[b:80348fc89e][size=18:80348fc89e]170,000 to benefit from wage rise [/size:80348fc89e][/b:80348fc89e]
19 October 2005

At least 170,000 people will be in for a $75 a week pay rise within three years, with the minimum wage set to rise from $9.50 to $12 an hour. But employers, who are facing a $660 million increase to their annual wage bill, are warning prices will rise as a result.

As a part of NZ First's deal to support the Labour-led Government, the minimum wage will be raised to $12 an hour by 2008. For somebody working a 40-hour week on the minimum wage, this amounts to an extra $100 a week before tax, taking their salary up to $480. The minimum youth wage, which is set at 80 per cent of the minimum adult wage, will rise from $7.60 to $9.60.

Statistics New Zealand said that in the June quarter there were 169,800 adults working at least 30 hours a week and earning between $9.50 and $12. This is 13.6 per cent of the workforce aged 18 and over and working fulltime. This means businesses will have to pay at least an extra $660 million in wages.

How the 26 per cent wage rise will be implemented is not known, but it is expected to be phased in over three years. Employers said that if people earning $9.50 get a pay rise, those earning $12 will expect their wages to increase by the same amount. Many workers in the $9.50 to $12 an hour pay bracket are in service industries such as supermarkets and cafes.

The co-owner of Kapiti Pak 'n' Save, Peter Anderson, said it would have a big impact in wage costs and prices across the board.

"It's not just raising the minimum wage, its the effect it has on the levels above that as well. If an unskilled person who has just joined is earning $12 an hour, then somebody who's been with us a couple of years and is earning a bit more than that will expect a rise as well. It's going to have quite a significant effect, and I cannot see any way that it won't flow through into consumer goods."

Council of Trade Unions chief executive Ross Wilson, said the rise is an important step in boosting New Zealand's economy. "We do have jobs that are highly skilled but are appallingly paid, such as aged care."

Mr Wilson said it is important to have the rise work alongside programmes to train workers for higher skilled jobs.

"It may result in some changes to the way work is done in places like supermarkets but we need to accept people are entitled to a living wage."

He said the minimum wage has already increased by more than 36 per cent over the last few years, without inflation increasing by the same amount.

Economists are picking overall small impact to the economy, assuming the increase is introduced gradually. "With the tight labour market that we have at the moment, this is just one way that it is manifesting itself," said BNZ chief economist Tony Alexander.

The chief executive of the Employers and Manufacturers Association central region Paul Winter said "we are keen to see New Zealand become a better paying country but there's real risks when you do it by legislation."

The minimum wage was raised 5.6 per cent in March, to the current $9.50 for adult and $7.60 for youth rates.