The minimum wage will rise to $21.20 an hour from April 1 but business representatives have said it’s a “kick in the guts” for struggling firms.
The minimum wage is currently set at $20. The 6 percent increase is just above the annual rate of inflation recorded in the December quarter.
The Ministry of Business, Innovation and Employment (MBIE) said there were about 160,600 people aged 16 to 64 paid the minimum wage in 2021, or 7.8 percent of all wage earners. That is compared to 3.5 percent on the minimum wage in 2018.
“Many Kiwis who earn the minimum wage have gone above and beyond in our fight against Covid-19. We remain committed to supporting New Zealanders by raising their wages, as we continue to recover and rebuild from the pandemic,” said Workplace Relations and Safety Minister Michael Wood.
“With the arrival of Omicron, we are once again calling on many of our frontline workers – such as cleaners, supermarket workers, and security guards – to keep the country running as the virus spreads and cases begin to increase. I think everyone agrees those contributing so much to our Covid response deserve a pay rise.
“Raising the minimum wage will directly benefit approximately 300,000 workers and will help many households that have been most impacted by the effects of Covid. For someone working a 40-hour week on the minimum wage, this increase will see them earning an extra $48 a week, and almost $2500 more each year.”
Canterbury businesses are among those expressing that increasing the minimum wage by six percent with just seven weeks’ notice is a slap in the face.
"For the Government to immediately increase the cost of doing business at a time where businesses are already facing extreme pressure shows a worrying disconnect from the reality that businesses are operating in," said Leeann Watson, Chief Executive of Canterbury Employers’ Chamber of Commerce.
"Much of the pressures facing businesses have been induced by Government restrictions. The Red Light settings are a significant handbrake, the cost of doing business is through the roof and our labour market is severely strained. This decision will immediately increase the cost of doing business at a time where many businesses are scraping by.
"We are not opposed to an increase in the minimum wage but would have preferred to see a staged approach at a more appropriate time, not when restrictions are preventing many businesses from operating - and with far more notice, not seven weeks."
The starting out and training minimum wage will increase from $16 to $16.96. The Government has been steadily lifting the minimum wage, from $14.75 in April 2017.
The living wage, a measure designed to indicate the level of pay required to live a full life, lifted to $22.75 in September last year.