NZ Minimum Wage to Increase to $23.15 in April 2024

Posted on 1 February 2024

The New Zealand government has announced a modest 2% increase in the adult minimum wage, raising it to $23.15 per hour from 1 April 2024. This adjustment, part of the government's efforts to address wage growth amid economic fluctuations, aims to strike a balance between supporting the nation's lowest-paid workers and maintaining a stable labour market environment.

Workplace Relations and Safety Minister Brooke van Velden highlighted the nuanced approach the government is taking in light of the current economic conditions. "Given the economic headwinds we face, including a softening labour market and constrained consumer spending, we believe a cautious increase in the minimum wage is prudent," van Velden remarked, pointing out the dual objective of aiding workers while ensuring businesses are not overburdened.

Economic Context and Policy Rationale

The government's decision is carefully calibrated against New Zealand’s economic backdrop. The country's minimum wage is among the highest in the OECD relative to the median wage, having climbed from 62% in June 2017 to 72% in June 2023. The aim is to alleviate the financial strains on businesses while ensuring workers can earn a living wage.

The increase is slated to benefit an estimated 80,000 to 145,000 workers, providing a slight boost in income for New Zealand's lowest earners without adversely affecting job growth or placing undue financial stress on businesses.

A Comparative Perspective

Contrasting with the larger increases under the previous Labour government, which saw the minimum wage rise nearly twice as fast as inflation from June 2016 to June 2023, the current government's strategy represents a more restrained approach to wage adjustments in an effort to stabilize the economy.

Prior to the announcement, BusinessNZ had provided guidance to the Government including a statement, "The minimum wage has increased by 40% since 2017 and is now nearly 77% of the median wage. Businesses tell us that the process of setting the minimum wage is becoming too politicised."

Training and Starting Wages

The adjustment also affects training wages and starting wages, which will stay at 80% of the adult minimum wage, moving up to $18.52. This ensures that those entering the workforce or in training positions are compensated in a manner that reflects the new wage standards.

Looking Ahead

The announcement has elicited a range of responses. While labour unions view the increase as a positive step towards narrowing the income gap and enhancing living standards for low-wage workers, some business advocates warn of potential challenges for small enterprises grappling with economic uncertainty.

As the country works towards economic recovery, this minimum wage increase is a key element of the government's strategy to promote economic and social well-being. The implementation of this policy, to be enacted by an Order in Council, will be an important development for New Zealand's labour market and broader economy.

The upcoming change to the minimum wage is a careful move by the government, aiming to support workers while keeping an eye on the economy. It's a balancing act, trying to make sure everyone gets a fair deal as New Zealand looks to bounce back stronger.