Labour on minimum wage

In opposition you can propose all sorts of things, without having to worry about the consequences. We see this today with Trevor Mallard’s private members bill to have the minimum wage go from $12.50 to $15.00 in just two years.

Increases in the minimum wage can destroy jobs. Not automatically in every situation, but certainly in many situations. If this was not the case the minimum wage would be $50 an hour.

With the abolishment of the youth minimum wage, I have no doubt that the record high youth unemployment is partially because some young workers have already been priced out of the market.

On the other hand the economy had strong enough economic growth for most of the 2000s that the minimum wage was increased without a significant impact on employment.

So let us look at Labour’s record vs their rhetoric.

In Labour’s first term, they had a booming economy (inherited from the previous Government). How much did they increase the minimum wage by? Their annual increase were 55c, 15c and 30c.

So Labour are demanding that just as we come out of a major recession with high unemployment, the Government should increase the minimum wage by $1.25 a year, when in their first term the increases averaged 33c a year. National’s increases have been 50c and 25c, around the same as Labour in their first term, but not quite as high as a percentage. Of course a key difference is the inherited recession.

Is anyone stupid enough to think that if Labour was in Government they would be increasing the minimum wage to $15?

In fact we know this from their own election policy. All their policy said was that they would increase it to keep pace with (the greater of) inflation or average wage increases. Now as neither inflation or the average wage is at 10%, it shows how hypocritical Labour is being – now promising something they know would be bad for jobs, purely because they know they don’t have to deliver on it. If they really thought it was a good idea they would have promised it at the last election.

Labour in their second term increased the minimum wage by just 50c a year.

The one period where it did increase much faster was 2005 – 2008, but that was not because of Labour – that was forced on them by NZ First and the Greens. But even then, they never did an annual increase of $1.25.

So again, when the economy is booming and unemployment is low, Labour implements relatively modest minimum wage increases. Once they are in Opposition and unemployment is high and we have just come out of recession, they advocate the highest ever increase.

Do you really want them running the country again?