The Government, with its announcement the minimum wage will
increase by 25c an hour to $13.75, continues to steer a
difficult path as debate about the minimum wage compared with
a ''living wage'' continues.
It remains on firm financial ground by increasing the minimum
wage by only 1.9% because inflation, a cruel eroder of
capital value, has fallen away in New Zealand.
The latest figures show inflation at 0.9%, giving those on
the minimum wage a net 1% rise in income. While 25c an hour
is a small amount, the Government will of course be aware
many employers are suffering and job losses are mounting. So
far, the Opposition has not been able to make many inroads
into blaming the Government for those losses. But if the
minimum wage had been increased by more than the expected
amount, Labour Minister Simon Bridges would have understood
that higher wage claims in the private sector would have
Employers are nervous about paying higher wages, particularly
in the South where manufacturing has been showing signs of a
slowdown for several quarters. While parts of the tourism
industry seem to be doing well, there is a general
sluggishness there, as well as across many sectors. Employer
representatives will have been lobbying the Government for
the smallest of increases to avoid, they will say, the need
to lay off staff they cannot afford to pay.
This is a game of one-upmanship. On one side, employers want
wage rises kept to an absolute minimum to retain jobs. On the
other, trade unions say the minimal increase is not enough to
sustain New Zealand families.
A complicating factor is the help provided to those
hard-working families by several government-backed schemes,
such as Working for Families. People on low incomes qualify
for help from the Government through tax credits and
Both sides of the argument let themselves down by not
outlining the total weekly income received by low-income
Obfuscation does little to help. Adding to the mix is the
Left's campaign for a so-called living wage of about $18.40
an hour. Again, no details are provided about where that
money will come from. If employers are expected to pay, will
the Government provide help to save jobs? That seems
unlikely. It is more politically correct to provide tax
credits and other measures to help low-income earners than to
be seen to provide financial help to employers directly.
If the Government is expected to contribute to the living
wage in some way, will the increase come from adjusting the
Working for Families tax credits? It seems that with a static
pool of funds with which to work, rearranging or renaming the
payments is the only obvious solution.
The Government has also refined the rules around training and
starting-out wages, so that those qualifying will be paid no
less than 80% of the adult minimum wage. That again is seen
as an insult by many, who claim that it is unfair for a 16
year-old with no experience to be paid the same as an adult
worker - in this case someone aged 20 and above - with some
experience. But an entrance wage does give young people
without qualifications or experience a chance to get
themselves a start. That start should lead to better things
if the person has the drive and energy to better themselves.
And New Zealand is in danger of slipping further into a state
where people no longer have the will to better themselves. It
can be argued that young people are being taught that average
is good enough. In general terms, we are at risk of becoming
a nation that relies too much on handouts rather than effort.
Increasing the minimum wage above the rate of inflation,
without a rise in productivity in return, sends the wrong
message that we can continue to get something for nothing.
While, of course, it would be nice if the minimum wage could
be much higher, money has to come from somewhere, and,
realistically, large increases are not possible at the