18 December 2006

Largest increase to minimum wage since 1999

Workers earning the minimum wage will receive a 9.8% pay rise from April 2007, Labour Minister Ruth Dyson announced today.

The minimum adult wage, which applies to people 18 years and over, will increase from $10.25 to $11.25 an hour ($450 for a 40 hour week) from 1 April 2007 - the largest increase since the Labour-led government came into office in 1999.

The minimum youth rate – for workers aged 16 and 17 years – will increase from $8.20 an hour to $9.00 an hour, to stay at 80% of the adult minimum wage. The minimum training wage will increase to the same rate

“The boost in the minimum wage will ensure that lower paid workers share the benefits of economic growth, encourage people to join the workforce and provide protection for some of New Zealand’s most vulnerable workers,” Ruth Dyson said.

“ An increase to $11.25/$9.00 will benefit around 110,000 adult workers, most of whom are women, and around 9,200 youth workers. It can be made with confidence in the current economic and labour market conditions, without being at the expense of jobs. "

“With four months till the changes come into effect, businesses will have time to prepare. The date of 1 April was chosen to reduce compliance costs for businesses as it will coincide with the implementation date of four weeks’ annual holidays.”

The Minister of Labour reviews minimum wage rates annually for adults, youth and trainees, seeking submissions from a wide range of organisations, including employer, union, Pacific, Maori and women’s groups.

Ruth Dyson said the Labour-led government’s goal is for the adult minimum wage to reach $12 an hour by the end of 2008, if economic conditions permit.

Changes to minimum wages are part of a wider mix of approaches from the Labour-led government to support higher quality working lives and productive workplaces. These approaches include workplace productivity, work-life balance, Working For Families, initiatives around labour and skills shortages, and the promotion of pay and employment equity.

For more information, employers and employees can contact the Department of Labour at www.ers.dol.govt.nz or free phone 0800 20 90 20.

ENDS

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