The Government will raise the minimum wage, but it falls well below the new Living Wage announced today.
Workplace Relations and Safety Minister Michael Woodhouse announced the adult minimum wage will increase by 50c from April, taking it to $15.25.
The starting out and training hourly minimum wages will also increase to $11.80 and $12.20 per hour respectively 80 percent of the adult minimum wage.
But it varies from the Living Wage Movement's recommended $19.80 per hour which was also announced today.
Mr Woodhouse says the increase represents the "right balance" between protecting low paid workers and ensuring jobs aren't lost.
"An increase to $15.25 per hour will directly benefit approximately 152,700 workers and will increase wages throughout the economy by $75 million per year," he says.
"With annual inflation currently at 0.1 percent, an increase to the minimum wage by 3.4 per cent gives our lowest paid workers more money in their pocket, without imposing undue pressure on businesses or hindering job growth."
This year's Living Wage is "modest" increase of 55c from last year.
It was made public this afternoon at a Pivotal Thames, a medium-sized printing business in Wellington, by the Living Wage Movement -- a society formed of faith-based groups, unions and community/ secular groups.
Employees at the Living Wage announcement in Wellington (Emily Cooper / Newshub.)
Living Wage Aotearoa New Zealand National Convenor Annie Newman says the figure is important to allow people to earn a decent income so they can "not just survive, but participate in society".
She believes the rise of 55c from last year is "very modest", and will equate to an extra $4.40 a day and $22 for a 40-hour week.
Each adjustment is based on the annual wage movement to June the previous year to stay consistent with the timeframe of the first Living Wage announcement in 2013. It will come into force on July 1 this year.
It is up to individual companies to decide to pay their staff a Living Wage, but Ms Newman says those who do can make a big difference in addressing inequality especially in the face of chief executives receiving large pay rises.
Among companies which pay the Living Wage are Nice Blocks, Unreal Films, Fresh Desk cleaning company, Wellington's Anglican Centre, Oxfam, the New Zealand Council of Trade Unions and Tuaropaki Trust.
Ika Seafood Bar and Grill in Auckland, owned and run by former Cabinet Minister and Internet Party leader Laila Harré, will become the first restaurant to be accredited as a Living Wage employer.
She says she wanted to show leadership in an industry where "great food is not always matched with great jobs".
"This was not an easy target to reach and we are reaching out to our customers to help us prove that the hospitality industry can provide good jobs on good wages," she says.
Ms Harré says paying the Living Wage sends a message to employees that they're "worth more" and has urged other restaurants to follow suit.
The Public Service Association says while the minimum wage increase is good, it's "falls far short" of what Kiwis need for a decent life.
Prime Minister John Key says he accepts people have a difficult time on the minimum wage, but generally those on low incomes receive other support from the Government.
"I don't spend much time focusing on the Living Wage, to be frank. The rate that we can control is the minimum wage, and every year we've put the minimum wage up," he said in his post-Cabinet news conference this afternoon.
If the Government did adopt the Living Wage, or something close to it, Mr Key says the Ministry for Business, Innovation and Employment estimates it would impact between 30,000 and 35,000 jobs.
He said it was a "balancing act" in keeping the rate affordable for businesses and also increasing the pay rate.
"Most people would reflect on the fact those earning the minimum wage are doing it pretty tough and increasing their wages is a good thing to do if we can do it."
The Green Party says the gap between the Living and minimum wages keeps growing.
"While the National Government boasts that New Zealand’s economy is growing, it’s made sure that lower income Kiwis get less of the benefit of that than others", workplace relations spokeswoman Denise Roche says.
She says the economy is out of balance between the incomes at the top and those at the bottom.
Paying the Living Wage is one of the easiest ways of improving the standard of living, Ms Roche says.
The Greens say they'd ensure all those in core public services earn the living wage and will be built into government contract wages as contracts come up for renewal.
ACT Party leader David Seymour says the increase will hit employers in the regions especially hard.
"In Auckland, $15.25 might not sound like much, but small businesses in the regions who generally charge less will struggle to bear the cost. Hikes to the minimum wage will discourage new employment, and lead to more lay-offs and business failures."
He believes the minimum wage is "set for the distorted Auckland economy".