Lean times ahead for minimum wage workers

The Government’s plan abandon a long standing approach to the annual review of the minimum wage is a cost-cutting exercise that could lead to a freeze on the minimum wage for hundreds of thousands of workers, says Darien Fenton.

“Currently, the minimum wage is reviewed against four important principles: fairness, protection, income distribution gap and work incentives.  These will all be ditched under the Government’s new “streamlined’ approach and the only factors that will be considered will be unemployment and inflation.

“Fairness for our lowest-paid workers should not be some optional extra.  It should be fundamental to deciding what a socially acceptable minimum wage is.

“Protection ensures that the lot of vulnerable workers with little bargaining power is taken into consideration and income distribution provides a small, but important check on rising income inequality.

“And abandoning the principle of work incentives - to make work attractive for those on benefits - is just bizarre.  We all want to see people in work, but forcing people into low wage jobs where they may end up worse off will only add to our disgraceful record of child poverty and inequality.

The Government has also decided to pare back the consultation process so that only Business NZ and the CTU will be asked to make submissions on future minimum wage changes. Other stakeholders will only have input every four years.

“This will exclude the important voices of those most affected by the minimum wage: women’s, Māori, Youth and Pasifika organisations, as well as businesses such as retail and hospitality, which are the most affected.

“This change confirms that the minimum wage setting process has joined the Government’s hit list on decent work and fair wages.  Minimum wage workers need to be prepared for even leaner times ahead,” says Darien Fenton.