The government announced yesterday that it would increase the minimum wage from $10.25 per hour to $11.25 per hour in April next year.
There was some good coverage on National Radio this morning of the minimum wage rise, with Business Roundtable spokesperson, Roger Kerr debating with the National Distribution union’s Laila Harré.
Roger Kerr makes the usual business advocacy group argument that business cannot afford the cost of an increase to the minimum wage. However as Laila Harré notes New Zealand businesses have been incredibly profitable in recent years with profits increasing an average of 11% per year for the last four years and CEO’s getting an average 23% salary increase last year.
Roger Kerr also articulated the other commonly believed myth about the minimum wage, which is that higher wages create unemployment by discouraging employers from hiring more people. In fact at the same time as the government has increased the minimum wage by 46% in the last seven years, unemployment has fallen to record low levels. CTU economist, Peter Conway , in another interview later in the morning, quotes a study that shows increases to the youth minimum wage led to an increase in hours worked rather than a decrease.
An increase to $11.25 (and $9.00 for the youth rate) will benefit around 110,000 adult workers, most of whom are women, and around 9,200 youth workers. As Laila Harré notes the majority of these jobs, such as caregiving in age care facilities, are skilled and demanding ones done by people with many years’ experience. It is fallacious to say that they are entry level or low skill jobs.
One of the reasons workers in these jobs are paid at or near minimum wage is that they have lost their bargaining power or collective agreement coverage. It is crucial that union members grow our membership and grown our coverage so that we are not forced to rely on minimum wage laws to receive a pay increase. While the minimum wage is rising at the moment, under previous governments it stagnated for decade leaving many workers in real poverty.
...the gossip 
Dominion Post editorial, 20 December 2006;
Easy to attack when on top
It is an unfortunate truism that enthusiasm for screwing down the minimum wage is directly related to one’s distance from it, writes The Dominion Post. Business NZ chief executive Phil O’Reilly is a fine advocate for his members, and trotted out the arguments against the $1 rise to $11.25 an hour from April 1 next year with his usual skill. He deserves the no doubt considerable salary he receives for those efforts, but it must be asked whether he and Business Roundtable chief executive Roger Kerr – who believes paying $11.25 an hour makes it hard for New Zealand to compete internationally – would be as enthusiastic on the subject were they the ones currently receiving $410 a week to clean the toilets of high-earning executives, or slightly more to scrape poo off the aged and infirm in a rest home.
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The position taken by critics of the minimum wage increase ignores an important reality. The rise in the minimum wage is expected to affect about 110,000 adult workers. Some of those workers will be starting their working careers, and the minimum wage job will indeed be a step on the way to something more lucrative. However, for many, such as Hastings healthcare worker Anne Bills, the reality is that the minimum wage is what they are going to be receiving for the forseeable future. She has been working in the sector for 20 years and in that time has had a pay rise of $1.39 an hour. She is understandably insulted that she has to rely on state regulation to deliver her pay increases.
Companies which straddle the Tasman are able to accommodate the higher rates of pay available in Australia and still turn a profit. According to information supplied by the Council of Trade Unions, Guardian Health Care NZ Ltd has a starting rate for New Zealand workers of $10.66 an hour, rising to $11 in February (and now $11.25 in April when the new mininum wage rules take effect). Guardian is owned by the Australian-based DCA Group, which offers similar services there through the Amity Group. In Australia, the aged care workers are covered by awards, and in New South Wales the minimum starting rate for an Amity nursing assistant aged 18 or over is A$15.38.
There are dangers for New Zealand in that equation. The first is that Australian companies will continue to regard New Zealand as a convenient milch cow, where low wages fuel returns at a level that would be impossible across the Tasman. The second is that workers here will get a message that the way to climb the employment ladder is to move to the bigger pay packets of Australia. That is already happening. The minimum wage increase is a step, albeit a small one, in stemming that flow. It is also the just thing to do.