A realistic minimum wage

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 followed.

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 accommodation allowances.

Both sides of the argument let themselves down by not outlining the total weekly income received by low-income families.

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 moment.