Key trumpets 'hard-won gains' in minimum pay rise that's derided by his opponents.

More than 100,000 low-paid workers will get a pay rise in little more than a month after the Government yesterday said the minimum wage would rise by 50c an hour to $14.25 from April 1.

The increase, announced by Prime Minister John Key, was double the widely expected 25c rise but leaves the legally allowable pay rate well short of what campaigners for the $18.80-an-hour "living wage" believe is necessary as a bare minimum to sustain a small family with one fulltime and one part-time wage earner.

Announcing the increase and a rise in the "starting out" and "training" minimum wages of 40c an hour to $11.40, Mr Key said a string of increasingly positive economic indicators represented "hard-won gains" that the Government wanted to build on.

"We know there's a balance between raising the minimum wage and making sure we don't put businesses or jobs at risk or create a disincentive for firms to hire new employees. Today's announcement strikes the right balance."


He said the increase would have a negligible effect on the availability of jobs, while a slightly higher rise - to $14.50 - would have cost about 2300 jobs, ministers were advised.

Mr Key said the increase would affect about 109,000 people - the 54,000 on the minimum wage, and about 55,000 others now earning an amount between the current and new minimum wage.

The Rev Charles Waldegrave, one of the Anglican Family Centre researchers pushing for a $18.80 living wage, said yesterday's increase was a move in a good direction.

"It's better than the 25c that was probably expected and a 50c-an-hour increase will clearly make something of a difference for people. It won't take families with children out of poverty but it will certainly ease the load to some extent."

Labour's policy is to lift the minimum wage to $15 within 100 days of taking power and to lift it further within nine months. Labour MP Darien Fenton said the Government had "once again blown an opportunity to give Kiwi workers on the minimum wage a decent pay rise".

"Today was the perfect time for John Key to send a message that in his 'rock star' economy, the low paid can expect a fair share. He didn't. Instead he's singing from the same old National songbook and some 200,000 Kiwi workers will still be taking home less than $15 an hour."

Council of Trade Unions economist Bill Rosenberg said the increase was "unfair given several years of stagnating wages, an economy that is starting to grow, and widespread concerns about how that growth will be shared".

Act leader-elect Jamie Whyte said it was "hard to think of a crueller policy" for people most in need of work than increasing the minimum wage.


Mr Key hadn't acknowledged "the unseen effects of minimum wages". "Those businesses which don't directly lay off workers will be discouraged from employing more, or replacing those who leave voluntarily in future."