New Zealand Prime Minister John Key announced yesterday that on April 1 the minimum wage will rise fifty cents to $12.50 (today, roughly US$6.76; the current federal US minimum wage is US$6.55, or NZ$12.12). As a centre-left voter, I’d like to see a bigger rise, but I think it’s a good compromise. It will mean 4.2 per cent rise for the approximately 120,000 workers on the minimum wage, while prices rose 3.4 per cent in the year to December. This will help these workers avoid losing ground.
Business lobby groups, of course, didn’t want any increase. However, Business New Zealand chief executive Phil O'Reilly was realistic, saying "…the Government's decision is pragmatic. I'm a realist, and it's certainly not as bad as it could have been." Which kind of suggests that the Government could have increased the wage a bit more.
Also predictably, the Unite Union, which tries to organise low-wage workers, said the rise wasn’t enough. The average wage rise in the year ending December was 5.4 per cent.
The union wants a citizens-initiated referendum asking if the minimum should be raised to $15 an hour, and then to two-thirds of the average wage within three years. O’Reilly said this proposal was "utterly ideological". What, like the positions of the business lobby aren’t?
The National Party, which leads this Government, doesn’t generally enjoy any support from unions (the members of which are generally automatically members of the Labour Party). That they’re not also being savaged by the business lobby is probably a good thing for National.
If the pay rise had been any lower, I would’ve criticised it. But given the current economic situation, I agree with the Prime Minister when he said, "I think we have hit the right balance." It must be looked at again as the economy improves, but for now, this is a sensible move.
2 comments:
I think it's a fair raise. And while I'm guessing you converted to USD for your US readers, it's not quite fair to base the wages here against US wages; we use the NZD to buy items at NZ prices (some of which are lower, some are higher than in the US).
Also, in the US, many professions - including waitressing - can be paid less than the minimum wage due to the availability of receiving tips. Waiters don't have to worry about that here.
So, $12.50 is damn good for minimum wage! Esp with even more tax cuts coming up on April 1, as well as a new tax credit for low-income earners.
Good points all, and ones I tend to take for granted, having lived here so long. When I first moved to New Zealand, I constantly converted back and forth to understand how much something was "really" worth. That didn't last long, stopping completely as soon as I adjusted to functioning in NZ dollars.
Later, I tried to explain to American friends and family the equivalence of the Kiwi dollar—the relative worth rather than the worth that the exchange rate suggested. I used the TWI (trade weighted index) which was always higher than the exchange rate vs. the US dollar and provided a better comparison. I haven't done that in years, either.
It's tricky comparing the economics of one country to another, and simple exchange rates clearly don't do it (you're right, I did include the US amounts for Americans). For one thing, they're always fluctuating, while our income and expenses don't. Also, even things that are relatively expensive here—like cellphone calls—are nevertheless more affordable in other respects (like that we don't pay to receive calls on our cellphones).
This probably deserves a post on its own—once I figure out a better tool to explain relative value to avoid using exchange rates as the main tool for comparison.
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