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Minimum wage and benefit increases start today

The minimum wage, main benefit and superannuation levels all rise today. File photo.

The minimum wage and benefit levels get a boost today, as part of a package of changes coming into effect from April 1.

Those on the minimum wage get a pay bump to $20 an hour - an increase many employers say is too much and badly timed.

Main benefit and superannuation levels also rise, as well as the amount people can earn before their benefit reduces.

But poverty advocates are equally unimpressed, saying the changes will barely help people keep afloat.

Prime Minister Jacinda Ardern says the minimum wage increase "struck a balance".

"Our job as government is to constantly strike that balance of ensuring that our lowest paid workers are earning enough to meet their cost of living and to thrive. At the same time balancing that against the ability of employers to sustainably keep people on," says Ardern.

Employers and Manufacturers Association policy director Alan McDonald says the balance has tipped away from business.

The minimum wage increase is the latest in a litany of costs employers are having to bear, he says.

"When you look at the cumulative effects, you've got the minimum wage, you've got the Matariki public holiday, you've got five days [extra] sick leave, fair pay agreements - it's quite a burden on employers at probably precisely the wrong time.

"A lot of businesses are on the brink, you know, there's not much left in the finger nail department, and I just think just pause, draw breath give business time."

ACT leader David Seymour says the government will only end up harming those people they are trying to help.

"It will affect decision making by employers. They will decide to employ fewer people than they otherwise would have, to invest less, and to raise prices for their customers," says Seymour.

"Those effects cannot be denied, and they defeat much of the purpose of the government's initiative, while the real answer is genuine productivity growth."

However, Council of Trade Unions president Richard Wagstaff says that's scaremongering, and the increase will make a big difference for people.

"The evidence doesn't support that. Minimum wage increases in New Zealand haven't resulted in less jobs, in fact the reverse is the experience," says Wagstaff.

"It's not a simple equation but we do know that people on the minimum wage spend the money they get and they'll put it back into the economy, and the money will go round and benefit employers."

Impact on benefits

Indexation sees main benefit levels and superannuation rates too, by 3.1 per cent.

The amount people on benefits will receive will vary, but they could get up to an extra $16.16 a week.

Child Poverty Action Group spokesperson Janet McAllister says the measures will have limited impact.

"The catchup in main benefits relative to wages won't make things get better, it will just make the rate at which things are getting worse get slower," says McAllister.

The amount people can earn before their benefit reduces - the abatement threshold - is also going up to $160 a week before tax.

But again, McAllister is underwhelmed.

"There will be some families that will notice a difference, yes, and that's positive, but does it go far enough? No. You can still only work eight hours on minimum wage before your benefit starts being abated."

The government was moving far too slowly on welfare reform and there needed to be a dramatic increase in benefit rates if people are going to be lifted out of poverty, says McAllister.

-RNZ/Yvette McCullough

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