2 February 2012

$15 minimum wage would help inequality, and stimulate the economy

CTU Secretary, Peter Conway today said that the government has a golden opportunity in the next few weeks to make New Zealand a fairer place, to help low income families cope with increases in the cost of living and to stimulate the economy, by increasing the minimum wage to $15 an hour when it announces its decision on the annual minimum wage review.

“A small inflation adjustment to the minimum wage is not enough. We are asking that the government raise the minimum wage to $15 an hour. Doing so would be a very significant step in addressing income disparity by raising the income of those most vulnerable to low pay, and the easiest way to compensate low income workers for increases in the cost of living.”

“Further, increasing the minimum wage to $15 would give low income earners a much needed boost that they missed out on in the tax cuts of last year that greatly favoured high income earners. We should remember that tax cuts last year increased the difference in take home pay between someone on $30,000 a year and someone on $150,000 a year by $135 per week, and had an even worse effect on low income earners when coupled with the GST hike,” said Peter Conway.

“Low income households were hit harder than higher income people by the increase in GST by having to pay a greater proportion of their income in GST. Increasing the minimum wage to an appropriate level would help rebalance this equation and put more money in the pockets of low income families who are more likely to spend it creating much needed economic stimulus.”

“Any number of measures of living standards show that a significant proportion of New Zealanders experience hardship on a daily basis and are evidence of the widening gap between rich and poor. The CTU believes the government can make New Zealand a fairer place by increasing the minimum wage to $15, doing so will improve the relativity of the minimum wage to the average wage and provide a more equitable distribution of income,” said Peter Conway.

Peter Conway said that lifting wages overall in New Zealand is vitally important – the minimum wage is one tool, but so is improved innovation and productivity provided the benefits are shared, and extended availability of collective bargaining through industry standards.

ENDS

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