The increase was to keep up with the cost of living, the Workplace Relations and Safety Minister said. (File photo) Photo: 123RF
Minimum wage workers will get a pay increase from April 1, but its less than the current rate of inflation.
Workplace Relations and Safety Minister Brooke van Velden said the rate would go up by 2 percent, from $23.50 to $23.95.
She said it would benefit about 122,500 working New Zealanders and struck a balance between keeping up with the cost of living and not adding further pressure to businesses.
"I know those pressures have made it a tough time to do business, which is why we have taken this balanced approach. With responsible economic management, recovery and relief is coming.
"I am pleased to deliver this moderate increase to the minimum wage that reflects this Government's commitment to growing the economy, boosting incomes and supporting Kiwis in jobs throughout New Zealand.
"The increase aims to help minimum wage workers keep up with the cost of living, with inflation projected to remain relatively stable at around 2 per cent from June 2026," she said.
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The increase was in line with the recommendation the Ministry of Business, Innovation and Employment (MBIE) made to the minister.
It said it would be the best balance between protecting real income of low-paid workers and minimising job losses.
"CPI inflation forecasts suggest annual inflation will ease to be within the 2-2.5 percent range in the first half of 2026 and remain relatively stable at around 2 percent from June 2026 through to 2028," MBIE said.
"These forecasts indicate that a 2 percent increase would largely maintain the real income of minimum wage workers relative to the level of the minimum wage when it last increased on 1 April 2025."
MBIE said the groups most likely to be affected included young people, part-time workers, female and Māori workers.
The effects would be concentrated in tourism, horticulture, agriculture, cleaning, hospitality and retail, it said.
It recommended increasing the starting-out and training wage rates from $18.80 to $19.16 per hour, maintaining the current relativity of 80 percent of the adult minimum wage rate. This recommendation was also adopted.
Infometrics chief economist Brad Olsen said the increases were probably closer to the rate of inflation than people might think.
Infometrics chief economist Brad Olsen. (File photo) Photo: LDR
"Only because of course these figures start from April 1 next year. At that point, it's forecast would have inflation up 2.3 percent. So you're sort of a lot closer than when we're currently sitting at 3 percent for the September quarter.
"The minister's been quite clear in her work to try and balance, supporting workers and the increasing cost of living, but where business conditions are at the moment and and you see that in terms of businesses highlighting cost pressures and the fact that job ads have not really improved all that much."
Job numbers were not particularly "upbeat" at the moment, Olsen said, with unemployment at its highest since 2016.
"So all of that is a bit more of a balance that I think the government has had to go through this year."
He said increases in previous years had been much bigger than the rate of inflation.
"Although in one year you might not have the minimum wage increase relative to inflation, the minimum wage is still considerably above where it would be if it indexed to inflation from, say, 2018 onwards."
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