Tuesday, May 21, 2024

Minimum Wage Increases by 2%

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2 per cent rise for minimum wage

The Government has officially declared an increase in the minimum wage by 45 cents an hour, setting it at $23.15 starting April 1.

This adjustment reflects a 2 per cent enhancement from the existing minimum wage rate of $22.70. However, with the cost of living expected to ascend by more than 2 per cent within the upcoming year, the financial situation for the estimated 80,000 to 145,000 New Zealanders earning the minimum wage may not see the anticipated improvement.

Brooke van Velden, the Minister for Workplace Relations and Safety, acknowledged the Government’s “cautious approach” towards the alteration of the minimum wage, attributing it to the economic “headwinds” the nation is currently experiencing.

2 per cent rise for minimum wage

Amidst the economic turbulence, characterized by minimal growth and the looming threat of increased unemployment due to the sustained impact of high interest rates, van Velden emphasized the contrast between the current administration’s policy and that of the previous Labour-led Government. The latter saw minimum wage escalations significantly exceed the rises in the Consumer Price Index (CPI).

“Between June 2016 and June 2023, overall, the minimum wage increased at nearly twice the rate of inflation, marking a 48.8 per cent increase in the minimum wage against a 25.1 per cent rise in the consumers price index,” van Velden highlighted, substantiating the current Government’s moderated stance on wage hikes.

Moreover, van Velden pointed out the narrowing margin between the minimum wage and the median wage—a disparity that has seen considerable reduction over the years. In 2017, the minimum wage amounted to 62 per cent of the median wage, while in 2023, it escalated to 72 per cent.

“This has posed challenges for businesses in terms of providing pay raises or hiring additional staff,” van Velden remarked. She attributed these obstacles to “historically large increases to the minimum wage that have distorted pay scales relative to other wage earners.”

In line with the increase in the minimum wage, training wages and starting wages will also see an adjustment. They will maintain their rate at 80 per cent of the adult minimum wage, thus increasing to $18.52.

The recent announcement illuminates the Government’s attempt to balance between supporting workers and managing the broader economic implications, striving for stability in a volatile financial landscape.

Alexandra Bennett
Alexandra Bennetthttps://www.businessorbital.com/
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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