9 February 2009 - The increase to the minimum wage announced today by the Government will be welcomed by workers on the minimum wage but will not relieve the difficulties these workers face making ends meets, Helen Kelly said today.
'It is the smallest increase to the minimum wage we have seen for many years and for the lowest paid workers in the country, it will mean no improvement in living standards this year,' she said.
By limiting the increase the Government has also lost an opportunity to provide a stimulus to the economy Helen Kelly added. 'People on the minimum wage spend all their income. Any increase is effectively a boost to economic activity at a time when things are slowing down. More spending power saves jobs.'
There is also no link between increases in the minimum wage and job losses, Helen Kelly said. 'Workers across the economy are losing employment, not because wages are too high but because of reckless conduct by financial institutions. We do not believe an increase in the minimum wage has an adverse effect on the industries that employ the largest group of minimum wage workers such as supermarkets, fast food and aged care industries. As we have seen in the last nine years, we have had very low unemployment and regular increases to the minimum wage.'
Helen Kelly said that New Zealand's highest paid workers will get big tax cuts in April whereas minimum wage workers only get modest cuts. 'At a time of increasing economic uncertainty, increasing the income gap between the highest and lowest paid workers will not give a sense that the pain of this recession is going to be shared. Coupled with cuts in work rights for many of these workers, the increase will be welcomed but there will be little celebration.'
Helen Kelly said that the Government has also committed to closing the gap on Australian wages. 'Their minimum wage equates to around $NZ18 so we have a long way to go.'
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