Lowest-paid get 25c an hour extra

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Raising the minimum wage to $15 an hour was considered by the Government but ruled out because it would cost up to 8100 Kiwi jobs, the labour minister says.

Up to 100,000 workers will get a pay increase in April when the $12.50 an hour minimum wage rises by 25 cents an hour, equal to $10 a week for a fulltime worker.

Labour Minister Kate Wilkinson said the 2 per cent rise was in line with inflation and struck a balance between protecting jobs and giving a fair wage rise.

"We would love the minimum wage to be $15 an hour if it was sustainable and it didn't result in job losses."

But that was equivalent to a 20 per cent increase when many workers had received a nil increase.

The training and new entrants' minimum wage will increase from $10 to $10.20 an hour.

About 87,400 workers are on the minimum wage but that rises to almost 100,000 when those just above it are included.

But Labour's spokesman, Trevor Mallard, said the move was miserable and would be swallowed up by rising living costs and increases to ACC levies.

Ms Wilkinson said officials had looked at a nil increase and rises to $12.75, $13.10, $15 and up to $16.75.

A rise to $15 would cost between 5400 and 8100 jobs but $12.75 was "unlikely to constrain job creation" and not price workers out of the market, Ms Wilkinson said. "The Government is working hard to provide the right environment for economic growth and ensuring workers can maintain the buying power of their wages is part of that."

Business NZ chief executive Phil O'Reilly said the rise was "probably reasonable in the circumstances".

However, unions campaigning for a rise to $15 said it was inadequate and demeaning.

"Whilst an increase to the minimum wage is positive, this modest increase does nothing to help the financial situation of people who are barely able to survive on poverty wages," Service and Food Workers national secretary John Ryall said.

Chris Jablonski, 21, a student who earns a minimum wage as a cinema attendant at Hoyts, cleaning, checking tickets and selling food and drinks, said the rise would not go far.

"I don't really think that will be much more in the pocket. We had been looking at about $15 an hour." With prices increasing, small rate rises made little difference.

Mr Mallard said he would introduce a bill to lift the minimum wage to $13.75 this year and $15 by April 2011.

There were strong equity and labour productivity arguments for an increase and it would help close the wage gap with Australia, he said. It would also spur employers to invest more in training, technology and plant.

- © Fairfax NZ News