Minimum wage set for cautious increase
The adult minimum wage rate will increase by 2 per cent to $23.15 an hour from 1 April 2024, Workplace Relations and Safety Minister Brooke van Velden announced today.
“This Government is committed to striking the right balance between protecting the incomes of our lowest paid workers and maintaining labour market settings that encourage employment,” says Ms van Velden.
“The economic context has changed significantly over the past year. While unemployment is currently low, the labour market is softening due to high net migration rates, constrained consumer spending and subdued economic growth. Given these economic headwinds, a cautious approach to the minimum wage is required this year.
“New Zealand’s minimum wage is one of the most generous in the OECD in terms of relativity with the median wage. As a ratio to the median wage, the minimum wage has increased from 62 per cent of the median wage in June 2017 to 72 per cent in June 2023. This has made it harder for businesses to issue pay rises or take on more staff.
“An increase to $23.15 will benefit between 80,000 and 145,000 workers and will give our lowest paid workers more money in their pockets, without hindering job growth or imposing unreasonable costs on businesses.
“Increases to the minimum wage under Labour far outstripped CPI. Between June 2016 and June 2023, overall, the minimum wage increased at nearly twice the rate of inflation, with a 48.8 per cent increase in the minimum wage and a 25.1 per cent increase in CPI. This Government’s approach sets the balance right.
“Moderate annual increases to the minimum wage reflect this Government’s commitment to growing the economy, boosting incomes and supporting job growth throughout New Zealand.
“The increase announced today takes into consideration the current economic conditions and the historically large increases to the minimum wage that have distorted relativities with other wage-earners.
“The increase will be given effect by an Order in Council to be signed by the Governor-General on the advice of the Minister.”
Training wages and starting wages will remain at 80 per cent of the adult minimum wage rate, thereby increasing to $18.52.
Note for editors: The Minister for Workplace Relations and Safety is required by law to review the minimum wages annually, to take effect 1 April each year by Order in Council.
The Cabinet Paper and Minimum Wage Review can be found here: Minimum wage reviews | Ministry of Business, Innovation & Employment (mbie.govt.nz)