If some more is good . . .

The Helen Clark Foundation and Institute for Economic Research are calling for an increase in the minimum wage.

. . . Institute deputy chief executive Todd Krieble told Mike Hosking the industry needs a reset.

“Now’s the time for change because it’s cheap to borrow and we can’t continue to rely on on low wage migrant workers to fuel the economy.”

Krieble says employers need to be thinking of how to retain staff and improve overall performance.

He says investing in people will provide more output and increased efficiency.

It was Labour policy to increase the minimum wage faster. This report goes further, wanting it to be raised to the living wage.

. . . Krieble said lifting the minimum wage to the level of the living wage of $22.10 would boost productivity.

Why stop there? If some more pay is good wouldn’t much more be better?

“It would encourage investment from employers in skills, either technical skills or soft skills, and it would help employees to hang around.” . . .

Not necessarily, especially now which is not the time to be adding costs to businesses:

A sharp boost to the minimum wage would see fewer jobs created as businesses struggle under a tidal wave of government-imposed costs, National’s Economic Development spokesperson Todd McClay says.

The Helen Clark Foundation has today called for wealth to be ‘pre-distributed’ through a sharp increase of the minimum wage to boost productivity.

“Sadly this will have the opposite effect. It will be especially hard on small businesses still struggling from debt taken on during the Covid-19 lockdowns,” Mr McClay says.

“Businesses need policies that will help them grow the economy and create jobs, not greater costs that will slow the job market.”

MBIE forecasted that 6500 jobs would be lost when the minimum wage was last increased. As employment costs increase, businesses find it hard to afford to replace workers who leave. This in turn slows job creation – a lagging indicator for unemployment.

The way to help businesses pay people more is through better rules, less red tape and lower costs. This in turn leads to job creation and wage growth,” Mr McClay says.

“The Government is proposing to increase the minimum wage quickly, double sick leave, impose another public holiday and reintroduce 1970s-style collective bargaining at a cost or more than $2.8b per year on Kiwi businesses at a time when they can least afford it.

“Now is the time for the Government to reduce costs on businesses and make it easier for them to create jobs, not make it harder for them to pay their bills.”

Businesses expect modest increases in the minimum wage but steep rises are counter-productive.

They are  much more likely to lead to investment in technology which reduces the need for people rather than in their staff and to make it much harder for people who are younger, unskilled, inexperienced or with any other disadvantage to find work.

2 Responses to If some more is good . . .

  1. pdm` says:

    I have been with the same employer since December 2013 and when I started I was earning $1.20 an hour above the minimum wage. As the minimum wage has increased my margin above it has reduced to just 20c an hour.

    Like

  2. adamsmith1922 says:

    Reblogged this on The Inquiring Mind.

    Like

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