Labour will be partly to blame for the job losses after today

There will be masses of job losses due to COVID-19. Before today it would have been unfair to blame that on the Government.

But from today, the Government is to blame for at least some of them. Because they have refused to suspend the increase in the minimum wage that came into force today.

Look of course you can increase the minimum wage with modest impacts when the economy is booming. If businesses are expanding, then all good.

But we are in the opposite of that. The vast majority of businesses have had a huge collapse in income, ranging from 30% to 100%. Entire sectors of the economy have closed down.

The increase in the minimum wage means that those employers with staff on the minimum wage will beyond doubt lay off more of them. And worse, it means that when firms finally can start hiring again, it will be more expensive to expand.

And it isn’t as if our current minimum wage was low. It was in fact one of the highest in the OECD relative to the median or average wage.

In 2018 it was 61% of the median wage. Here’s some others:

  1. New Zealand 61%
  2. UK 54%
  3. Australia 54%
  4. Canada 51%
  5. Ireland 48%
  6. US 33%

So this move will see large numbers of workers go from an income of around $750 a week to the unemployment benefit of $245 a week. And they will probably remain unemployed for years not months.

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