Minimum wage not so low

The campaign for a living wage has led to discussion on the minimum wage.

No-one is calling $13.50 high, but it’s not so low in relation to the average wage by world standards.

Hon STEVEN JOYCE: The minimum wage is currently $13.50 an hour in New Zealand, which is half the average hourly wage of $27. The OECD’s database shows that this proportion is, in fact, the highest in the developed world, and that, on this measure, our minimum wage is, therefore, the most generous in the developed world as a proportion of the average hourly wage. In all other countries the minimum wage is under half the average wage—for example, in Canada, it is 40 percent of the average wage; in the UK, it is 38 percent; and in the US, it is 28 percent.

John Hayes: Do any industries stand out as having higher than average wage increases?

Hon STEVEN JOYCE: Yes, a few industries do stand out. One of them is the manufacturing industry, where average weekly wages rose 4.1 percent over the last year, and that is actually not a short-term thing. Over a longer period wages in manufacturing have also grown faster than average. Over the last 4 years average weekly wages in the manufacturing sector have risen 18 percent, compared with 13 percent in the economy as a whole. No doubt, that fact has been brought up and discussed at the Opposition’s manufacturing inquiry. 

Hon David Parker: Has the wage gap between New Zealand and Australia grown larger over the last year; if so, will he be providing milestones for National’s promise to close the wage gap with Australia, given that it is growing rather than closing?

Hon STEVEN JOYCE: I do not have that information to hand, but I do know that the member is very careful to talk about the wage gap, rather than the after-tax wage gap, which people actually experience. But again, if the member wants to talk about the differences between here and Australia, fundamentally, the main difference is the investments made in Australia in the resources sector over the last few years. That is the fundamental difference. If the member would like to reverse his party’s ambivalence towards the investment in the resources sector in the New Zealand economy, I am sure we could have a good discussion. . .

Comparing wage rates between countries isn’t simple.

There are a lot of variables including tax rates but there is no doubt that the mining industry in Australia has a very strong influence on wage rates there and the government’s attempts to encourage mining here are met by little or no enthusiasm from the opposition.


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