hour, alongside a commitment to phase out youth rates.

Today's increase still left New Zealand trailing Australia, where the minimum rate is A$12.30 ($13.24) an hour , Mr Wilson said.

Employers and Manufacturers Association (EMA) central chief executive Paul Winter said no one was wanting to see people not getting the support they need.

"But the issue is whether it's best done through keeping on pushing up the minimum wages, because inevitably it will price some work that people do out of the market," he said.

This could potentially affect sheltered workshops or people of limited capacity, he said.

EMA northern chief executive Alasdair Thompson said the latest increase followed a formula and the association had no problem with it.

- NZPA