Grant Robertson rubbishes talk minimum wage hike will leave thousands out of work

Finance Minister Grant Robertson has rubbished suggestions increasing the minimum wage at a reasonable rate will cause job losses. 

It's set to rise to $20 next year, but a new report from the Helen Clark Foundation and the New Zealand Institute of Economic Research says now would be a good time to bump it up to $22.10 - the amount determined by the Living Wage campaign to be "necessary to provide workers and their families with the basic necessities of life". 

The report says this will not only motivate employees but also save taxpayers money as the state won't have to redistribute as much to alleviate poverty. 

But every time the minimum wage goes up, business groups and right-wing politicians claim it'll result in job losses. 

"What the business community needs at the moment is policies to help them grow the economy and create jobs, not greater costs that will slow the job market down," said National small business spokesperson Todd McClay.

"Unfortunately I think the suggestion from the [Helen Clark] Foundation will have the opposite effect than they're hoping for."

Ministry of Business, Innovation and Employment calculations suggest it would cut 30,000 jobs, and Business New Zealand chief executive Kirk Hope said it would be mostly young people affected. 

And ACT leader David Seymour has called for the next increase - to just $20, well below the Living Wage Clark and her team are calling for - to be cancelled.

"Basic economic theory and empirical evidence show minimum wage increases would only serve to reduce the number of jobs available."

Grant Robertson.
Grant Robertson. Photo credit: The AM Show

But that's not what happens in reality, Robertson told The AM Show on Wednesday.

"We'll continue to look at what we can do to support lifting the wages of the lowest-income New Zealanders. We always have in mind how that will work in terms of businesses. 

"I've [seen] many interviews on this show where people have said when you increase the minimum wage we'll see massive job losses, and it doesn't happen. The minimum wage earners spend the money they earn in the economy, so we'll continue to seek to lift that, while remembering the importance of balance."

MBIE analysis when the 2020 hike to $18.90 was being considered said 17,000 jobs would be lost if it went to $20, but only 6500 at $18.90. In that same time, 43,600 new jobs would be created.

As for the Living Wage, Robertson said people were "getting a little ahead of ourselves on where it might go in the future". 

Labour promised a $20 minimum wage by 2020 as long ago as 2017, and has stuck with it despite the biggest economic shock in nearly a century. 

A Newshub analysis of minimum wage increases and unemployment last year found little link between the two. Bigger minimum wage increases typically came under Labour-led Governments, with no apparent correlation with unemployment. 

Unemployment fell constantly throughout the 2000s, despite minimum wage increases averaging 8 percent under Clark's leadership. Unemployment rose sharply with the global financial crisis, but fell again through the 2010s despite regular increases in the minimum wage over and above inflation by both National- and Labour-led Governments.