Wellington, Dec 2024 – The New Zealand Government has announced an increase to the adult minimum wage, with rates set to rise by 1.5 percent to $23.50 per hour from April 1, 2025. Workplace Relations and Safety Minister Brooke van Velden confirmed the adjustment today, stating that the decision aligns with the NZ First-National coalition’s commitment to moderate annual wage increases.
The Cabinet’s decision takes into account the current economic climate, emphasizing a balanced approach between supporting workers and limiting costs for businesses.
“The New Zealand economy is still recovering from a sustained period of high interest rates and recessionary conditions. In that context, delivering a modest increase in the minimum wage strikes the right balance,” said Minister van Velden.
She also noted that the increase reflects progress in controlling inflation, which has now returned to the Reserve Bank’s target band for the first time in over three years.
The Government is also focused on reducing Jobseeker Support benefit numbers, aiming to create a business-friendly environment that encourages employment growth.
“To do this, we need to ensure employers and businesses can continue to grow and provide jobs, which could be put at risk with a disproportionate increase in the minimum wage,” she said.
A key concern in setting the rate was the impact on young workers, who are more likely to earn minimum wage. The Government aims to ensure they are not excluded from employment opportunities due to steep wage increases, recognizing the value of early work experience in building future career prospects.
In a shift from previous years, the government announced the change before Christmas, allowing businesses more time to adjust payroll systems.
“The past three minimum wage announcements were made in February of the same year, leaving businesses with only two months to prepare. By announcing this now, we are giving employers the time they need to plan ahead,” Minister van Velden stated.
Meanwhile, the starting-out and training minimum wage rates will be set at $18.80 per hour, maintaining the current 80 percent of the adult minimum wage.
The decision comes as New Zealand continues efforts to stabilize the economy, balance workforce needs, and support both businesses and workers.
Historical Context of Increases
Table 1- NZ Minimum wage rates from May 2014 to May 2025
| Effective Date | Adult Wage | Starting-Out Wage | Training Wage |
| 1 April 2025 | $23.50 | $18.80 | $18.80 |
| 1 April 2024 | $23.15 | $18.52 | $18.52 |
| 1 April 2023 | $22.70 | $18.60 | $18.60 |
| 1 April 2022 | $21.20 | $16.96 | $16.96 |
| 1 April 2021 | $20.00 | $16.00 | $16.00 |
| 1 April 2020 | $18.90 | $15.12 | $15.12 |
| 1 April 2019 | $17.70 | $14.16 | $14.16 |
| 1 April 2018 | $16.50 | $13.20 | $13.20 |
| 1 April 2017 | $15.75 | $12.60 | $12.60 |
| 1 April 2016 | $15.25 | $12.20 | $12.20 |
| 1 April 2015 | $14.75 | $11.80 | $11.80 |
| 1 April 2014 | $14.25 | $11.40 | $11.40 |
Impact on Increase in Minumum to All Stakeholders
- Workers: The rise in the minimum wage translates to additional weekly earnings, benefiting an estimated 80,000 to 145,000 workers, thereby improving their standard of living.
- Employers: Despite increasing wage expenditures, employers may experience heightened employee morale and productivity, potentially offsetting costs through reduced turnover.
- Economy: The wage increase is anticipated to stimulate economic activity by boosting consumer spending, as workers have more disposable income to invest in goods and services.
Rationale Behind the Increase in Minimum Wage
The decision to elevate the minimum wage is driven by a comprehensive strategy to address critical economic and social challenges:
- Cost of Living: The wage increase ensures workers can sustain their expenses in response to escalating living costs and inflation.
- Income Inequality: The adjustment seeks to mitigate income disparities, promoting a more equitable distribution of wealth.
- Economic Stimulus: The minimum wage increase enhances workers’ purchasing power, catalyzing consumer-driven economic growth.
Conclusion
The increase in New Zealand’s minimum wage to $23.50 per hour marks a significant step forward in the nation’s ongoing efforts to support its workforce, reduce economic inequality, and stimulate growth. By carefully balancing the needs of workers, employers, and the broader economy, this policy underscores New Zealand’s dedication to fostering a fair, prosperous, and inclusive society.
Reference
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