Today’s announcement of a 50 cent increase in the minimum wage from April 1 will still mean workers unable to survive on a full-time wage and the state subsidising employers who pay low wages.
Minimum wage announcements are an entirely political process.
The minimum wage is currently about 52% of the average wage. It reached this level under Labour in 2008 and has been maintained at that level by National.
The previous national government, however, increased the minimum only once in nine years and allowed it to decline to around one-third of the average wage.
The minimum wage has been as high as 80% of the average wage in 1946 when it was first introduced and was 66% in April 1973.
There is no reason economically why it could not be returned to that level. Current CTU policy is for a minimum wage of two-thirds of the average wage and indexed in law at that level. This is the case for National Superannuation payments which are indexed so that the couple rate is at least 66% of the net average wage.
According to Statistics New Zealand figures, the current average wage is $29.38. Two-thirds of that level is $19.59.
An increase in the minimum wage to this level was supported at the last election by Labour, the Greens, NZ First, the Maori party and the Mana Movement. I hope the same promise can be obtained from all five parties before the next election.
The current level still means that someone working a 40-hour week is only $610 before tax. Tens of thousand of workers have no guaranteed hours in their contracts and work fewer than 40 hours a week.
The government ends us subsidising employers low wages by supplementing inadequate incomes through Working for Families and the Accommodation Supplement at a cost of around $4.5 billion annually.
The minimum wage should be a living wage!