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Minimum wage set to increase to $23.15 from 1 April

(file image) Photo: RNZ / Rebekah Parsons-King

The minimum wage will increase by 2 percent, from $22.70 to $23.15, from 1 April.

Training wages and starting wages will remain at 80 percent of the minimum wage rate, thereby increasing to $18.52.

In a statement making the announcement, Workplace Relations and Safety Minister Brooke van Velden said given economic headwinds with a softening labour market and high net migration, a cautious approach was required to raising the minimum wage.

"An increase to $23.15 will benefit between 80,000 and 145,000 workers and will give our lowest paid workers more money in their pockets, without hindering job growth or imposing unreasonable costs on businesses," van Velden said.

"Moderate annual increases to the minimum wage reflect this government's commitment to growing the economy, boosting incomes and supporting job growth throughout New Zealand," she said.

"The increase announced today takes into consideration the current economic conditions and the historically large increases to the minimum wage that have distorted relativities with other wage-earners."

The formal swearing-in of the new coalition government by Governor-General Dame Cindy Kiro on 27 November, 2023.

Workplace Relations and Safety Minister Brooke van Velden Photo: RNZ / Samuel Rillstone

Van Velden said New Zealand's minimum wage was one of the most generous in the OECD in terms of relativity with the median wage.

"As a ratio to the median wage, the minimum wage has increased from 62 percent of the median wage in June 2017 to 72 percent in June 2023. This has made it harder for businesses to issue pay rises or take on more staff."

Last year, the minimum wage increased by $1.50 an hour, with the then Labour government saying the impact on inflation would be "negligible".

But van Velden was critical of Labour's moves, saying the minimum wage increases under the Labour government "far outstripped CPI".

The minister for workplace relations and safety is required by law to review the minimum wages annually.

The Ministry of Business, Innovation and Employment recommended in its review that the wage be increased by 4 percent to $23.60, which was expected to impact the earnings of about 164,400 workers, resulting in an economy-wide wage bill increase of $145 million.

"[This increase option] is estimated to produce no restraints on employment in 2024, therefore meeting the objective relating to job losses. It also roughly protects the real current value of the minimum wage as it approximately matches Treasury's and RBNZ's forecast CPI inflation rate for the March 2024 quarter (4.3 percent)."

ACT's campaign promises for a three-year freeze on the minimum wage, reversing new sick leave entitlements, and the scrapping of the 2 January public holiday did not make it into the party's coalition agreement with National.

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