Prime Minister John Key says whether companies pay above the minimum wage is "a matter for them" with the Government unlikely to endorse a living wage campaign.
Later this week the Kiwi Living Wage campaign will be launched, which is expected to push for a minimum wage of at least $18 an hour, well above the current $13.50 rate.
But Key said this was not on the agenda of the Government.
"What companies or council organisations choose to do in terms of paying their staff is a matter for them. The only area where the government plays a role is in setting the minimum wage. If you ask me whether we intend to raise the minimum way to 18 dollars an hour, the answer is no, not in the next 12 months," he said.
"There's always got to be a balance there between, obviously, people needing to pay their bills and meeting their liabilities, but the counter of that of course is, making sure they remain employed or get employment. That's the balancing act we're constantly trying to manage."
Key said the labour market "hasn't been that strong" in recent months.
Last week official figures showed that while unemployment fell by 0.4 per cent to 6.9 per cent, there was a sharp drop in the participation rate in the labour market, suggesting some workers may be dropping out by focusing on full time study or retiring earlier than they might have otherwise.
Mr Key said he encouraged companies to pay more where they could afford to, but the government was unlikely to endorse the living wage campaign.
"In the end, companies, if they can pay more, obviously you'd encourage them to pay more, but I'm not sure it's as simple as this is a magic number, I'll meet it."