Mike Treen is a retired union advocate.

Members of Parliament are getting a 10.5% pay rise over the next three years from 2024-2026. Backbench MPs will go from $163,961 in 2024 to 181,200 in July 2026. This is broadly in line with inflation so it may not seem out of place. The problem is that MPs used to get a salary in line with other skilled workers. Today they are way above most.

In 1976, the year before the Remuneration Authority was established to set MPs pay, MPs earned less than the top pay rate for a secondary school teacher which was $14,580. If teacher salaries had only increased by the consumer price index (CPI) inflation rate since then that would equal $145,000 today. The top rate for a senior teacher is now $104,117. The backbench MP rate is $168,600 a year - 62% more.

Private sector inequality has grown to an even greater extent. Pay to NZX-listed company chief executive officers (CEOs) rose 3.6% to an average of $2.23 million or 32 times the average worker pay in 2023 from 2022. Re: reports: "The gap between CEO and worker pay has been widening in recent decades. In 1997, average CEO pay was 11 times higher than the average worker salary. In 2019, it had climbed to 18 times higher". Wealth inequality is even more dramatically unequal. The IRD reported in 2023 that the top 10% of households by wealth own 60% of all the wealth. The bottom 50% own around 1-2%. That is a picture that has barely changed over the past decade.

Minimum Wage Value Being Reduced

New Zealand enacted the world's first national minimum wage laws with the Industrial Conciliation and Arbitration Act of 1894. Stuff reported: "It was a response to employers blacklisting union members and slashing wages following the failure of the trans-Tasman Maritime Strike of 1890". By 1946 it was equivalent to 80% of the average wage (for men). It was two shillings, nine pence per hour for men - but only one shilling, eight pence for women. The different rates were eliminated in 1977 when instituting a minimum wage of $1.62/hr for all adults. This was close to two-thirds of the average for that time.

Decreasing The Real Value Of The Minimum Wage

The minimum wage on April 1 2025 increased by only 1.5% to $23.50 an hour. This was a real value cut given that inflation was up 2.5% in the year to March 2025 and rising. This follows a 2% rise in 2024 when inflation was 4.7% in 2023. The Minister in Charge, ACT's Brooke van Velden, recommended an even smaller increase in 2024 and as a party ACT do not support even the existence of minimum wages which "distort" the free market.

From 1 September 2025, the Living Wage hourly rate is $28.95. This is an increase of $1.15 on the 2024/25 rate, which is in line with a 4.2% increase in New Zealand's average ordinary time hourly rate. The Living Wage matches what the Council of Trade Unions argues should be the minimum wage for everybody - a rate equal to 2/3 of the average wage. Today that would be two-thirds of the June quarter 2025 average hourly rate of $43.39 an hour i.e. $28.92, almost exactly matching the Living Wage rate. As a union leader in minimum wage industries, I had feared the Living Wage campaign might undermine the demands for a two-thirds average minimum but have been proved wrong in practice.

Major Real Increase In Minimum Wage

Since the 1999 Labour Alliance government was elected there has been a major real increase in minimum wages. It had been frozen for eight of the previous nine years under the previous National-led government. Before 1994, there was no minimum wage for workers under 20. A law change then introduced a minimum of 60% of the adult rate for 16-19-year-olds.

In 2001, the new Labour-Alliance government, under the auspices of Alliance Minister Laila Harre, the age of eligibility for the adult minimum wage was lowered to 18. The youth minimum wage rate was also increased to around 70% of the adult minimum wage. The rate was increased again in 2002, to 80% of the adult minimum wage. The youth minimum wage was technically abolished in 2008 for anyone employed for more than three months or in a supervisory position.

In 2013 National brought back an 80% minimum for workers 16-17 for the first six months in a first job. Most workers are not usually employed on what has been termed the "the starting out wage". When the Labour-Alliance government was elected in 1999 the adult minimum was $7 an hour for adults and $4.20 for youth. The adult rate was equal to about 40% of the average wage. By 2008 with increases to $12 an hour the minimum had reached 50% of the average wage. Labour Leader Helen Clark said she was "comfortable" with the level reached and saw no need to go much further in relation to the average wage.

A National government was elected in 2008 and set rates from 2009 until 2017. Surprisingly (to me at least), the John Key government continued above inflation increases and there was even a small increase in the percentage of the average wage when it reached $15.75 and 52% of the $30.25 average when he left office in 2017. The newly elected Labour-led government maintained above-inflation increases that also increased it as a percentage of the average wage. At $22.70 on 1 April 2023, it was now 58.3% of the average wage of $38.93.

The below inflation and below average wage movement by the current National-led government has reduced that percentage to 54% of the average. This is still one of the highest minimum wages as a percentage of the average wage in advanced capitalist countries - especially given that youth rates apply to a relatively small number of workers (unlike Australia which has a similar adult rate).

Minimum Wage Increases Not Cause Of Job Losses

Employers hate higher wages because they are employers. To them, and this is true in part, profits happen after wages have been paid and lower wages mean higher profits. Businesses are in business to make profits so it doesn't matter if the economic laws they think govern their system have been disproved by a relentless rise in real minimum wages that did not lead to an immediate rise in unemployment or price inflation.

Prices have increased about 90% since 1999 while the minimum wage has increased by 245%. Despite all the neoliberal dogmas that said these increases in the minimum wage would lead to escalating unemployment, especially for young people, the opposite has happened. The increases in unemployment we have seen since the election of this Government have been caused by the reimposition of neoliberal dogmas and austerity economics that were so dangerous back in the 1990s.

Watchdog - 170 December 2025