20 January 2023 
 
Re: Maximum Wage 
 
[FYI request #21331 email] 
 
Dear Chris,  
 
Thank you for your email of 4 December 2022 to the Ministry of Business, Innovation and Employment 
(MBIE) regarding wealth distribution in New Zealand.  
 
Statistics New Zealand has recently published data on household net worth. You can find further 
information at the following link: Distribution of wealth across New Zealand households remains 
unchanged between 2015 and 2021 | Stats NZ. 
 
You say that “if you work 40 hours a week, you should get paid enough money so that you do not require 
any government subsidy at all”.  
 
Workers negotiate how much they are paid with the business that hires them. In practice, some workers 
have lower bargaining power and are less able to influence their pay rate. In New Zealand unions 
represent groups of workers, and through collective bargaining may be more effective at negotiating pay 
rates for workers. In addition, the Government sets a minimum wage that adult employees must be paid.  
 
Currently the adult minimum wage is $21.20 per hour. This amount is reviewed annually by the 
Government. There are many factors that must be considered in setting and adjusting this rate. On one 
hand, if the rate is set too high it may result in fewer jobs and negative effects on small businesses, some 
of which struggle to cover costs. On the other hand, if the rate is set too low it might not protect the real 
income of low-paid workers. It is important that the minimum wage is raised over time so that workers’ 
pay keeps pace with increases in living costs. The annual minimum wage reviews are published at the 
following link: https://www.mbie.govt.nz/business-and-employment/employment-and-
skills/employment-legislation-reviews/minimum-wage-reviews/. 
 
Whether the minimum wage is sufficient to meet living costs depends on individual circumstances. The 
Government makes payments to some people who are in employment to help with costs related to their 
personal situations. For example, Working for Families is paid to families with dependent children aged 
18 years or under to help with the day-to-day cost of raising a family. The payment depends on the 
number of children the recipient has and how much they earn. The Disability Allowance helps with the 
extra costs a person might experience as a result of having a disability. The amount paid depends on 
specific costs such as ongoing visits to the doctor, medicines and extra travel. More information is 
available at the following link: https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-
guides/ir200---ir299/ir201/ir201-2022.pdf?modified=20220405210043&modified=20220405210043%22. 
 
Finally, another mechanism that can help improve pay and employment conditions for vulnerable 
employees is the Fair Pay Agreements Act, which was passed last year. The Act enables employers and 
employees to bargain collectively for industry or occupation-wide minimum employment terms. 
Information on the development of the Fair Pay Agreements system, including policy advice provided to 
the Government by MBIE, is published at the following link: https://www.mbie.govt.nz/business-and-
employment/employment-and-skills/fair-pay-agreements/. 

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Thank you again for your email and I hope you find this information helpful. 
 
Yours sincerely, 
Anna Spencer 
Acting Manager, Employment Standards Policy  
Workplace Relations and Safety Policy 
Ministry of Business, Innovation and Employment 
 

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