Labour pledges $2 rise in minimum wage to $16.25

03:46, Jul 30 2014

Labour leader David Cunliffe says he would lift the minimum wage to $16.25 an hour in 2015.

"We think a $2 rise on the first year is a decent increase," he said at the launch of the party's work and wage policy.

That would put $4000 a year into the pockets of those workers.

The minimum wage for workers over the age of 16 is currently $14.25 an hour, and Prime Minister John Key says Labour's proposal would cost the jobs of 6000 people.

Cunliffe also confirmed a commission of inquiry into wage setting and workplace practices.

He said the party would also aim to raise the minimum wage to two thirds of the average wage over two terms in government "as conditions allow".

Labour's fair workplace inquiry would lift the lid on workers' pay and conditions ahead of a major revamp of industrial relations law, its spokesman Andrew Little said.

Extra powers may be needed to ensure it had access to workplaces and could take evidence in confidence.

In the first 100 days Labour would repeal recent National changes, including the 90 day ''fire-at-will'' probation rule.

Key hit back at the announcement.

"I think it's irresponsible actually for politicians in an election cycle to put 6000 jobs at risk," he said.

Scrapping the 90-day probationary period would mean fewer opportunities for thousands of New Zealanders, Key said.

New Zealand already had the highest minimum wage relative to the average wage in the developed world, he said.

Pushing it up too too fast would cost jobs.

"It's pretty well documented around the world that, yes, you can make changes and do that over time but if you think about the mass of employers in New Zealand they're not the big companies like Fletcher Building or Fonterra they're actually the hundreds of thousands of small businesses around New Zealand and they simply will employ less staff, fire people or ultimately not take on staff in the future."

Labour Minister Simon Bridges, reiterated Key's claims, saying the policy would hurt businesses.

"Labour's policy to immediately increase the minimum wage to $16.25 would cost at least 6000 jobs ... If you want to make people unemployed this is a good way to go about it," he said.

Setting the minimum wage "represents a careful balance between protecting low-paid workers and ensuring jobs are not lost".

"You cannot legislate your way to higher wages with the stroke of a pen. If it's not based on increased productivity, simply paying people higher wages is a cost that gets passed on to New Zealanders as higher taxes, reduced competitiveness, inflation and fewer jobs."

Research into the impact of the 90-day trial had showed that a third of employers who trialled staff would not have hired new staff without it. An "overwhelming majority" had kept staff on after the period ended, Bridges said.

Council of Trade Unions president Helen Kelly said the policy was "very exciting". Labour had set a clear path that would see wages rise and workers' bargaining rights restored.

The commission would determine the best way to implement industry standard agreements.

"It is to show the extent of the problem. In farming, forestry, construction... the booming sectors in this economy, they are paying some of the lowest wages - dangerous wages actually - and longest hours."

The commission would also show up long and increasing hours of work, insecurity and a lack of investment in training.
"It will show up the faults in the free market system around labour market wage setting."

But Business NZ said the policy released today would bring back a system that delivered counterproductive workplace relations in the past.

"Labour's policy would see a return to more collective bargaining, preference for unions, and more central direction over employment matters.

"The 90-day trial policy would be repealed and pay rates would be hiked for public servants and minimum wage workers," Business NZ chief executive Phil O'Reilly said.

That was inconsistent with the rest of Labour's rhetoric about skills, business development, growth of small business and growth in the regions.

Labour's idea of a workplace commission to advise on labour issues was reasonable and business would be comfortable with engaging with it, he said.

"But it would need to listen to evidence around both successes and problems of the labour market," such as the success of the 90-day trial.