New Zealand urged to increase minimum wage

To boost economic productivity and inclusion, New Zealand should raise its minimum wage, says a report by the Helen Clark Foundation and the New Zealand Institute of Economic Research.

“Minimum wage reviews should place less emphasis on potential short-term disemployment effects and more on a medium to long-term view of higher wages to encourage investment in upskilling and productivity gains,” stated the report. 

The pandemic has adversely affected the future of roles like hospitality, retail, aged care, and food-processing industries, which typically employ low-paid workers. With COVID-19 affecting migration, roles like these are unlikely to return to the country, and would benefit by having a minimum wage to attract the “highest skilled workers to… focus on their specific talents”, it added. 

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While there may be adverse company-level impacts in the short-term, the overall economy and workforce will be better off, it adds. In fact, “lifting minimum wages has an inequality reducing effect,” highlights the report. 

“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,” commented NZIER Deputy Chief Executive Todd Krieble.

“The recovery gives us an opportunity to build a more inclusive economy that shares the gains,” he added.