'It's quite a burden': Criticism as minimum wage, benefit increases kick in

By Yvette McCullough of RNZ 

Minimum wage and benefit levels get a boost on Thursday as part of a package of changes coming into effect from April 1.

Those on the minimum wage get a pay bump to $20 an hour - an increase many employers say is too much and badly timed.

The main benefit and superannuation levels also rise, as well as the amount people can earn before their benefit reduces.

But poverty advocates are equally unimpressed, saying the changes will barely help people keep afloat.

Prime Minister Jacinda Ardern said the minimum wage increase "struck a balance".

"Our job as Government is to constantly strike that balance of ensuring that our lowest-paid workers are earning enough to meet their cost of living and to thrive. At the same time balancing that against the ability of employers to sustainably keep people on."

Employers and Manufacturers Association policy director Alan McDonald said the balance had tipped away from the business.

The minimum wage increase was the latest in a litany of costs employers are having to bear, he said.

"When you look at the cumulative effects, you've got the minimum wage, you've got the Matariki public holiday, you've got five days [extra] sick leave, fair pay agreements - it's quite a burden on employers at probably precisely the wrong time.

"A lot of businesses are on the brink, you know, there's not much left in the fingernail department, and I just think just pause, draw breath give business time."

ACT leader David Seymour said the Government would only end up harming those people they were trying to help.

"It will affect decision making by employers. They will decide to employ fewer people than they otherwise would have, to invest less, and to raise prices for their customers.

"Those effects cannot be denied, and they defeat much of the purpose of the government's initiative, while the real answer is genuine productivity growth."

However, Council of Trade Unions president Richard Wagstaff said that was scaremongering, and the increase would make a big difference for people.

"The evidence doesn't support that. Minimum wage increases in New Zealand haven't resulted in fewer jobs, in fact, the reverse is the experience.

"It's not a simple equation but we do know that people on the minimum wage spend the money they get and they'll put it back into the economy, and the money will go round and benefit employers."

Impact on benefits

Indexation sees main benefit levels and superannuation rates too, by 3.1 percent.

The amount people on benefits will receive will vary, but they could get up to an extra $16.16 a week.

Child Poverty Action Group spokesperson Janet McAllister said the measures would have limited impact.

"It will just make the rate at which things are getting worse get slower," McAllister said.

The amount people can earn before their benefit reduces - the abatement threshold - is also going up to $160 a week before tax.

But again, McAllister was underwhelmed.

"There will be some families that will notice a difference, yes, and that's positive, but does it go far enough? No.

"You can still only work eight hours on minimum wage before your benefit starts being abated."

The Government was moving far too slowly on welfare reform and there needed to be a dramatic increase in benefit rates if people are going to be lifted out of poverty, McAllister said.