Minimum wage rise 'insufficient'

20:43, Feb 24 2014

Labour has joined unions in attacking the Government's 50 cents-an-hour hike to the minimum wage.

Prime Minister John Key yesterday announced the decision to lift the minimum wage from $13.75 to $14.25 from April 1.

However the raise has been criticised by unions as "unfair" and this morning Labour leader David Cunliffe called it "insufficient".

"We've been saying at least $15 for quite a while, and I've said yesterday not only will we raise it to $15 in our first hundred days, but we'll raise it again six months later in our first year - April or May," he said on Breakfast.

Cunliffe said the second increase would be another "significant raise", but he would not say how much it would be.

"What's clear is working New Zealanders will be far better off under Labour," he said.

Cunliffe said it was important the living wage - currently defined as about $18.80 an hour - remained separate from the minimum wage.

The living wage is defined as the minimum income necessary for a worker to meet their needs that are considered to be basic.

"The minimum wage applies to everybody, the living wage is a very good and useful thing to have, and we're going to require that for the core state service and we're going to make it easier for companies who are living-wage employers to sell to the Government.

"It's a strong incentive to the market, but we won't make it compulsory."

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

The first step should be an increase to $15.50 this year.

"The minimum wage is the only way, other than through the tax and benefit system, that the Government has to ensure wage and salary earners, and particularly people on low incomes, benefit from a growing economy," he said.

"Instead, almost half of employees are getting no wage or salary increases at all. This minimum-wage increase goes little distance to addressing the inequalities in society."

Key said the decision to lift the minimum wage was made against the background of an improving economy, with a fall in unemployment to 6 per cent.

The rise would have a negligible effect on jobs, although it was estimated 2300 would have been lost if the minimum wage had gone up to $14.50, he said.

"I accept people will always want more."

Green Party co-leader Metiria Turei said the rise represented an increase of just $2.25 an hour in six years under National, or $4500 a year for a fulltime worker.

"That compares to the $35,500 a year increase in the prime minister's salary over the same time," she said.

Labour's associate spokeswoman for labour Darien Fenton said Key had missed an opportunity to send the message that "in his 'rock star' economy, the low paid can expect a fair share".

"While salaries at the big end of town might have continued their upward trajectory under this government, in real terms the minimum wage has actually decreased," she said.

Turei said the Greens would also lift the minimum wage to $15 immediately and work quickly towards a living wage for all workers.

"Well-paid CEOs might claim that a fair minimum wage would cost jobs but evidence from around the world shows that is just not true," she said.

"A higher minimum wage puts more money in families' pockets, giving them more money to spend, and that creates jobs."

Rosenberg said more than 100,000 people were on or close to the new minimum wage and well over 200,000 would have benefited from an increase to $15 according to official figures from 2012.

Meanwhile, Minister of Labour Simon Bridges said the starting-out and training minimum wages would also increase, from $11 an hour to $11.40 an hour - 80 per cent of the adult minimum wage.

The increase keeps the minimum wage at about 50 per cent of the average hourly rate.


Fairfax Media