The Government has announced a 2% increase in the adult minimum wage, lifting it to $23.95 an hour from April 1 next year, a move criticised by opposition parties as “piddly” and “measly”.
The current minimum wage stands at $23.50 an hour. Under the decision, the starting-out and training minimum wage rates will be set at $19.16 an hour, remaining at 80% of the adult minimum wage.
By law, the Minister for Workplace Relations and Safety is required to review minimum wages annually, with any changes taking effect on April 1, as reported by 1News.
Workplace Relations and Safety Minister Brooke van Velden said the increase reflected the Government’s commitment under the NZ First–National coalition agreement to moderate minimum wage rises.
"This new rate will benefit around 122,500 working New Zealanders and strikes a balance between keeping up with the cost of living and not adding further pressure on the costs of running businesses," she said, as quoted by 1News.
"I know those pressures have made it a tough time to do business, which is why we have taken this balanced approach. With responsible economic management, recovery and relief is coming," 1News has quoted.
Van Velden said the increase was designed to help minimum wage workers keep pace with living costs, with inflation expected to remain relatively stable.
"The increase aims to help minimum wage workers keep up with the cost of living, with inflation projected to remain relatively stable at around 2% from June 2026," as reported by 1News.
She said youth unemployment and wage compression were key considerations in setting the new rate.
"Past minimum wage increases have driven wage compression, reducing the differentiation in pay between workers based on skills, experience or performance. The moderate increases agreed to by this Government for the 2024 and 2025 minimum wage decisions have started to ease this trend," as quoted by 1News.
Van Velden also stressed the importance of maintaining access to entry-level jobs for young people.
"Ensuring a balanced minimum wage rate enables young people to have access to entry-level jobs that can set them up for greater future success," 1News has quoted.
Opposition and unions condemn the decision
Opposition parties were quick to condemn the increase, describing it as an “effective pay cut” for workers amid ongoing cost-of-living pressures.
Labour said the rise was inadequate and failed to keep up with household expenses.
"Just like Christopher Luxon, this Government’s minimum wage bump is weak and shows just how out of touch they are,” Labour workplace relations and safety spokesperson Jan Tinetti said.
"If National were serious about helping businesses, they’d get real about the rising cost of living and start investing in people and businesses. Nearly 200 Kiwis are leaving a day because jobs are disappearing and they can’t afford to live here. New Zealand cannot afford another three years of National," 1News has quoted.
The Green Party also criticised the decision, calling it a “measly” increase that would disproportionately affect vulnerable workers.
"Once again, the people who stand to lose out are predominantly young, part-time, female, Māori, and Pasifika workers," said Green Party workplace relations spokesperson Teanau Tuiono, as reported by 1News.
"Raising the minimum wage by less than inflation is a political choice. It means, in no uncertain terms, that more people will face mounting debt and will struggle to cover the basics, let alone afford the unexpected costs of medical care, childcare, or urgent repairs," 1News has quoted.
Unite Union, which represents hospitality workers, said it was “appalled” by the increase, noting it remains well below the Living Wage of $28.95 an hour.
"We are in a cost-of-living crisis, and this will mean things get harder for many working people and their families. This is a Government that continuously demonstrates it does not care about cost-of-living pressures," said national secretary Shanna Olsen-Reeder, 1News has quoted.
"At Christmas, working people need to have some hope for the future. A 45-cent increase on April 1 demonstrates a serious disconnect between our Minister for Workplace Relations and the working public," as quoted by 1News.
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