Government confirms 2021 minimum wage hike

The Government has confirmed it will raise the minimum wage to $20 per hour from April 1, 2021.

Ahead of its landslide electoral victory in October, the Labour Party campaigned on increasing the minimum wage to $20 from the current rate of $18.90. The previous coalition Government increased the wage each year it was in power.

The starting-out and training minimum wages are also rising to $16 to stay at 80 percent of the adult minimum wage.

Workplace Relations and Safety Minister Michael Wood said it was vital that as New Zealand recovers and rebuilds from the COVID-19 pandemic, that the Government supports Kiwis. 

"There are many Kiwis who earn the minimum wage that have gone above and beyond in our fight against COVID. I think everyone agrees those who served us so well during lockdown - including supermarket workers, cleaners, and security guards - deserve a pay rise."

Wood said the increase will lift the incomes of roughly 175,500 New Zealanders. Kiwis working 40 hours a week on the minimum wage will receive $44 more each week before tax.

"The rise in the minimum wage is estimated to boost wages across the economy by $216 million, giving New Zealanders more money to spend at local businesses. Increases to the minimum wage can also promote productivity, which is good for businesses too."

Wood said next year he would outline what changes the Government is "intending to make in the coming years to give businesses time to plan ahead".

ACT Party leader David Seymour in November said it would be an "act of economic vandalism" to increase the minimum wage, while National's Todd McClay said at the time that another increase would punish businesses. 

"The Government is proposing to increase the minimum wage quickly, double sick leave, impose another public holiday and reintroduce 1970s-style collective bargaining at a cost or more than $2.8 billion per year.

"Now is the time for the Government to reduce costs on businesses and make it easier for them to create jobs, not make it harder for them to pay their bills."

Wood said on Thursday that the Government is supporting employers during the pandemic through its Leave Support Scheme as well as the recently announced Short-term Absence Payment. It will cover eligible workers needing to stay at home while awaiting a COVID-19 test.

"This will be a one-off payment of $350 to employers to pay workers who need to stay home while awaiting a test or while someone who is their dependent is doing so, in accordance with public health advice," Finance Minister Grant Robertson said earlier this week.

The Government also unveiled the new Resurgence Support Payment this week, which would support businesses if there is a move to alert level 2 or higher for a week or more.