Govt officials: Minimum wage hike will cost 8,000 jobs

Sun, 31 Mar, 2019

Officials are warning the Government that rapidly increasing the minimum wage will see 8,000 fewer jobs created this year alone with worse to come by 2021, says ACT Leader David Seymour.

“New Zealand already has the highest minimum wage in the developed world relative to our average wage.

“The Ministry of Business, Innovation and Employment predicts this wage hike alone will cost 8,000 jobs as firms automate rather than hire workers, or go out of business completely because of higher costs.

“These are the unseen effects of minimum wages – those businesses that don't directly lay off workers will be discouraged from employing more, or replacing those who leave.

“Meanwhile, the Treasury argues the impact on job creation will be even more significant if the Government continues with its radical plan to hike the minimum wage to $20 by 2021, especially if economic conditions continue to worsen.

“These job losses will fall disproportionately on young, unskilled workers – the very people the Government says it is committed to helping.

“The youth unemployment rate is already 14 per cent

“Low-skilled workers need work experience. It's hard to think of a more cruel policy than passing a law that bans the people most in need of work experience from getting any.

“Firms will also pass the higher minimum wage on to consumers, contributing to the rising cost of living.

“ACT doesn't believe the Government should put up barriers to employment or intervene to drive up the cost of living.

“It should instead be creating an environment in which businesses can innovate and grow. 

“The Government’s approach of pouring new costs and red tape on firms – including new industry-wide centralised bargaining – will lead to lower growth at a time when the global economy is starting to stall.”