Minimum wage increase not enough

new-zealand-council-of-trade-unions

Wed Jan 27 2010 13:00:00 GMT+1300 (New Zealand Daylight Time)

Minimum wage increase not enough

Wednesday, 27 January 2010, 3:09 pm
Press Release: New Zealand Council of Trade Unions

CTU media release
27 January 2010

The increase in the minimum wage of just 25c to $12.75 per hour is mean, said Council of Trade Unions President Helen Kelly today. “If this is the rate at which we intend to catch up with Australian wages then we will never get there,” she said.

“The increase to $12.75 from 1 April is an annual increase of only 2 per cent. That is barely enough to compensate for inflation, and may not be enough even for that.” The NZIER consensus inflation forecast is 2.3 per cent for the year to March 2010. The average wage rose 2.8 per cent in the six months to September 2009 alone.

“This decision will leave low paid workers even further behind. We need to be reducing income inequalities not increasing them,” said Kelly.

“Providing higher wages to low paid workers stimulates the economy, which is only just emerging from recession. It also benefits hundreds of thousands of workers and their families, and many more are on low wages which are influenced by the minimum wage. It is untrue that increases in the minimum wage cost jobs. Much higher increases in the minimum wage in recent years have occurred while employment was maintained at record high levels.”

“The NZIER consensus forecast for the increase in private sector wages to March 2010 is 3.5 per cent. If this turns out to be correct, the minimum wage will actually fall as a percentage of the average wage. This means low paid workers are going backwards not forwards.”

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“Workers who live on the minimum wage are already struggling as the Government itself has publicly acknowledged. To set this increase at the absolute minimum will increase their difficulties in the coming year and is very unfair,” said Kelly. “The CTU believes the minimum wage should be two thirds of the average wage and as an interim step should immediately rise to $15. We will continue to campaign for this.”

NOTES TO EDITORS

Minimum Wage increases 2008-10
1 April 2008 increased to $12.00, an increase of 6.7 per cent. It was 51 per cent of the average wage ($23.49).
1 April 2009 increased to $12.50, an increase of 4.2 per cent. It was 51 per cent of the average wage ($24.73).
1 April 2010 (assuming that is the date the new rate takes effect) $12.75 is an increase of 2.0 per cent. That will be 50 per cent of the average wage if the NZIER consensus forecast for wage increases is correct.

Inflation (CPI) 2009-10
Latest (year to December 2009) is 2.0 per cent
Reserve Bank forecasts 1.8 per cent to March 2010
NZIER consensus forecast is 2.3 per cent to March 2010

Wage increases 2009-10
Average wage rose 2.8 per cent between March 2009 and September 2009 alone (i.e. just six months)
($24.73 to $25.42). (Sept is latest available.) It rose 5.1 per cent in the year to September 2009 and 5.3 per cent in the year to March 2009.
NZIER consensus forecast is 3.5 per cent increase in private sector wages to March 2010.
Labour Cost Index rose 2.1 per cent in the year to Sept 2009 (latest) (0.8 per cent in the six months March to Sept).
In Sept quarter, among the 47 per cent of wage and salary earners who got a pay increase, the average rise was 4.8 per cent and median 4.0 per cent
Reserve Bank forecasts 1.5 per cent increase in the LCI in the year to March 2010.

ENDS

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