Minimum wage to increase by 1.5% to $23.50 an hour from April
Tuesday, 17 December 2024
The minimum wage will increase by 1.5% to $23.50 an hour from April 1 2025.
Workplace Relations and Safety Minister Brooke van Velden said the move delivered a “modest increase in the minimum wage strikes the right balance between supporting workers and limiting further costs on business”.
The modest increase drew sharp criticism from unions and Opposition MPs.
The adult minimum wage rate is set to increase by 1.5% from $23.15 to $23.50 an hour from April 1 2025, a modest rise that has drawn sharp criticism from unions and Opposition MPs.
The starting-out and training minimum wage rates will be set at $18.80, to remain at 80% of the adult minimum wage.
“The New Zealand economy is still recovering from a sustained period of high interest rates and recessionary conditions. In that context, delivering a modest increase in the minimum wage strikes the right balance between supporting workers and limiting further costs on business,” Workplace Relations and Safety Minister Brooke van Velden said in announcing the move on Tuesday.
“This increase also reflects the significant progress the Government has now made on inflation, which has now returned to the Reserve Bank’s target band for the first time in more than three years.”
Van Velden said the move needed to support the Government’s objective of reducing the number of people on the Jobseeker Support benefit.
“To do this, we need to ensure employers and businesses can continue to grow and provide employment opportunities – which could be put at risk with a disproportionate increase in the minimum wage.”
Van Velden said young people are more likely than other demographic groups to be earning the minimum wage, and it was important to ensure they are not locked out of jobs as the minimum wage rises.
“The experience and life skills that young workers can gain in these minimum wage jobs can set them up for greater future prosperity and success.”
Labour’s workplace relations spokesperson Camilla Belich said a 35 cent minimum wage increase was simply not enough to address the cost of living increases.
“It’s less than the rate of inflation, it does equate to a wage cut for minimum wage workers for the second time under this Government,” she said.
“When I think the Government has put aside $2.9 billion for landlords and $217 million for tobacco companies, 35 cents for a minimum wage worker is really not good enough.”
Green Party workplace relations spokesperson Teanau Tuiono said the modest rise was “another blow to workers”.
“While the Government claims this move supports its objective of reducing the number of people claiming the Jobseeker benefit, it fails, miserably, to address the reality for many workers,” he said.
“The assertion that work is the pathway out of poverty rings hollow when minimum wage is no guarantee of the ability to pay rent, feed a family, or pay for essential things like healthcare.”
The Employers and Manufacturers Association (EMA) said welcomed the move, but sought more stability.
“While we support this modest increase, we continue to advocate for a more predictable and stable approach, such as an index-linked method, to future wage increases,” EMA Head of Advocacy Alan McDonald said.
McDonald said in the past, significant increases have often been announced with little notice and businesses have been left scrambling to adjust their budgets and payroll systems.
“The Government’s early announcement of this modest increase will give businesses time to prepare.”
New Zealand Council of Trade Unions (NZCTU) acting president Rachel Mackintosh said National promised to support New Zealanders through the cost of living crisis, but Tuesday’s decision would mean that the lowest income workers fall even further behind.
She said minimum wage workers were now $1206 a year worse off as a consequence of these “real term wage cuts”.
“Government has a responsibility to ensure that all workers have enough to afford rent, pay the bills, put good food on the table, and buy their kids what they need. How are workers meant to keep up with rising food and rent costs when the Government is cutting their wages in real terms,” she said.
“At a time when inflation is coming down, this was an opportunity for the Government to give workers a break and ensure they get real terms pay increases.”
The minimum wage over the last 10 years
2014: $14.25
2015: $14.75
2016: $15.25
2017: $15.75
2018: $16.50
2019: $17.70
2020: $18.90
2021: $20
2022: $21.20
2023: $22.70
2024: $23.15
2025: $23.50
Is the minimum wage enough? Have your say in the comments.