Increase to minimum wage unfair

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“The increase of the minimum wage to $14.25 is unfair given several years of stagnating wages, an economy that is starting to grow, and widespread concerns about how that growth will be shared”, says CTU Economist Bill Rosenberg.

“The minimum wage is the only way other than through the tax and benefit system that the government has to ensure wage and salary earners, and particularly people on low incomes, benefit from a growing economy. A more effective system of collective bargaining would be a much fairer way to spread the economic benefits to the majority of the workforce while reflecting the situation that each industry is in. Instead almost half of employees are getting no wage or salary increases at all.

This minimum wage increase goes little distance to addressing the inequalities in society. It is not socially or economically sustainable to have another round of growth that goes mainly to a small minority. 

Over 100,000 people are on or around the minimum wage at its new level and well over 200,000 would have benefited from an increase to $15.00 according to MBIE figures from 2012. It is therefore an important factor in addressing low wages and inequality,” he says.

The CTU in its submission to the government on the 2013 Minimum Wage Review called for a phased increase in the minimum wage along a planned three-year track. The submission said that the first step should be an increase to $15.50 this year.

Rosenberg pointed out that in five years between 2003 and 2008 the minimum wage was raised by 50% (from $8.00 to $12.00) while the government has raised it by only 14% in the last five years – only about 3% after CPI inflation.

“The government has been saying people should expect wage rises. The minimum wage review was a missed opportunity to ensure that everyone from the lowest paid upwards gets a decent increase after several years of hard times,” said Rosenberg.