New Zealand is set to increase its minimum wage starting May 2025. The adult wage will go up by 35 cents, taking it from $23.25 to $23.50 an hour. The government says this small increase will help workers keep up with rising costs and inflation.
This change is not just for adult workers. The starting-out and training wages will also rise to $18.80 per hour, up from $18.52. While the increase may seem small, it adds up over time—especially for those working full-time.
About 141,900 people will be affected by this new wage rate. Workers on minimum wage can expect to earn about $14 more each week, or around $728 more each year. Employers must prepare for this update by adjusting payrolls and planning their budgets carefully.
Benefits for Workers: More Than Just a Pay Bump
The wage hike helps in several ways:
- More Weekly Earnings: Full-time workers will get about $14 more each week before tax.
- Stronger Buying Power: Because inflation is now under control, the extra money won’t be lost to higher prices.
- Extra Income for Young Workers: Those on starting-out or training wages will also see a rise, helping close the income gap.
- Boost for Local Economy: More money in workers’ pockets can lead to more spending in shops, cafes, and services.
This increase, while small, can make a real difference to everyday living costs.
What Employers Should Do to Get Ready
Employers must take some important steps before the new wage rates start:
- Tell Your Staff: If employees are on minimum wage, inform them of the change. Update contracts if needed.
- Check Payroll Systems: Make sure payroll software or processes are set to apply the new rates from May 2025.
- Look at Your Wage Structure: If some staff earn just above minimum wage, they may ask for pay rises too. Review and adjust accordingly.
- Update Your Budget: Plan for higher wage costs, especially if you run a small business.
- Train and Upskill Workers: Investing in staff training can improve efficiency and balance out the higher wages.
These actions will help avoid errors and support a smooth changeover.
Special Rules for Disabled Workers
Some workers with disabilities may not be able to perform standard duties. In these rare cases, employers can apply for a Minimum Wage Exemption Permit. But there are rules to follow:
- The employer must show clear proof that the worker’s ability is affected.
- The employee must agree to the exemption.
- The business must try other support options before applying.
These rules make sure disabled workers are treated fairly and not taken advantage of.
Effects on the Economy and Small Businesses
The minimum wage rise will impact the wider economy too:
- Higher Spending by Workers: More pay means people might spend more in shops and services, helping local businesses.
- Challenges for Small Firms: Businesses with tight budgets may feel pressure. Some might need to cut costs elsewhere.
- Keeping Inflation in Check: A modest increase of 1.5% was chosen to avoid pushing up prices too much.
- Better Workforce in the Long Run: Fair pay can boost job satisfaction and staff productivity over time.
It’s a careful balance between helping workers and not harming businesses.