The politics of the minimum wage rise



The government decision to increase the minimum wage by 50 cents was an interesting decision on a number of levels.

$14.25 is clearly not enough to live on – especially given that minimum wage workers often also work in industries that have no guaranteed hours week to week.

An immediate increase to $15 an hour and then a staged increase over the next few years to the CTU target of 66% of the average wage would have been more reasonable and done something to put a dent into the gross inequality and low wage culture that operates in this country.

However, this is a National Party government. The last time they were in government from 1990 to 1999 they had one increase. The minimum wage fell from around 50% of the average wage to around 30%.

This was reversed under the labour government with the minimum wage going from $7 to $12 an hour for an adult – a 71% rise.

This increase however only returned the minimum wage to the level it was under the 1984-1990 Labour Government of 50% of the average wage. The then Labour Prime Minister Helen Clark said she was “comfortable” with that level and the any further increases in real terms would be unlikely.

As I explained in last week’s blog, real wages declined by about 25% in the late 1980s and early 1990s without much recovery since. This meant that many more workers were affected by the increases in the minimum wage under Labour than had been the case in the past. 

TDB Recommends

Most of Unite’s collective agreements actually include the minimum wage as the base rate as many of our collective agreements were being won during the time of a rising minimum wage. They were also in industries that had been largely de-unionised in the 1990s and were completely dependent on legal minimums which were often ignored anyway.

It seems this government has continued that policy of keeping the minimum wage at roughly 50% of the average wage. In the last five years the National Party have been in office the increase has been about 14%. Given that this is an election year the latest increase in fact takes it frationally ahead of 50% of the current $28.03 average wage figure.

I suspect it is against the real views of many Cabinet Ministers who hold to the right-wing economic views that minimum wage laws destroy jobs. This is the view of the new Act Party leaders. He doesn’t believe there should be a minimum wage at all.

The fact that this business-friendly National Party government has acted to maintain the minimum wage at approximately 50% of the average wage is a victory for the struggles that have been waged over the past few years to put low wages and inequality at the centre of the public discussion. These campaigns have been led by Unite Union and the Service and Food Workers Union who represent the lowest paid workers in the country.

Our members however have been telling us that as much as it is important for the minimum wage to keep going up – especially in real after inflation terms – we need to do something about what have been dubbed “zero-hour contracts”. These are contracts that allow bosses to change workers rosters from week to week without any effective legal limits. They never allow a worker to build up his hours from irregular part-time to full-time no matter how long they work for the company.

This is the reality for hundreds of thousands of workers in this country. The 50 cent rise affects about 100,000 workers. 200,000 workers earn less than $15 an hour. This is the reality not just for workers in a corner coffee shop but for workers who work for some of the biggest companies in New Zealand. This is the reality for workers that Unite Union represents in fast food, hotels, cleaning, security, the casino. The companies that dominate these industries are usually part of huge multinational chains.

We are serving notice on these companies that in the next negotiations we will be looking at getting secure hours for our members (as well as a higher minimum wage!).


  1. Zero-hours contracts have the playing field positioned at vertical.

    The worker is stuck by the phone ‘just in case’ and is not free to build a ‘stable’ of employers to give themselves a reliable cashflow, and all that goes with it.

    Useful for the employer, for sure. Very low overheads and very few obligations. No hungry mouths to feed when the work/demand is low. Training and up-skilling becomes the responsibility of the worker.

    Mike, I hope you have ways upon ways that you can bring to bear on this situation. And, when it works, take it to Europe and the US. Workers there are equally desperate for solutions that work for them, too.

  2. A quote from Bill English…


    “GUYON Can I talk about the real economy for people? They see the cost of living keep going up. They see wages really not- if not quite keeping pace with that, certainly not outstripping it much. I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper. I mean, is that an advantage now?

    BILL Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.

    GUYON So it’s part of our strategy to have wages 30% below Australia?

    BILL Well, they are, and we need to get on with competing for Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.

    GUYON But is it a good thing?

    BILL Well, it is a good thing if we can attract the capital, and the fact is Australians- Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.

    GUYON So let’s get this straight – it’s a good thing for New Zealand that our wages are 30% below Australia?

    BILL No, it’s not a good thing, but it is a fact. We want to close that gap up, and one way to close that gap up is to compete, just like our sports teams are doing. This weekend we’ve had rugby league, netball, basketball teams, and rugby teams out there competing with Australia. That’s lifting the standard. They’re closing up the gap.

    GUYON But you said it was an advantage, Minister.

    BILL Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia. So Australia already has 40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.

    – TVNZ, Q+A

    – Sunday April 10, 2011

    And from another National Party MP;

    “Australian workers will get a 2.6 per cent rise to $A622.20 a week or $NZ750.50 at the prevailing exchange rate.

    That’s $A16.37 ($NZ19.75) an hour for Aussies’ 38-hour working week compared with $NZ13.75 an hour or $NZ550 for Kiwis’ 40-hour working week. I note that the Labour Party spokesperson on Labour issues is wringing her hands in despair at this news.

    I think we should celebrate because a rise in the minimum wage in Australia makes our labour force more competitive and will be helpful in attracting investment and jobs to New Zealand.

    About 18 months ago CHB Mayor Peter Butler and I approached Australian based food processors with the suggestion of moving across the Tasman to establish plants in New Zealand to process food produced under newly irrigated areas. We established that Australian food processors are interested to do this when our new irrigation is in place.

    A driver from the Australian perspective is that the New Zealand labour force is well educated, more productive and less unionised than their Australian counterparts.”

    – John Hayes, National MP

    – 5 June 2013

    These are the scumbags elected to our Parliament.

    • I agree, yet our media don’t pick up on this kind of analysis. It makes a mockery of Keys policy that he wanted NZ to close the wage gap with Australia, yep they are greedy scumbags

  3. Thanks Mike – I have a real issue with minimum wage and laws around it. To me the minimum wage was a replacement, and quite a shitty one at that – for the award wages I use to get. The minimum wage has been the heel of the bad employer and the knife with which to hold people down. Fear is a minimum wage and a minimum breeds fear.

    It has been a bloody nightmare and everyday I hear of people working for less than minimum wage – either piece meal work, an immigrant putting in extra hours to keep their job, a student doing extra hours to keep their job whilst they study or workers being forced to do an extra 1/2 an hour here or there just to keep the company they work for afloat.

    Funny it’s always the people being paid the lowest wages who are the ones being asked to do just a little bit more. The weak and the vulnerable who are prayed on.

    Lets thank again the neo-con corporate world – because without them we would not have the barbarians running our society.

  4. Hi Mike, I noticed Simon Bridges claimed in the article on Stuff that 50% of the average wage is the highest in the OECD.

    I decided to do a bit of amateur fact-checking. I found this:
    The stats are all a year or two old but if you’re right about them keeping it pretty consistent at 50% of average wage, that shouldn’t particularly matter.

    Anyway, on minimum wage relative to mean income we were indeed first in 2012. On median we’re third. (Are you using mean or median figures? Median seems like a more reliable measure to me – less affected by outliers, more tied to where you’re at compared to others in the society.)

    On real minimum wage we’re 7th. 8th on minimum wage according to value of our currency.

    We’re behind Australia on all these stats but ahead of most of the OECD.

    Anyway, the main reason I’m posting is to ask: do you have any comments to make on these figures, or any other information that we need to take into account in interpreting them, etc?

    At this point, I don’t know whether to be pleasantly surprised that we’re doing better than I thought we were relative to other countries, or disappointed that other countries are doing even worse than us. We’re still doing badly to have so many living in poverty, even if others are doing worse.

    I certainly agree with you that it’s good news if even this government, which is philosophically dead against raising minimum wages, has felt the need to offer a 50c increase as an election bribe. It is testament to the good work of your union and others, and I salute you.

  5. It is a fact that the NZ minimum wage is above average in the OECD as a percentage of the average wage or the median wage – whichever measure is used. NZ has traditionally used the average figure to do its measurement against. The CTU uses the average measure for its target of 66% of the average wage as the minimum it wants. Legal minimums play a pretty important role in NZ – maybe more than other countries. But even here we come across many cases where legal minimums are ignored. There are even anomolies like Germany where wages are generally significantly higher but has no minimum wage!

  6. Standard response by a government who thinks its clever, is in government for power and nothing else and who take the voters for fools.

    Knowing that the opposition were targeting minimum wage growth they put it up a miserable amount, not enough to make a difference to the people affected, not enough to do anything economy wise but enough to fight that particular fire.

    Either National think the minimum wage is worthy of being set at a reasonable level to ensure better living standards (not what it is now) or they think it should not exist and the market should dictate a level.

    Typically they have no view, just one that they think will steal the oppositions thunder and enough to ensure they remain in power. What a way to run a country!

  7. Yay – I get a pay rise! We – somehow – now have the economic conditions …oh that’s right election year!!
    Grizzly about living wage (and minimum wage!) while supporting gigantic wages for some (because ” good people won’t work for less”) is the equivalent of a reverse Robin Hood.
    Anyone who says (with a degree or not) that most of these workers are young, students or ‘wouldn’t get a job otherwise’ probably don’t know any of the skilled cleaners, gardeners, careworkers, etc who have been doing there jobs for years.
    Education is not the answer – a fair days pay for a fair days work is.

Comments are closed.