Key rules out big rise in minimum pay

A hefty rise in the minimum wage is being ruled out as the recession bites.

Prime Minister John Key confirmed yesterday that the Government would consider a Labour Department paper next week, canvassing options including linking future rises to inflation. But with businesses struggling through a severe downturn, the Government is under pressure to keep a lid on wage costs.

Mr Key yesterday indicated sympathy for a rise in the minimum wage but ruled out a big leap, as urged by Labour and big unions. They want it raised from $12 to $15 an hour.

Mr Key made it clear yesterday that was too much: "I can't see any chance of that occurring next Monday."

But he signalled a modest increase was in the pipeline. "The minimum wage is important ... people need to live and meet their liabilities."

Labour is accusing the Government of dragging its feet on a decision for fear of alienating the business lobby. Business groups say any rise in the minimum wage, which affects about 100,000 workers, will force them to lay off staff.

The Government is due to announce a package of measures to help small businesses tomorrow.

Labour MP Trevor Mallard questioned why the Government had not moved quicker to make a decision on the minimum wage. Cabinet had had all the information it needed to make a decision since before Christmas but the Government had delayed the announcement for two months.

"The lowest-paid New Zealanders need certainty about what they'll earn and whether they can pay their bills. It's time for some positive news on the economy."

Yesterday Mr Key rejected suggestions that the Cabinet had put off a decision for fear of overshadowing its package for small businesses.

The package is expected to include easing penalties on provisional tax payments and reducing compliance costs.