From today (Thursday), New Zealand is increasing its minimum wage to NZ$20 an hour, as well as raising the tax rate on top-earning individuals to 39 percent.
This rise of $1.14 per hour will benefit up to 175,500 Kiwi workers and increase wages across the economy by around NZ$216-million.
Other changes that come into effect from today include small increases to unemployment and sickness benefits.
New tax rate for NZ’s top-tier earners
Meanwhile, top-tier earners will pay the new 39 percent tax rate if they earn more than NZ180,000 per annum. According to the Government, about 2 percent of people are in this bracket.
The new tax will bring in an additional NZ$550-million in revenue this year, official estimates indicate.
Prime Minister Jacinda Ardern, said the changes were part of a pre-election promise and were “real and long-overdue improvements to the support we provide our most vulnerable”.
“There is still much more to do, including building more homes, improving our health system, investing in education, training and job opportunities,” she stated.
Minimum wage has gradually increased
“The Ardern-led government has raised minimum wage gradually over the past four years, adding up to an increase of $4.25 an hour since 2017,” The Guardian newspaper reported.
“Last year, Ardern made headlines for encouraging New Zealand employers to consider adopting a four-day workweek and other flexible arrangements as a way to rebuild from Covid-19.”
The country’s Council of Trade Unions is welcoming the introduction of the new legal minimum wage.
“Over 170,000 Kiwis will have a pay rise,” said CTU President Richard Wagstaff. “And for those who were on the previous minimum wage of $18.90, working a 40-hour week, they will have an increase of $44 a week, before tax.
Many working people do not earn enough
“We know that thousands of working people do not earn enough to provide for a comfortable life for them and their whanau (family).
“They are the working poor; struggling to meet the costs of basics like food and housing. Increasing the minimum wage has a real and meaningful impact on these people’s lives, but these people will still be living on the bread line,” Wagstaff said.
“Covid showed us all just how crucial many jobs are to the functioning of our society; jobs in health, cleaning, on our border or [in] supermarkets. Many of these crucial roles are poorly paid. It’s time we valued those being paid the minimum wage more, and this increase is one way of doing just that.”