Powered by
Sponsored by

New Zealand increases minimum wage, increases taxes on rich

New Zealand’s NZ$18.90 minimum wage was already among the highest in the world

Jacinda-Ardern-New-Zealand-Reuters New Zealand Prime Minister Jacinda Ardern speaks at the Labour Party election night event as she claims victory in the general election, in Auckland, New Zealand, October 17, 2020. AAP Image/David Rowland via REUTERS

New Zealand will raise its minimum wage to NZ $20 ($14) an hour, in order to protect the financially vulnerable and increase the top tax rate for the highest earners to 39 per cent.

The change will be effective Thursday onwards. This also includes small increases in unemployment and sickness benefits. The raise in minimum wage will benefit up to 175,000 workers. The new tax rate would be applicable to those earning more than NZ $180,000 (approx. $125,960)  a year and will bring in an additional NZ $550m (approx. $384 million) in revenue this year. According to data from Organisation for Economic Co-operation and Development, New Zealand’s minimum wage of NZ$18.90 an hour was already among the five highest in the world. 

Businesses had called for a delay in the rise as borders still remain closed due to COVID-19. The sentiment was echoed by the Ministry of Business, Innovation and Employment. The ministry also suggested in cutting the minimum wage by 25 cents in order to cushion economy from the uncertainties caused by COVID-19. 

In 2020, labour unions had called for an increase to the living wage, $22.10, for those on the front lines. 

Prime Minister, Jacinda Ardern, told The Guardian they fulfilled a pre-election promise and represent “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,” Ardern said.

“Sharply increasing the minimum wage during a period of extreme uncertainty for small businesses is economic vandalism,” workplace relations spokesman of the opposition National Party, Scott Simpson said. 

📣 The Week is now on Telegram. Click here to join our channel (@TheWeekmagazine) and stay updated with the latest headlines