Minimum wage bill defeated in Parliament
The demand to raise New Zealand’s minimum wage has decline. We live in a society where government has to make balance between employers and employees. Workers want better paying job and at the same time employers want to control labour cost. Therefor government put the floor of minimum wage “a minimum wage is the lowest wage that each employee can legally get from an employer” (exclusive papers). This is the lowest amount that a worker can sell his/her labour and that is what we need for better economy right now especially not a price ceiling which is "a set below the market price, then a "shortage" is created; the quantity demanded will exceed the quantity supplied"(week 3w/s).However increasing the minimum wage dose have many consequences on society, people will have better standard of living and encouraging more people to work but at the same time it will affect the employers in increase on their production costs. Therefore the employers has to cut down the staff and it could be hard to find a job for unskilled workers, youth or adults could also face problems in finding the job, which may result as increase in unemployment.
Economist needs assumptions to simplify the reality and models to apply (lecture1).As we take simple demand and supply frame work if the price of a commodity goes up, the demand of it goes down (week3) it is the same in case of labour market if government increases minimum wage (price), the demand of labour will go down(less employers willing to hire them) in New Zealand. (Google image)
The industries that offer minimum wages to people are small scale business, who wants to survive in the market by keeping their profit level high and labour cost low. In New Zealand estimated 41,300 workers are on the minimum wage in 2011 “Industry sectors most affected by changes to the minimum wage are hospitality, retail and Agriculture (NZHRC, 2011)”....
Please join StudyMode to read the full document