New Zealand hikes minimum wage to $23.15 starting in April

The adult minimum wage in New Zealand will see a "cautious" two per cent increase to $23.15 an hour starting April 1, according to Workplace Relations and Safety Minister Brooke van Velden.

The increase is expected to benefit between 80,000 and 145,000 employees, said Van Velden, adding that it also won't hinder job growth or impose unreasonable costs on businesses.

"This government is committed to striking the right balance between protecting the incomes of our lowest paid workers and maintaining labour market settings that encourage employment," the minister said.

Van Velden also attributed the increase to a softening labour market due to high net migration rates, constrained consumer spending, and subdued economic growth.

"Given these economic headwinds, a cautious approach to the minimum wage is required this year," she said.

According to the minister, training and starting wages will remain at 80% of the adult minimum wage, raising them to $18.52.

"The increase will be given effect by an Order in Council to be signed by the Governor-General on the advice of the Minister," van Velden said.

Businesses welcome hike

Businesses across New Zealand welcomed the newly announced increase, while thanking the government for hearing their calls for a moderate hike.

"Minimum wage increases coming too hard and too fast tend to impact very heavily on business, especially if they are unable to pass on their increased costs," Business NZ chief executive Kirk Hope said in a statement. "Small businesses in particular will be relieved to see the moderation in this latest rise."

Retail NZ also said their members are relieved over the increase.

"It is a relief that the Government has announced the adult minimum wage rate will increase by only 2% to $23.15 an hour from 1 April 2024," Retail NZ chief executive Carolyn Young said in a statement.

This comes as wage increases emerged as one of the top issues cited by retailers (43%) in the previous quarter, second only to inflation (57%).

Retail NZ said they are "pleased" that van Velden listened to their calls before Christmas to restrain this year's minimum wage increases amid pressures retailers face.

'Heartless' increase

In contrary to the relief from businesses, unions are calling out the government from the restrained increase it announced.

"The government is increasing the minimum wage by a paltry two per cent to $23.15. This falls well short of the Living Wage rate, which is currently $26. That is simply heartless at a time when so many are doing it tough," said Council of Trade Unions economist Craig Renney in a statement.

Renney pointed out that the increase falls short of the four per cent recommended by the Ministry of Business, Innovation, and Employment.

"That's an annual difference of $944.32. If the minimum wage had kept up with inflation, that would have been a $1,274 difference annually – or $24.52 a week," he added.

The economist further accused the government of cutting employees' wages in real terms, which will make it difficult for employees to keep up with rising food and rent costs.

"This is a government that doesn't seem to know how difficult life is for working people and those on low incomes. It's simply out of touch and focused on tax rises for the wealthiest people and landlords instead," Renney said.