NZ Minimum Wage Freeze Sparks Controversy Amid Business Concerns
ACT leader David Seymour's proposal to freeze the adult minimum wage at $23.95 an hour for three years has sparked controversy.
The policy, announced on September 14, would also replace the starting-out wage of $19.16 with a training wage of $14.37 for workers under 20, applying for the first 12 months with any employer.
Economist Eric Crampton notes that a binding minimum wage set high relative to the median can lead to compression, where wages rise faster than productivity and prices. This compression has been building in New Zealand since June 2018, when the adult minimum wage rose 37.6% while CPI grew only 21.3%, nearly double the rate of price growth.
BusinessNZ supports a three-year rolling average of CPI and the Labour Cost Index, rules-based and inflation-aware, which would provide forward visibility for payroll planning. However, EMA Head of Advocacy Alan McDonald calls the proposal 'a step too far', arguing that indexed increases make more sense due to their smaller steps up.