How much the minimum wage increase will add to Kiwi wallets

Workers on the minimum wage will be nearly $2500 better off per year than they currently are when the minimum wage rises in April next year.

The Government announced on Wednesday the minimum wage will increase by $1.20 on April 1, 2019 - the biggest boost in history.

For an employee on minimum wage working 40 hours per week, and paid for 52 weeks per year, that equals an increase of $2496 over a year - or $48 over a week before tax.

The minimum wage already increased by 75 cents earlier this year. After the increase is introduced, minimum wage workers will be making $4056 more per year before tax than they were before the Labour-led Government came into power.

Workplace Relations and Safety Minister Iain Lees-Galloway said: "The Government is determined to improve the wellbeing and living standards of all New Zealanders as we build a productive, sustainable and inclusive economy".

The Government wants to see the minimum wage hit $20 per hour by 2021, with proposals to first see it reach $18.90 by April 1, 2020.

The increase will benefit approximately 209,000 workers, according to the Government, lifting wages by $231 million per year across the economy. Roughly a quarter of those earning the minimum wage are parents with children.

The announcement on Wednesday has been welcomed by some, but the Opposition says it will cost jobs.

"The minimum wage increase will provide a reprieve for low-income workers, who are the breadline," said Auckland Action Against Poverty coordinator Ricardo Menendez March.

But he warned the effect for those on the benefit wouldn't be so great.

"For people on the benefit, who often go in and out of minimum wage jobs, the increase will make less of an impact due to benefit levels remaining far below the poverty line."

National's Workplace Relations spokesperson Scott Simpson said the increase will only make it harder for businesses already "struggling with new taxes and higher costs".

"While the announcement is good news for workers on the lowest pay rates, for others it will mean their jobs are in jeopardy as businesses will struggle to absorb the new costs."

The last National government increased the minimum wage 31 percent - from $12 to $15.75. Unemployment peaked in 2012 at 6.9 percent, and fell to 5.8 percent.