NZCTU President Richard Wagstaff is calling on the Government to deliver minimum wage increases that keep up with rising costs, in response to new inflation data released by Stats NZ today.
The new data shows that food and housing prices have risen by far more than the minimum wage will. Food price inflation was at 4% for the year to January 2024, while rental price inflation was at 4.5%. This contrasts with the decision to only increase the minimum wage by 2%.
“This new data confirms that the Government’s decision to only adjust the minimum wage by 2% is in fact a cut in real terms, and this will put further pressure on the ability of families to get by during the cost-of-living crisis,” said Wagstaff.
“Wages not keeping up with inflation has a significant impact on workers having enough to afford rent, pay the bills, put good food on the table, and buy their kids what they need.
“All New Zealanders benefit from minimum wage increases because they drive up wages, local economies prosper, and our communities are safer and healthier.
“The NZCTU has launched a petition calling on the Prime Minister and the Minister of Workplace Relations to do the right thing and deliver minimum wage increases that don’t see New Zealand workers fall further behind.
“The minimum wage should equal the Living Wage, but at the very least, the Government must deliver annual increases to the minimum wage that lift low-paid workers’ incomes in real terms,” said Wagstaff.
NZCTU President Richard Wagstaff is concerned that the Government’s welfare and employment policies will make it harder for people who lose their jobs, following the release of new employment data.
The data shows that unemployment rose for the December 2023 quarter, to 4%, and the Treasury and Reserve Bank both expect it will rise to 5% by the end of this year. In real terms, that means a further 60,000 people will be unemployed, compared to 2022.
“Unemployment is always stressful, but the Government’s recent policy decisions will make things even more difficult for displaced workers,” said Wagstaff.
“The Government has ended work on the income insurance scheme, which would have provided displaced workers with up to seven months of financial support after losing their job, at 80% of their salary or wages. This would have helped to reduce the high rate of wage scarring – the pay cut that workers often experience as a result of losing their job – that New Zealand has compared to our OECD peers, and supported workers to upskill and retrain.
“The Government has announced its intention to introduce new sanctions for welfare recipients. But the evidence is clear that this punitive approach to welfare doesn’t work, and only serves to compound social harm and increase poverty.
“The Government has also extended 90-day trials to businesses of all sizes, meaning that many job seekers who do find work will feel insecure in their employment for the first three months. As with their other policy decisions, there is no evidence that 90-day trials increase employment.
“Instead of helping people through the cost-of-living crisis, the Government’s policies are further reducing employment security, and increasing poverty,” said Wagstaff.
Adult minimum wage will go up from $22.70 to $23.15 per hour.
Starting-out and training minimum wage will go up from $18.16 to $18.52 per hour.
All rates are before tax and any lawful deductions, for example, PAYE tax, student loan repayment, child support.
If you have not yet talked to your accountant, payroll provider or your finance/HR teams now is the time. It is also an opportunity to check your employment records, processes and systems are current.
Read about types of wage rates, exemptions and more here:
If you have employees on the minimum wage, let them know about the increase they will be getting. You should send them a letter or email (variation of employment contract) advising them of the new wage.
2. Check your payroll systems and processes
Make sure your payroll provider, accountant, lawyer, HR, or finance people are ready to implement the change.
If your system is manual or computer-based, you should check and confirm the settings will be adjusted for the new rates.
If any of your employees are on starting-out or training wages, now is a good time to check when they will be eligible to move onto the adult rate.
If any employment agreements (contracts) are not current or you did not give one to your employees, now is an ideal time to discuss with them in good faith. Update the contract with any terms and conditions that were agreed to by both parties before the contracts were last reviewed. Make sure they include all the mandatory clauses a contract should have by law. Another useful tool is the employment agreement builder if your employees do not have one.
You may also wish to consider potential impacts on your business due to internal wage relativity and external benchmarking. For example, how employees are paid compared to each other, and how your pay rates compare to others in your industry or sector. Employees on higher wages may want to negotiate a pay increase to keep the relative difference.
4. Update your business budget
You should add any expected increased costs to your short and medium-term budget forecasts. This will help you plan for and manage the effect of higher wage and holiday pay liabilities.
To work out the updated cost of your employees, use the employee cost calculator:
The decision today by the Government to cut the minimum wage in real terms is a sign of what they think about workers, said CTU Economist Craig Renney.
“All New Zealand workers have the right to a liveable income to support their families – they deserve to be paid a Living Wage,” said Renney.
“The Government is increasing the minimum wage by a paltry 2% to $23.15. This falls well short of the Living Wage rate, which is currently $26. That is simply heartless at a time when so many are doing it tough.
“Inflation is currently 4.7%, and a 2% increase means in real terms cuts for the lowest income workers across New Zealand. Taking money away from hundreds of thousands of workers during a cost-of-living crisis defies understanding and is poor economics.
“The proposal wasn’t even supported by MBIE officials, who recommended a 4% increase, rather than a 2% increase. That’s an annual difference of $944.32. If the minimum wage had kept up with inflation, that would have been a $1,274 difference annually – or $24.52 a week.
“How are workers meant to keep up with rising food and rent costs if the Government is cutting their wages in real terms? This is a Government that doesn’t seem to know how difficult life is for working people and those on low incomes. It’s simply out of touch and focused on tax rises for the wealthiest people and landlords instead.
“Such an inadequate increase may save some New Zealand businesses a few dollars, but it will cost everyone more in the long-run. It will mean higher payments in tax credits. It will mean higher support for rental payments. It makes no sense from an economic and or fiscal perspective.
“The Government should do the right thing and deliver a minimum wage that doesn’t see New Zealand workers fall further behind,” said Renney.
The death of a teenager on a Bay of Plenty building site is yet another example of why the construction sector needs to up its game, WorkSafe New Zealand says.
Ethan Perham-Turner was killed when timber framing weighing 350 kilograms fell on him at a residential building site in Ōmokoroa in March 2022. The 19-year-old was just four months into an apprenticeship with Inspire Building Limited at the time.
Ethan Perham-Turner
A WorkSafe investigation found the risk was heightened by the framing being manually installed around the site, and a temporary support brace being removed just prior to the fatal incident. When one frame knocked another, it fell on the teenage apprentice.
Inspire was providing building labour for the main contractor, Thorne Group. Both were charged for health and safety failures in relation to the death. The businesses should have consulted each other on the framing installation plan, and ensured a mechanical aid (such as a Hiab crane truck) was used.
“The death of a worker so young is an indictment on the construction sector. Ethan was new to the job, and new to the task of manoeuvring framing. He should have been provided with what he needed to be safe,” says WorkSafe’s area investigation manager, Paul West.
“The safest way would have been to mechanically lift the framing into place, given its weight. This can come at little to no extra cost. In this case, the supplier delivering the framing had a Hiab and could have lifted it into place if asked.
“The high number of deaths and injuries tell us construction is a very dangerous industry. WorkSafe has seen other similar incidents where workers handling large or heavy frames have been paralysed or killed. It is unacceptable that companies are not identifying the risks and providing workers with a safe workplace. We can only hope the death of a very young apprentice might motivate the step change required to improve the sector’s health and safety performance,” says Paul West.
Inspire Building Limited and Thorne Group B.O.P Limited were sentenced at Tauranga District Court on 31 January 2024
Inspire Building was only fined $30,000 due to financial incapacity, and Thorne Group was fined $210,000. Reparations of $130,000 were ordered to be paid to Ethan Perham-Turner’s family, and $15,072 to his co-worker – a fellow apprentice.
Both entities were charged under sections 36(1)(a), s 48(1) and (2)(c) of the Health and Safety at Work Act 2015
Being a PCBU having a duty to ensure, so far as is reasonably practicable, the health and safety of workers who work for the PCBU, including Ethan Thomas Perham-Turner, while the workers were at work in the business or undertaking, namely erecting prefabricated timber frames, did fail to comply with that duty, and that failure exposed workers to a risk of death or serious injury.
The maximum penalty is a fine not exceeding $1.5 million.
NZCTU Economist Craig Renney is calling on Finance Minister Hon. Nicola Willis to scrap her plan to cut frontline services after she acknowledged today that this is likely to happen.
“In September last year, the CTU showed the areas that were at risk – these included the courts, biosecurity, and cybersecurity. National refused to answer questions at the time, but now reports in the media show this to be true,” said Renney.
“These are frontline services that all New Zealanders rely on. The Government needs to scrap its proposed tax cuts and protect the essential services that keep this country running.
“We are now seeing that it’s even worse than had been advertised at the election. Ministers aren’t taking responsibility for the cuts – that is now the responsibility of Chief Executives. The cuts package now extends to even more departments and public services, as the Government desperately tries to make its pre-election promises work.
“The Finance Minister’s credibility is once again on the line. Her pre-election promise was that as Finance Minister she would “reduce the cost of back-office government bureaucracies with an immediate savings drive across a series of identified government agencies while protecting frontline services.’[1] It’s now very clear that the Minister is breaking her promise to New Zealanders.
“The Government is also claiming that this is part of moving resources into the frontline. This is simply untrue. These cuts are needed to pay for tax cuts that will give landlords thousands of dollars a year while giving those on the minimum wage a couple of dollars a week.
“Aotearoa New Zealand’s population is rising rapidly. Unemployment and the demands on public services will keep increasing. Yet the Government is now no longer ruling out cuts to essential services such as customs, food standards, or search and rescue.
“These aren’t spending cuts to fund new frontline services. Instead, they are cutting to fund their reckless tax cut policy for the wealthiest New Zealanders,” said Renney.
[1] p17 National’s Back Pocket Boost, 30 August 2023
A business owner who put motorists at risk when felling trees has been criticised for his ‘dismissive attitude’ toward health and safety.
Kevin Howard Stratford, who operates Stratford Logging, was convicted in the Nelson District Court this week.
Over the course of 2021 Mr Stratford carried out tree felling in Takaka Hill at a site directly adjacent to State Highway 60.
WorkSafe was notified in August 2021 by an experienced tree feller that the work was being carried out with disregard for industry standards, in particular that trees were being felled very close to the road with no traffic management in place.
WorkSafe opened an investigation. An independent forestry expert who assisted WorkSafe’s investigation found felling techniques were of ‘very poor quality’, well below industry standards and posed a serious risk to all in the area.
Several trees had been cut in a way which increased the risk of ‘barberchairing’. Barberchairing is an exceptionally dangerous situation where a tree splits vertically from top to bottom before breaking away. Workers on site also didn’t have the relevant qualifications do the work.
“The way work was done with no warning signage or traffic management put people at great risk, including innocent bystanders driving along the road,” says WorkSafe Regional Manager Juliet Bruce.
“There were steps Mr Stratford should have taken, including not felling trees within two lengths of a public road, putting in place temporary traffic management controls with authorisation of the Road Controlling Authority and ensuring all workers were adequately trained. He was also required to notify WorkSafe before he began tree felling.”
WorkSafe issued Mr Stratford with four Prohibition Notices and 28 Improvement Notices since 2013 in relation to unsafe tree felling, failing to notify of tree felling work, workers having inadequate qualifications and having an insufficient health and safety system. Mr Stratford was also convicted in 1998 for failing to ensure the safety of an employee.
“There has been a huge amount of enforcement action against Mr Stratford to motivate him to keep people safe, but he persisted in his poor practices and the only option left for WorkSafe was to prosecute,” says Ms Bruce.
In sentencing Mr Stratford, Judge Jo Rielly was critical of his ‘dismissive attitude’, commenting ‘you are a person who has put your concerns around financial costs involved in completing work ahead of important safety considerations’.
WorkSafe has several pieces of guidance on its website related to tree felling:
Kevin Howard Stratford was sentenced at Nelson District Court on 23 January 2024.
A fine of $56,000 was imposed.
Kevin Howard Stratford was charged under sections 36(2) and 48(1) and (2) of the Health and Safety at Work Act 2015;
Being a PCBU, failed to ensure, so far as was reasonably practicable, the health and safety of other persons, was not put at risk from work carried out as part of the conduct of the business or undertaking.
The maximum penalty is a fine not exceeding $1.5 million.
NZCTU President Richard Wagstaff said he was disappointed in the Government’s short-sighted decision to shut down the Regional Skills Leadership Groups (RSLGs), saying it is further evidence of the Government’s lack of a strategy when it comes to vocational education and workforce planning.
“Coming off the back of the reckless decision to disestablish Te Pūkenga, this is another example of the new Government’s slash and burn approach. As with Te Pūkenga, the government hasn’t announced what will be replacing the RSLGs. This will only add to the uncertainty facing the vocational education sector and its workforce,” said Wagstaff.
“The RSLGs, which were set up as part of the Reform of Vocational Education, play an important role in identifying skills and workforce needs across different regions of the country.
“Aotearoa New Zealand suffers from persistent skills shortages and high levels of skills mismatching. This hinders productivity growth and increases the wage scarring experienced by workers who lose their job.
“With unemployment forecast to rise over the next year, we should be looking at how we can support people into good work and help employers find the essential skills they need.
“The NZCTU supported the establishment of the RSLGs as mechanisms for rebuilding New Zealand’s capacity for regional economic development, including skills and workforce planning.
“Importantly, the RSLGs promote worker voice in the development of training initiatives and solutions to persistent labour market problems in different parts of the country.
“Union representatives on RSLGs speak for the interests of our members as learners and give workers a voice in the skills and workforce development strategies of their regions.
“While the new government has been quick to first disestablish Te Pūkenga, and now the RSLGs, we are yet to hear what its alternative plan is for vocational education,” said Wagstaff.
E tū, the union for cleaners in Aotearoa New Zealand, has filed an application for fixing with the Employment Relations Authority, after the companies party to the Commercial Cleaners Multi-Employer Collective Agreement (MECA) have refused to budge, offering their workers no improvements to pay and conditions.
An application for fixing means the union is asking the Employment Relations Authority to determine the terms and conditions of the MECA, as a result of the employer parties breaching good faith provisions, leading to a breakdown in negotiations.
E tū initiated for bargaining in February last year. Since then, the employers party to the MECA have offered no pay increase above the minimum wage and no improvement to terms and conditions such as health and safety protections. They have used both the Fair Pay Agreements process and potential future increases to the minimum wage as excuses not to negotiate constructively with the union and employees.
E tū delegate and cleaner, Mele Peaua, says: “Most of the cleaners are on the minimum wage. We all know how much of a struggle that is for workers.
“I was part of the bargaining team, and we were not happy that the companies didn’t want to bargain for a better deal for cleaners. All we want is to improve wages and get better conditions, beyond the minimum.”
E tū National Secretary Rachel Mackintosh says the companies have been particularly difficult in this bargaining round.
“It’s unprecedented, and frankly quite unbelievable, that the companies are still taking this hardline position of a zero-offer beyond minimum wage,” Rachel says.
“These companies hold some of the biggest cleaning contracts in the country, in both the public and private sectors. The cleaners often work long and unsociable hours, doing the essential job of keeping workplaces and public spaces clean and healthy.
“It wasn’t long ago that cleaners were being celebrated by all of Aotearoa as part of the essential workforce that kept us going during Covid-19 disruptions. The companies need to show they respect and value their employees, instead they are demonstrating the complete opposite.”