Minimum wage workers across Porirua will receive a pay increase from April 1, but economists and opposition parties say the change amounts to a real pay cut as it fails to keep pace with rising living costs.
The adult minimum wage rises by 45 cents to $23.95 an hour at the start of the new financial year, a 2 percent increase announced in December by Workplace Relations and Safety Minister Brooke van Velden. About 122,500 workers nationwide are expected to benefit.
However, with inflation sitting at around 3 percent, the increase falls short in real terms. That means minimum wage earners may be able to buy less than they could a year ago, despite earning more on paper.
Van Velden said the adjustment strikes a balance between supporting workers and avoiding extra pressure on businesses.
“This new rate keeps wages moving while recognising the challenges facing employers,” she said.
Starting-out and training wages will rise to $19.16 an hour, remaining at 80 percent of the adult rate.
Mana MP Barbara Edmonds said the increase does not keep pace with the cost of living and risks pushing more households backwards.
“The Government’s choice to keep the minimum wage increases below inflation means more people will fall further behind,” Edmonds said. “Prices on everything from food to fuel keep rising and the Government is not doing enough to help households.”
Edmonds said Labour would prioritise policies aimed at easing pressure on families, including cost-of-living support and ensuring wages better reflect inflation.
She said feedback from Mana residents highlights growing strain on working households, with increased demand at foodbanks and concern about rising everyday costs.
“It is incredibly tough for our locals,” she said. “Working families are feeling the pressure and many believe the Government is out of touch with what they are dealing with.”
Porirua City councillor Geoff Hayward said the increase would not fully offset financial pressure on local whānau.
“What we’re seeing is that the increase will help at the margins, but it won’t fully offset the pressure many whānau are under,” Hayward said.
“Rising global costs, particularly fuel, are flowing through to food, power and transport, hitting households immediately”.
Hayward also pointed to wider policy settings, including housing and support changes, as adding to financial strain.
“In that context, the minimum wage increase does make a difference, but for many it’s still not enough to get ahead, or even stay comfortably afloat,” he said.
He warned that when wages fail to keep pace with living costs, workers are pushed closer to debt and long-term hardship.
“A minimum wage that can’t even keep pace with the cost of living effectively becomes a pay cut in real terms,” he said.
Hayward said he supports the Living Wage Movement, noting the current living wage sits at $28.95 an hour, and highlighted Porirua City Council’s commitment to paying it across its workforce and contractors.
He said other local organisations, including Ngāti Toa and several schools, have also adopted the standard, and encouraged more employers to follow.
“Porirua could and should be New Zealand’s first true living wage city,” he said.
The minimum wage is reviewed annually under legislation, with each adjustment taking effect on April 1.
Alongside wage changes, New Zealanders will also see updates to benefits, student support and KiwiSaver settings as part of the new financial year, adding to a wider set of financial shifts for Porirua households.