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Labour raise the minimum wage

Written By: - Date published: 7:05 am, December 19th, 2019 - 32 comments
Categories: labour, minimum wage, wages - Tags:

No Right Turn reports,

Last year the government gave us the biggest ever increase in the minimum wage, from $15.50 to $17.70 an hour. This year, they’re doing it again:

New Zealand’s minimum wage will rise to $18.90 an hour from April 1, the Government has confirmed.

Workplace Relations and Safety Minister Iain Lees-Galloway said it would mean a quarter of a million workers were better off next year.

“The new $18.90 rate will mean an extra $48 per week before tax for Kiwis who work for 40 hours on the current minimum wage,” he said.


Which means they’re on track for another increase to $20 an hour in April 2021, as promised in their confidence and supply agreement with the Greens. Which will mean that they will have increased the minimum wage by 20% in their first term – which should deliver a significant benefit to workers, both directly for those on the minimum wage, and indirectly by ratcheting up other wages in response.

_____________________________________________________________________________

Press Release from Minister for Workplace Relations, Iain Lees-Galloway.

The Government is making sure we share the prosperity of our strong economy fairly with those on the minimum wage by lifting it to $18.90 per hour on 1 April 2020 – the next step in the Government’s plan for a $20 minimum wage by 2021, Workplace Relations and Safety Minister Iain Lees-Galloway says.

“Around a quarter of million workers will be better off next year, thanks to another $1.20 an hour increase to the minimum wage, the biggest equal lift ever,” says Iain Lees-Galloway.

An estimated 242,000 workers will benefit by a lift in their income, which includes people working on $17.70 and between $17.70 and $18.90 an hour.

“The new $18.90 rate will mean an extra $48 per week before tax for Kiwis who work for 40 hours on the current minimum wage.

“New Zealand’s economy currently has a solid footing. Our unemployment rate is low at 4.2 per cent, our economy is predicted to add 43,600 jobs in 2020, and our GDP is growing at a faster rate than other OECD nations, including Australia, Canada, the USA and European countries.

“With our economy doing well, we want to make sure that our lowest paid workers also benefit. The rise in minimum wage is estimated to boost wages by $306 million a year across the economy. That’s a good investment in local economies where workers spend their wages.

Iain Lees-Galloway says today’s announcement reconfirms the rates signalled in 2018 and the Government’s plan for a $20 minimum wage in 2021.

“We’re implementing a balanced approach to the minimum wage increases and have provided certainty to businesses who told us they wanted to know how much the minimum wage will increase and when the changes were going to happen,” says Iain Lees-Galloway.

“Last year, we signalled minimum wages of $18.90 for 2020 and $20 in 2021.  By re-confirming these rates we offer certainty the businesses need for planning and forecasting.”

The starting out and training wages will also see a boost, with a rise to $15.12 per hour from 1 April 2020, remaining at 80% of the adult minimum wage.  

32 comments on “Labour raise the minimum wage ”

  1. michelle 1

    Based on this policy alone NZers need to see through national pretending to care for all NZers because they expect people to live of a pittance at a time when housing cost is at an all time high so they don't really care its all an act,

    • Sabine 1.1

      actually the min wage increased by 1.20$ + 8 % holiday pay + 3 % kiwisaver.

      as for this :
      “Last year, we signalled minimum wages of $18.90 for 2020 and $20 in 2021. By re-confirming these rates we offer certainty the businesses need for planning and forecasting.”

      yep, not hiring that third person. Thanks Ian.

        • Sabine 1.1.1.1

          oh i can afford my two current staff that i had for several years now working for me.

          And my business can also afford myself – on min wage 🙂 ) ,but then maybe you think that it would be better if we all went on the dole or something.

          Fact is, dear Phil, that for many micro businesses – and i am a micro business – our income has not gone that much up to make up for

          1. increases in compliance costs

          2. increases in leases – commercial leases are through the roof as evidenced by empty down towns the country over

          3. increases in costs for all of the products that i use, butter just to name one.

          4. increases in ACC

          5. increases in insurance – liability, stock, premises

          6. increases in Rates – rates are 100% rolled over to he tenants of any premise – residential or commercial

          7. last, but certainly not least increases in Min wages.

          and as i said above, to tout 1.20$ is bollocks as the actually increase is, current min wage + 1.20 + 8% holiday pay + 3% Kiwi saver. And then suddenly yes you are looking at revenue after costs, tax, and such and then the math says that considering the upcoming shitstorm of loss of tourism revenue (global politics do not let me to believe that really tourism is up n coming) that the prudent business person will hold of on hiring people.

          Commerical leases + charges and staff costs are the biggest costs in most micro bsuinesses. But then as you said, maybe i should just close shop and kick out my current workers and myself and go on the dole.

          You are a genius Phil.

          • weka 1.1.1.1.1

            what would be the purpose of hiring a third worker?

            • Sabine 1.1.1.1.1.1

              its not gonna happen.

              The purpose was to take a chance and grow the business and maybe maybe find some extra revenue. As it always is.

              At some stage one realises that one only has two hands, two legs, one head and on heart and that all of these spare parts are dog tired after 365 days of work years on end.

              Currently i look at all the increases i have absorbed this year alone and am now at the point of saying i stay the size i am and if business stays the way i am i might even get away with less hours for my staff. And i am not the only one. An example all the new staff that the hair dresser next to my shop hired last year are contractors. Non of them receive a wage, they get paid a cut per cut and that is it. Great solution if you can, and yeah, it undermines the min wage by a lot.

              Unless the coalition government actually tries to do more then just roll the cost of rent over to the hiring businesses of NZ nothing is gonna change.

              They could increase the min wage by 50$ an hour, and it would still not be enough to satisfy the landlord class in NZ – as evidenced by increases to the housing allowance.

              • Sacha

                Or you could raise your prices. It's how higher-wage economies work.

                • Sabine

                  we are still the same low wage economy we were three years ago.

                  as for increasing prices…..yeah, right Tui.

                  Good grief. Have a good look at the businesses that 'do well'…..Mc.Do, KFC, Warehouse, K-mart, 2 dollar shops etc etc etc

                  if we were a 'high wage' economy, with regulated rent controlled housing, stable electricity prices, gasoline prices etc etc etc you might have a point, but sadly we are as removed from that type of economy as we were when John effn Key promised us wage parity with OZ and houses for unhoused Kiwis – lest we become tenants in our own country.

          • Nic the NZer 1.1.1.1.2

            I don't understand why you feel pressure to hire more (full time) staff in response to a minimum wage increase. I would have expected a small business to be looking to hire due to an influx of work.

      • pat 1.1.2

        "yep, not hiring that third person. Thanks Ian."

        Is that entirely down to increase (and projected) in minimum wage?

        • Sabine 1.1.2.1

          see above,

          but yes, there comes a point where true mom and pop businesses are having to do a simple math.

          a. hire another person and 18.90*40 hour comes to 756$ (not including holiday pay and kiwi saver – these are add ons).

          to pay out 756 $ net to a person fulltime i would have to make at the very least three times that to cover production costs etc. So we are talking about rought an extra 2000$ per week that will have to come from somewhere.

          Now the very naive thinking would be "Oh they have more money to spend", but that is not the way it works ,when the increase will be wholesale eaten up by raising rent costs, transport costs, heating costs, food costs etc etc etc.

          Personally me i would have favored making the first 25.000$ income tax free. My threshold sits there as 25.000$ is the average cost of a rental pretty much anywhere in the country. This would have brought a bit more money into the pockets of people then 1.20 +hol pay + kiwisaver.

          As it is atm the Labour government has choosen to roll the cost of housing people in this country over to the business sector and while some can afford to pay that increase, most micro businesses will have to do the hard math.

          And for me, the question is can i raise that money of my current customer base or am i better of to not expand and just do what i do now and leave it at that.

          • McFlock 1.1.2.1.1

            Just to be clear:

            at $708/w you can hire the third person, but at $756/w you cannot, because you would have to recoup $2000/w to cover all the other costs?

            Seems to me the problem you have is with the 7 in front, not the 56 to the right.

      • Lucy 1.1.3

        So Sabine to keep your business going you need to pay 2 people 18.23 per hour, wow maybe you need to rethink your business model. If your cost of doing business is so high that the productivity gain made by increasing your labour force by a third at the cost of $37,920 per annum then I would suggest the problem is at management level!

        • Sabine 1.1.3.1

          hi dear Lucy,

          two min wages for my Micro business at that cost per week amount to

          1512$ per week not including 8% holiday pay, not including 3% kiwi saver, not including rent, comliance, increasing costs for products, insurance, health and safety, pest control etc etc etc.

          But yeah, dear Lucy, like dear Phil above, i thank you for suggesting that i fire my two current staff and myself and live of the dole – thanks to tax payers like yourself.

        • lprent 1.1.3.2

          Lucy, for the type of business that Sabine is describing, the largest variable costs are usually labour and premises rental (or mortgage if they share ownership with the bank).

          So for any employee being added, you usually multiply by about three times their gross wages as being the target for the increased revenue required to justify the outlay. Effectively the overhead plus anticipated 'profit' (actually usually the capital acculmulation for the next growth spurt).

          The alternate is to figure out how to grow the business by increased productivity. There are also usually pretty strong constraints on bringing in capital to increase productivity. The cost of training people to use it (including the mom and pop owners) often being more expensive than any capital outlays.

          Or alternatively to figure out how to grow the enterprise by more effective marketing. Again costly and risky.

          Or just not plan to expand – which is what Sabine is talking about.

          The nett effect is that raising wages makes other alternatives look more viable.

          //———–

          Personally my view is that growing minimum wages is justified simply on the basis that it tends to force the increased business focus on productivity.

        • greywarshark 1.1.3.3

          Lucy – don't be so quick to 'eave 'alf a brick.

          It is hard to run a micro business as you apparently know as you seem so confident that you have all the expertise needed. As stats show many tiny businesses after just three years of striving are out of the original business, for good, for the time being, have morphed into something else, have amalgamated with someone else, owner got sick, ran out of capital, couldn't manage a steady cash flow etc etc.

          It is hard, it is hard, and not something to be lightly or heavily mocking about. The strivers in business aren't mucking about, so don't put them down you tall poppy culler, or killer!

  2. As someone who rented for 35 years can I personally acknowledge all the landlords out there who will chanell this money- in some cases exactly, down to the last cent- directly into their bank accounts.

    • Kevin 2.1

      Yep, time for serious legislation on rent control.

      • Sabine 2.1.1

        that is in the too hard basket.

        it is easier to just roll this cost over to business people in the form of

        'min wage increases'.

        its a load of bullshit, but hey, they get to feel good about themselves.

  3. John Clover 3

    The problem with such increases in the minimum wage and related increases to those already above the current minimum is that the cost to business goes up yet once again, and most are hardly better off. True as the beneficiary of numerous wage increases in my working life I found a greater ability to determine what I spent my money on.

    Really the need is to provide housing at a cost that people can afford and which doesn't inhibit their participation in.the community. Having owned my own home now for much of my life, and at no time being working for a bank to any great extent, in retrospect I can appeeiate what a good life I have been fortunate to have.by not renting in the private sector. With only rates and maintenance to pay for.

    My dream in this respect is for all to havehousing provided by govt. at rents reasonable to their wages. Basic housing with the opportunity to move intot The orivate sector aas owners if they wish.

    • pat 3.1

      so no private landlords?

      • Sabine 3.1.1

        a mix of private, social, co-opoerative housing with limitations as to what can be charged depending on square meterage, yard, back yard, storage space, access to schools, hospitals, kindies, shops, sports ground etc etc etc.

        at the moment tenants are forced to pay the full cost of a mortgage and a boat and nothing much is done about it. And no matter how many times the min. wage goes up, businesses should not be made responsible for the greed of the landlord class.

  4. John Clover 4

    Pat … I have nothing against private landlords as they are trying to run a business wtth govts. blue and red, loading more and more costs onto them because as they sit with their great salaries coming in every two weeks they have little appreciation of what somebody in business has to try and cover as Sabine outlined for us above.

    I was self employed myself until I managed to get a govt job so have some inkling of the problems Sabine faces…. but that was years agosmiley

    Pat … I have nothing agin private landlords as they try to cover costs and get a return on their money which is in a house rather than a bank etc. Just glad I managed to end my tenanting days by my part-time efforts building on a small legacy. But looking at an advert in the paper for an ancient two bedroom cottage for 295G I was lucky to do it when I did… almost imposible these days to buy a run down old place and replace it with a new house.

    Livinge in the old dump while building 🙂
    Sabine ….

    The trouble with regulations on rents etc is the inflexibility of any system of interference … however well intentioned.

    ;

    Sosrry for duplication but I thought the first had got lost ;

    ;

    ;

    • pat 4.1

      Fair enough, was curious to know as there is a large chunk of people who do indeed seek to secure their future through property rather than equities or bank deposits, personally the few occasions when it may have been an option for me Ive decided against it due to the problems Ive seen of those who have….property investment is not always a licence to print money though it can be. The costs however. be they ownership or renting. are certainly at the foundation of many of our problems.

    • Sabine 4.2

      The trouble with regulations on rents etc is the inflexibility of any system of interference … however well intentioned.

      well i might just quit, go on the dole, tell the women working for me to go on the dole, cause i am slowly but surly priced out of business and then that works better for all, cause getting some restriction on what one can charge on a two bedder with nothing much is in the too hard basket for our over priced, over educated and otherwise spineless and gutless suits/suitettes in parliament. I get it.

      We are so fucked. Like so fucking fucked.

      The question i have, when are we just gonna line up surplus people(either to shoot them, or deport them, or send them to mars or something) when we have not only not got enough houses for them but no jobs for htem either, with that no tax base and no benefits?

      Do people actually think?

      • adam 4.2.1

        What a sad series of posts from you today, Sabine. I now understand why you poo poo anyone who brings up an economic definition of the left.

        One the plus side, you have provided a clear representation of why liberals (as in the exponents of liberalism as an ideology) are not left wing. It's all economics, and liberal economics is not left wing.

        Social democrats, socialist, communist and anarchist – left wing economics.

        Liberalism – not left in this lifetime – well maybe for the foolish and politically naive.

      • David Mac 4.2.2

        I hear you Sabine. Sack your workers, take your recipes and methodology to a commercial Chinese slave kitchen. Have them take your product to near finished, snap freeze and ship to you. Squirt some cream or place a sprig of parsley on top and call them NZ MADE. (some imported ingredients.)

        I wrestled with the demons you are Sabine, over and over. Most small business operators do. Things improved for me when I started with business model criteria that required me to legitimately work from home and room to grow with just the one employee, me. I exclusively use contractors. The good ones I lavish with goodness, the average ones, I don't ask them back. I think my business model is crappy re: a prospering NZ but like you Sabine, I feel I've been pushed there.

        I don't think being left means a default position of: "What is somebody else going to do for me?" It also has to encompass those wishing to have serious go, take 'All-in' risks, make a contribution to our society and be rewarded accordingly. A thriving small business is not the devil. The key is in the sharing.

        There is a joy in sharing that we all savour. We need to get better at hooking into that type of satisfaction. My new phone: about a 6 on my joy scale, surprising my kid with one, a 9.

  5. greywarshark 5

    If government was working effectively workers would be on living wage once the had learned a new job, after 60 days perhaps??

    Part of the problem is the contracting out I think.

    https://www.rnz.co.nz/news/national/405830/government-departments-consultant-spending-increases

    At that time, the total spend across all 30-plus public sector bodies was just over $550m.

    However, annual reviews show spending on contractors and consultants at 13 of the largest departments increased a total 14 percent in a single year to $720m.

    Driving while talking on a cellphone is hazardous, not allowed. Driving a country with politicians having as much hands-on effect to the moving contractor, as a cellphone user in a moving vehicle, can lead to big mishaps.

  6. I suspect this has appeared before..but heck..the hilarity of minimum wage never fades..

    https://www.youtube.com/watch?v=6gerNVgJW5M&list=RDrSwIpya4BjY&index=14

    looking forward to some conversations about maximum wages, ..but not exactly holding my breath

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