Minimum wage to rise to $12 an hour

About 200,000 workers on the lowest pay rates are to get a wage rise of up to $30 a week, after the Government agreed to lift the adult minimum wage to $12 an hour.

It is understood the Cabinet agreed yesterday to increase the current $11.25 an hour minimum adult rate to $12 – a 6.66 per cent increase.

The movement fulfils, ahead of schedule, a deal struck with support parties after the last election.

However, it is still short of the $15 an hour called for by the Council of Trade Unions, which will press for further increases at next year's election.

Under agreements with NZ First and the Greens, the Government pledged in 2005 to continue annual increases "with a view to it being set at $12 per hour by the end of 2008 if economic conditions permit". Labour Minister Trevor Mallard is expected to announce the rise later this week, to take effect at the end of March.

Last year it rose from $10.25 to $11.25, a 9.8 per cent increase.

Initially business groups were opposed to lifting the minimum wage, which was set at $7 an hour when Labour took office in 1999.

However, in recent years they became more relaxed as the labour market tightened and hiring staff became more difficult.

A survey taken last year of Wellington businesses found 69 per cent expected that an increase to $12 an hour by 2009 would have no significant impact on their businesses, though a similar survey in Auckland found 70 per cent were opposed.

CTU secretary Carol Beaumont said yesterday she did not know the final figure but a move to $12 would be welcome. That would amount to a 71 per cent increase since 1999.

However, the CTU believed that a rise to $15 – two thirds of the average wage – was needed to achieve an equitable living wage, improve skills, investment and productivity and help close the 30 per cent wage gap with Australia.

- © Fairfax NZ News