Minimum Wage Increase

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The Government has announced changes to the minimum wages that come into force on 1 April 2015. The adult minimum wage will increase by from $14.25 to $14.75 per hour and the starting out and training minimum wages will increase from $11.40 to $11.80 per hour.

Pay will increase by 3.5% for those on a minimum wage. Given that annual inflation (CPI) is currently 0.8%, employees on a minimum wage can expect a 2.7% increase in purchasing power.

To put the increase into perspective, since 2009:*

·         Labour productivity has increased by 10.1%;

·         Wages have risen by 9.6% in real terms; and,

·         The minimum wage has risen by 6.5% in real terms.

The increase is consistent with the Government’s approach to the minimum wage, which has seen regular increases of between 25 and 50 cents.

Businesses should begin planning for the 1 April increase now.

* Labour productivity and real wages data from: http://www.stats.govt.nz/browse_for_stats/economic_indicators/productivity/ProductivityStatistics_HOTP78-13.aspx
CPI inflation data from: http://www.stats.govt.nz/browse_for_stats/economic_indicators/CPI_inflation.aspx
Historical minimum wage data from: http://www.dol.govt.nz/er/pay/minimumwage/previousminimum.asp

Contact Sean Maskill if you require any further information.

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