Wellington, January 22, 2020
The Labour-led coalition government has announced its decision to raise the minimum wage.
Once again this appears to be a policy like that of Kiwibuild or the Capital’s Gains Tax (CGT), seems to have been thought on the fly rather than after a thorough analysis.
Analysis undertaken by the Ministry of Business Innovation and Enterprise (MBIE) concludes that the Labour-led government’s decision to raise minimum wage to $18.90 an hour from April 1, 2020 will cost the New Zealand economy 6500 jobs and increase Government expenses by $62 million in 2020.
Further, moving to a $20 an hour minimum wage by 2021, is likely to cost the New Zealand economy 17,000 jobs and increase Government expenses by $125 million a year.
Driving up inflation
Further this will also drive up inflation.
The minimum wage changes will see small businesses struggle more at a time when the government should be supporting them, not working against them.
This increase will also hurt workers whom this Labour government is keen to appease.
Migrant workers keen to gain New Zealand experience will struggle to find work whether it is to support themselves as international students or to gain their first full time role to start life in New Zealand.
Lastly, when inflation rates rise this will lead to an increase in the costs of living.
Everyone from workers, to small businesses, to end consumers, to tax payers who will pay the extra costs of $62 million in 2019 and $125 million in 2020 stand to lose from increase in minimum wage.
Therefore it is hard to comprehend the rationale for this government policy.
Editor’s Note: The government lifted the minimum wage from $16.50 to $17.70 per hour with effect from April 1, 2019. This will move up to $18.90 from April 1, 2020 and $20 per hour from April 1, 2020.
Harsh on people
The government is making it harder for small businesses to employ people, harder for them to invest in training and development, and harder for them to grow and contribute via taxes, research and development to New Zealand.
These projections could prove to be much larger if our economy continues to slow and the labour market weakens, as it has already under the Labour-led government.
Everyone wants high wages for workers, which is why National increased the minimum wage every year in Government. But we believe the minimum wage should go up in a balanced way that does not go too far, too fast.
Hard-working Kiwis are already doing it tough because of the Labour-led government’s poor policies, which are driving up the price of petrol, rent and other living costs.
The best way to put more money in workers’ pockets is to let them keep more of what they earn.
New Zealand is a smart and innovative economy where we are known to encourage and reward talent. Regressive and thoughtless polices such as these undo all the positive work that has been done for years by making New Zealand a less attractive place to invest and live in as job creation and growth is low.
Kanwaljit Singh Bakshi is a Member of Parliament on National List. He is the Party’s Spokesperson for Internal Affairs and Associate Spokesperson for Justice.