Minimum wage hike isn’t what the economy needs

A sharp boost to the minimum wage would see fewer jobs created as businesses struggle under a tidal wave of government-imposed costs, National’s Economic Development spokesperson Todd McClay says.

The Helen Clark Foundation has today called for wealth to be ‘pre-distributed’ through a sharp increase of the minimum wage to boost productivity.

“Sadly this will have the opposite effect. It will be especially hard on small businesses still struggling from debt taken on during the Covid-19 lockdowns,” Mr McClay says.

“Businesses need policies that will help them grow the economy and create jobs, not greater costs that will slow the job market.”

MBIE forecasted that 6500 jobs would be lost when the minimum wage was last increased. As employment costs increase, businesses find it hard to afford to replace workers who leave. This in turn slows job creation – a lagging indicator for unemployment.

“The way to help businesses pay people more is through better rules, less red tape and lower costs. This in turn leads to job creation and wage growth,” Mr McClay says.

“The Government is proposing to increase the minimum wage quickly, double sick leave, impose another public holiday and reintroduce 1970s-style collective bargaining at a cost or more than $2.8b per year on Kiwi businesses at a time when they can least afford it.

“Now is the time for the Government to reduce costs on businesses and make it easier for them to create jobs, not make it harder for them to pay their bills.”