New Zealand’s adult minimum wage is set to increase by 2% to 23.15 NZ dollars (equivalent to 14.12 U.S. dollars) per hour, effective from April 1. In a statement on Thursday, Workplace Relations and Safety Minister Brooke Van Velden emphasized the government’s commitment to balancing the protection of the lowest-paid workers’ incomes while maintaining a labor market environment conducive to employment.

Van Velden acknowledged the cautious approach taken this year in light of the significant economic changes over the past year. Despite the current low unemployment rate, the labor market is experiencing softening due to factors such as high net migration rates, constrained consumer spending, and subdued economic growth. Notably, the minimum wage as a proportion of the median wage has risen from 62% in June 2017 to 72% in June 2023.

The minister highlighted the challenges faced by businesses in issuing pay raises or expanding their workforce in response to the increased minimum wage. Conversely, the opposition Labor Party criticized the raise as “tiny.” Van Velden defended the decision, citing the consideration of current economic conditions and the substantial historical increases in minimum wage that have affected wage relativities with other earners.

Furthermore, while the adult minimum wage increases, the rates for training wages and starting wages will stay at 80% of the adult minimum wage rate. This move aims to address concerns about the impact on businesses and employment.