Calls for minimum wage boost to kickstart NZ economy

New report says focus should be on upskilling and development

Calls for minimum wage boost to kickstart NZ economy

A new report has called for an increase to New Zealand’s minimum wage in order to kickstart the country’s post-pandemic economy.

The joint research by the Helen Clark Foundation and the New Zealand Institute of Economic Research says the country is in the midst of a unique opportunity to build a more inclusive economy.

NZIER Deputy Chief Executive Todd Krieble said: “With border controls to prevent importing COVID-19 limiting the inflow of migrants, labour will become relatively scarce and costly. Capital has never been cheaper.

“This is an unheard of combination of factors and should allow for a more equitable economic model.”

The report encouraged a focus on investing in upskilling to help people move out of low-paying jobs which will then boost productivity.

Krieble said previous minimum wage increases have been too short-term focused, and instead, the aim should be on encouraging employees from the start with good wages and long-term investment.

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Those with good wages report greater job satisfaction, productivity and are more likely to remain in their employment for longer.

The government is due to increase the minimum wage to $20 an hour but Krieble argues it should be brought in line with the living wage, which currently stands at $22.10.

Compared to the economic impact of COVID-19, the report suggests that a significant increase in the minimum wage would have a less significant hit on the economy.

“The idea that minimum wage increases cause unemployment in advanced countries is not well supported by the evidence,” Krieble said.

“In any case it is a very short-term view if we want a fairer society.”

Read more: COVID-19 sparks recruitment shift in NZ

Kathy Errington, executive director of the Helen Clark Foundation, said the focus must be on helping the salaries of low-income earners grow faster than those in high-paying jobs.

“Lockdown brought home to many of us that the essential workers who keep us alive are not paid at a level which recognises their value to society,” she said.

“Cleaners, supermarket workers and other essential workers need more than applause at 7pm – many of them urgently need more money.”

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