Debate rages over timing of minimum wage increase as businesses struggle with COVID-19 impacts

With an increase in the minimum wage coming into effect on Wednesday debate is raging over whether now is an appropriate time for the rise. 

The $1.20-an-hour increase sees the minimum wage rise from $17.70 to $18.90 and comes as businesses across the country are struggling with the economic impact of COVID-19. 

As of Thursday last week, the nation has been placed in lockdown, meaning all non-essential businesses have been closed and Kiwis ordered to self-isolate. 

John Milford, of the Wellington Chamber of Commerce, says now is not the time to put more pressure on businesses struggling to stay afloat.

"To put this on businesses at the moment - a number of them that have absolutely no revenue coming in at the moment, so they've got no way of earning any revenue whatsoever - it is an imposition that is probably at this moment in time too much on a business," Milford told Newshub.

He says although the Wellington Chamber of Commerce is in favour of a minimum wage increase, we are in "unprecedented times" and it's important to keep the bigger economic picture in mind.

"While we support the view that obviously giving a living wage is important and appropriate there is a time for that and we would suggest that that's delayed for six to nine months until we get through these circumstances."

But E Tū union says for those earning the minimum wage and struggling to make ends meet six to nine months is too long to wait. 

"Workers should earn enough to survive and participate in society, and what we know is that the minimum wage is not enough to do that," says Annie Newman, E Tū assistant national secretary.

"Every single thing that those workers earn, every dollar that they earn, is an important dollar for their survival."

According to E Tū, the wage increase will benefit around 250,000 workers.

"There is absolutely no argument for a delay in this wage increase," says Newman. 

"For all of those workers that are going to get that increase it's about survival. They have a right to that money."

There has been much talk of essential workers receiving a pay increase during the lockdown to reflect the importance of their roles. Both Foodstuffs and Countdown have announced workers will be paid more during the lockdown period.

Newman says that although that is a start, the increase needs to be permanent.

"They don't need the money just now, they need the money on an ongoing basis."

She says the fact that many minimum-wage jobs have been deemed "essential" shows their importance to the economy.

"Many minimum-wage workers are also on the COVID-19 frontlines, including in security and cleaning. These workers get up every day to make sure our communities are safe and healthy. Yet they are paid as low as they legally can be. it’s an injustice."

She says in the long-term, raising the minimum wage will mean more money will end up flowing back into the economy.

Prime Minister Jacinda Ardern argued against delaying the minimum wage increase on the basis of the stimulatory effect it would have on a struggling economy.

"We have to keep in mind that what we need people to keep doing is continue to spend and consume," Ardern said in March, which she said is "part of keeping the economy ticking over".