New Zealand's Labour Party has promised an additional $2 per hour to the minimum wage ahead of the September election. The party announced it will eliminate the 90-day work trial as part of Labour's work and wages policy.
According to Labour leader David Cunliffe, if he is elected prime minister of New Zealand, he will repeal the 90-day work trial for new employees, implement the Living Wage for government workers and increase the minimum wage to $15 and then $16.25 per hour by early 2015. Cunliffe has vowed he will fulfill his election promises within his first 100 days in office.
Phil O'Reilly, Business New Zealand chief executive, dismissed Labour's work and wages policy as "anti-growth" but he expressed his support for forming a Commission of Inquiry to establish industry standards.
Cunliffe said raising the minimum wage will give minimum wage workers almost $4000 annual income which will "make a huge difference" to their families. He believes this can help reduce child poverty rates and motivate people to work.
The Labour leader is confident the minimum wage increase is something New Zealand's economy could afford. Low-wage earners spend every dollar they earn on businesses. Cunliffe said the policy is a "win-win" for businesses as well.
The Service Workers Union praised Labour for its plans to raise the minimum wage. The union represents 22,000 of New Zealand's lowest paid employees. They are currently being paid $14.25 per hour. Union national secretary John Ryall said the current rate is "too low to live on."
In response to Labour's plans, Prime Minister John Key called it "really frightening." He said raising the minimum wage in such a short time may have its consequences. Mr Key declared the minimum wage has increased under National every year and is considered one of the highest among developed nations based on percentage of the average wage.
The prime minister has been vocal about his doubts regarding Cunliffe's ability to manage the country. Mr Key said Labour was "unfit to rule" the government amid the party's poor results at the polls and other internal problems.