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New Zealand: Minimum Wage to Increase to $15.25 Per Hour

(Mar. 1, 2016) On February 29, 2016, the New Zealand Minister for Workplace Relations and Safety, Michael Woodhouse, announced that the adult minimum wage will increase by NZ$0.50 to NZ$15.25 per hour (about US$10) from April 1, 2016.  (Press Release, Michael Woodhouse, Minimum Wage to Increase to $15.25 (Feb. 29, 2016), BEEHIVE.GOVT.NZ.)  A smaller increase of $0.25 to $15.00 per hour had initially been considered, but the government had decided to “err on the generous side” after officials advised there was “no discernible restraint on employment growth” from a $15.25 minimum. (Vernon Small, Minimum Wage Rise of 50c to $15.25 Will Cause Zero Job Losses, Govt Says, STUFF.CO.NZ (Feb. 29, 2016).)

Annual inflation in New Zealand is currently at 0.1%, and the Minister stated that “an increase to the minimum wage by 3.4 per cent gives our lowest paid workers more money in their pocket, without imposing undue pressure on businesses or hindering job growth.”  (Press Release, Michael Woodhouse, supra.)  The Minister further stated that the increase would not result in job losses, whereas an additional $0.25 increase to $15.50 could result in the loss of “up to a couple of thousand jobs.”  (Small, supra.)

The two other minimum wage rates, the “starting-out wage” and the “training minimum wage,” will also be increased from $11.80 to $12.20 per hour, in order to remain at 80% of the adult minimum wage.  (Press Release, Michael Woodhouse, supra.)  The starting-out wage generally applies to persons 16 to 19 years of age who have not yet completed six months of continuous employment with their employer or who are required to undertake industry training, while the training minimum wage applies to employees 20 years of age and over who are completing recognized industry training.  (The Minimum Wage, New Zealand at Work website (last visited Feb. 29, 2016).)

The new rates will be specified in the Minimum Wage Order 2016, which has not yet been published.  Section 5 of the Minimum Wage Act 1983 requires the Minister  to review the minimum wage rates by December 31 each year.  (Minimum Wage Act 1983, New Zealand Legislation website.)  The minimum wage has been increased every year since the current National Party-led government took office in late 2008, with the overall increase being 27% ($12 to $15.25).  This compares to inflation of 11% over the same period.  (Press Release, Michael Woodhouse, supra.)

Officials had also modeled the impact of a $19.25 per hour “Living Wage,” the 2015 wage rate that advocates claim is “[t]he income necessary to provide workers and their families with the basic necessities of life” and which would “enable workers to live with dignity and to participate as active citizens in society.”  (Press Release, The Family Centre, Social Policy Research Unit, Living Wage Aotearoa New Zealand 2016 Update (last visited Feb. 29, 2016).)  The government estimated that this rate “would affect 500,000 people, cost 28,000 jobs and [push] up costs to the Government by $500m.”  (Small, supra.)  On February 29, 2016, Living Wage Movement Aotearoa New Zealand announced a new Living Wage standard of $19.80 per hour, effective July 1, 2016. (Collette Devlin, New Zealand Living Wage Rate of $19.80 to Kick in July 1, STUFF.CO.NZ (Feb. 29, 2016).)  There are currently 47 “full-accredited living wage employers in New Zealand,” up from 27 in 2015.  (Id.; see also Accredited Living Wage Employers in NZ, Living Wage Movement Aotearoa New Zealand website (last visited Feb. 29, 2016).)