Minimum wage increase will slow job growth - MBIE

Fewer jobs will be created in 2020 than what would have been thanks to the upcoming rise in the minimum wage, Government documents suggest.

The Ministry of Business, Innovation and Employment's (MBIE) review of the hike - which will take the minimum wage from $17.70 an hour to $18.90 in April - claims it'll cost the country 6500 jobs.

The number of jobs on offer will still grow - up around 43,600 in 2020 - but not by as many if there was no minimum wage rise, MBIE said.

"The minimum wage changes will see small businesses struggle more at a time when the Government should be supporting them, not working against them," said National Party workplace relations and safety spokesperson Todd McClay.

About 240,000 workers will benefit from the increased pay rate immediately, MBIE's review said - anyone earning between the minimum wage and $18.90.

If the Government went for the living wage - currently estimated at $21.15 - MBIE says about 30,000 jobs would be wiped out. 

"Everyone wants high wages for workers, which is why National increased the minimum wage every year in Government," said McClay. "But we believe the minimum wage should go up in a balanced way that doesn’t go too far, too fast."

Unemployment is presently at 4.2 percent, with employment near its "maximum sustainable level" according to MBIE. 

When unemployment is low wages tend to go up, as businesses seek to outbid each other for good employees. 

"The most common concern we hear from business is for more workers as they are struggling to get people they need with such low unemployment," Government minister Tracey Martin told NZME.

"The rise in the minimum wage is estimated to boost wages by $306 million a year and that's money that's going to help families and be spent in local economies."

ACT leader David Seymour told Newshub by the time the minimum wage hits $20 - as it will likely do so in 2021, if the present Government is returned - "tens of thousands of vulnerable workers, many of whom are young, unskilled, Māori or Pasifika" would be out of work.

"Politicians can't legislate for higher living standards. That can only come through better educated workers and business owners confident enough to invest and put new ideas into action."

In its previous nine years in power, National increased the minimum wage an average 3.4 percent a year. So far under Jacinda Ardern, it's gone up 6.6 percent a year.