National Party 'thinking about' stopping minimum wage bumps

National's finance spokesperson says the party is "certainly thinking about" stopping the next minimum wage boost if elected to power, over concerns that small businesses are struggling. 

Paul Goldsmith was asked by Morning Report on Tuesday if a National Party-led government would commit to stopping the minimum wage increasing to $20 an hour. 

"I'm not prepared to commit to that today but that is certainly something we're thinking about and also in relation to a whole host of areas where costs have been added onto small business," Goldsmith said. 

The minimum wage is set to rise to $18.90 in April this year, up from $17.70, in what will be the second $1.20 increase in a row under the current Coalition Government. If the current pattern continued, it would reach $20 an hour by 2021. 

The Ministry of Business, Innovation and Employment's (MBIE) released a review of the hike earlier this year and claimed that increasing the minimum wage would 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 National Party's workplace relations and safety spokesperson Todd McClay said at the time, "Everyone wants high wages for workers, which is why National increased the minimum wage every year in Government. 

"But we believe the minimum wage should go up in a balanced way that doesn't go too far, too fast."

Goldsmith told Morning Report one of the groups struggling with minimum wage increases is exporters because the "rest of the world doesn't care about our cost structure - they just want the thing at the same price". 

National's finance spokesperson Paul Goldsmith.
National's finance spokesperson Paul Goldsmith. Photo credit: Newshub / Zane Small

He said the hospitality industry is also affected.  

"The point I'd make is everybody wants higher wages and higher incomes, but ultimately if they want to be sustainable, they have to be backed by productivity growth," Goldsmith said. 

"What we've seen in New Zealand in recent years is we haven't seen much productivity growth... You can keep on increasing wages, but if the productivity doesn't follow, then there is an inevitable pressure on companies."

He said the National Party will provide more policy clarity later in the year in a proposed business relief package. 

The Council of Trade Unions has argued that increasing the minimum wage takes the pressure off low income workers, giving them the ability to not have to take on extra work. 

Unemployment is also low at 4 percent - below the 4.7 percent when the Government came into power in 2017. When unemployment is low wages tend to go up, as businesses seek to outbid each other for good employees. 

"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," NZ First MP Tracey Martin said earlier this year. 

The 2017/18 Stats NZ's Household Economic Survey showed that a third of people said their current household income was either not enough or only just enough to meet their everyday needs.

Goldsmith says productivity is the issue. Low productivity, he said, leads to less investment and "ultimately that leads to fewer opportunities for New Zealanders to get ahead". 

The latest figures from Stats NZ show that labour productivity in New Zealand is lower than that of Australia. New Zealand's most productive area has been primary industries while goods-producing has been stagnant. 

The previous National-led Government increased the minimum wage an average 3.4 percent a year. So far under Prime Minister Jacinda Ardern, it's gone up 6.6 percent a year.