Monday 17 January, 2011

A substantial increase in the minimum wage is needed to both help low income workers and add further stimulus to the economy, the National Distribution Union (NDU) said today.

The government is expected to announce soon whether the minimum wage will increase from April 1st.

“Many minimum wage households are struggling to cope with the significant increases in food and living costs over the past year,” NDU General Secretary Robert Reid said.

“GST and petrol price rises are pushing inflation to around 4%, with higher levels expected in the next two quarters.”

“And figures released today showed despite recent seasonal falls, over the past year food prices were up 4.2%, including increases in groceries and fruit and vegetables on or above 5%.”

Increasing the minimum wage is a very effective means of delivering a fiscal stimulus to a slow economy, as people on low incomes are more likely to spend any additional income, Robert Reid said.

“But if wages, including the minimum wage, are held flat, that takes badly needed income out of New Zealand communities and threatens the opportunities for economic recovery.”

“Unless the minimum wage is increased by a significant amount, the NDU is concerned this could have the same impact as a wage freeze in real terms.”

The NDU has made the case for a minimum wage of $17.22 in its submission to the Minister of Labour at the end of last year, equating to two-thirds of the average wage.

“People on the minimum wage were the losers in the misleadingly titled “tax switch” from income tax to GST last year.”

“A substantial wage increase to those at the bottom is the most equitable and makes the most economic sense. An immediate increase of the minimum wage to $15.00 would be acceptable, anything less would be an insult,” Robert Reid said

ENDS

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