Calls grow for minimum wage increase to be scrapped

Mon, 09 Mar, 2020

ANZ has joined ACT in calling for this year’s minimum wage increase to be scrapped, with Chief Economist Sharon Zollner saying the move was a ‘no-brainer’ given the current pressure on businesses. Zollner said:

‘Higher wage bills could exacerbate the slowdown and lead to more business failing, or at least cutting staff. In this environment, a lift in the minimum wage is more likely to result in higher unemployment than lead to better social outcomes.’

“Labour is prepared to ease access to benefits for people who lose their jobs, but has so far refused to ease pressure on businesses trying to keep people working”, says ACT Leader David Seymour.

“New Zealand is now likely to enter a recession. Many firms will have declining revenues and won’t be able to sustain a 7 percent increase in labour costs. That’s even before other costs like KiwiSaver are taken into account.

“In order to scrap this year’s minimum wage increase, the Prime Minister needs only to have the Governor-General sign an Order in Council. It could be done this afternoon if she had the political will.

MBIE already predicts 6,500 fewer jobs will be created as a result of the 1 April minimum wage increase. It also said things could be worse in difficult economic times.

“As ANZ pointed out, the minimum wage increase was subject to prevailing economic conditions, and current conditions do not support a lift in minimum wages this year.

“In its annual minimum wage review in February, MBIE told the Government that, in the case of ‘a worsening economic context, a lower increase…would need to be considered to mitigate against disemployment’.

“We now have that worsening economic context. Slowing economic growth, low business confidence, international trade tensions and now a global public health emergency.

“The Government has made it easier for workers affected by coronavirus to access benefits. It must now make it easier for businesses to create jobs and keep workers employed by delaying this year’s minimum wage increase.”