The Government will increase the minimum wage by 75 cents to $16.50 per hour on 1 April 2018, and to $20 by 2021.
National supports regular increases to the minimum wage and lifted it progressively from $12.60 to $15.75 between 2009 and 2017. However these increases need to be carefully calibrated to minimise the number of job losses that can occur if minimum wage rates increase too quickly.
The proposed increases over the next three years are dramatic. They will slow the economy down, increase the cost of living and hurt our small businesses. We’ll also see job losses particularly in small businesses that can’t easily put their prices up.
New Zealand is a country of small businesses. If the Government keeps adding unreasonably to the costs of those businesses, they will stop investing and stop growing which means less jobs overall.
The Government seems to think that the minimum wage can go up as much as you like and with no cost to employment. If that was the case why not just make it $40 an hour? The answer of course is that every increase in wages means businesses have to either outsource jobs offshore or to technology, or raise their prices. None of that is good for New Zealanders.
If the Government really cared about increasing the incomes of lower paid workers they would not have cancelled the changes in tax thresholds the previous Government promoted that would have increased after-tax incomes. Instead they are putting all the burden of lifting incomes of lower-paid workers directly on small businesses.
The way to get wages up sustainably is to have a strong economy which lifts wages as employment grows, not by shrinking employment and diminishing opportunities.