Minimum wage increase: Could it harm those it's meant to help?

There's a chance the recent minimum wage increase could end up harming those it's meant to help, according to experts.

New Zealand's minimum wage has been upped to $16.50, with plans to raise it to $20 by 2021.

The 75c increase will have a wide and varied impact. For example, teacher aides will take home a slightly larger pay packet - but without any increase in funding, some schools will struggle to keep them on.

A report from the Ministry of Business Innovation and Employment warns that businesses will need to fork out an extra $129 million to meet the new minimum wage, potentially putting 3000 jobs in jeopardy.

Alex Penk from Maxim Institute says minimum wage workers will be pleased with the boost to their pay packets - but at the same time,  they might lose some of their Working For Families payments.

"If an employer looks at this and says 'well maybe I should invest in automation instead', or they might just not create those jobs in the first place," he told The Project.

"If that happens then there is a risk that this policy ends up harming the people that it's meant to help."

Adam Cunningham, managing director of Village Accommodation Group, employs almost 100 people, from cleaners to service staff. He says with the recent minimum wage increase, he has no choice but to raise his prices.

It will cost them just under $1 million to cover everyone's wages until 2020.

"We increased all of our staff's wages by the $0.75 across all gambits of our business a week before it came into play," he says.

"Those skilled people that have worked hard to get to the level that they've got to deserve to see at least those increases at the same time that minimum wage goes up. That's just fair."

However, he says he won't be looking for an extra 75c worth of work per hour.

"I'm not sure what style of boss would try and squeeze that out of people. If they're not doing as well as they can be now, we should be talking to them now."

Newshub.