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Summary
- Government to implement the minimum wage hike of NZ$20 from April this year.
- It says this would increase the purchasing power of daily wage earners, helping the local economy.
- Others say that this wage increase could impact small businessmen and ultimately lead to job losses.
The NZ government has given a go-ahead to the plan of enforcing the hike in minimum wage, ignoring the suggestion of Ministry of Business Innovation and employment (MBIE) to delay the increase till October and scale down the minimum wage increase by 25 cents, or 1.3% due to economic downturn.
The Government is proceeding with the hike of NZ$1.10, making it to $20 an hour from April 2021. This was up from $18.90 per hour, the minimum wage for previous year.
However, a court ruling said that the lockdown-impacted workers who were not on the roster were not entitled for minimum wages.
Government favours increasing the income of daily wage workers
Michael Woods, Workplace Relations and Safety Minister, said the minimum wage increase would hike wages by approximately $216 million.
He said that the hard-working daily wager deserved an increase in their wages and that the economy was in a stronger position than expected, despite COVID-19-induced restrictions.
He believes that increasing minimum wages help the local economy as the daily wage people go out and spend money on local products.
How minimum wage hikes would hurt small businesses?
Even though businesses were given three years to plan for the wage increase, a section of opinionists felt that it would greatly hurt the small businesses.
Supporters of Ministry of Business Innovation and Employment said that this would lead to job losses and to ensure that people spend money, they should at least have jobs.
Many felt that an increase of NZ$20 would be very steep in these times, considering the economic situation. They feel that small businesses are in a difficult situation and not in a condition to implement the minimum wage increase.
Further, it is not just the hike in minimum wage, but the total cost that small businesses would have to bear in terms of double sick leaves, fair pay pacts etc.
It must be noted that the last minimum wage hike led to cut in 6,500 jobs. This is going to repeat with this year’s minimum rise.
It may be worthwhile to note also that a recent court ruling said that the lockdown-impacted workers who were not on the roster were not entitled for minimum wages.
