New Zealand has recently raised its minimum worker wage to $20 per hour and applied a higher tax rate of 39% for high-income earners.

Despite being a raise of only $1.14 per hour, this boost is estimated to channel $216M back into New Zealand’s economy. Based on a report by the Organisation for Economic Cooperation and Development (OECD), New Zealand was already in the top five countries in the world to offer a high minimum wage. However, due to COVID-19, many employees throughout the country had jobs terminated or reduced to a minimum wage. This was especially the case for airport and international control workers. As such, amid COVID-19 in 2020, many unions moved to have an increase in the minimum wage and the New Zealand Government has finally answered.

Additionally, New Zealand implemented a high-income earner tax. This tax rate will only apply to individuals earning more than $180,000 per year, which only equates to roughly 2% of all New Zealanders. However, this tax increase is estimated to generate an additional $550M in revenue for 2021. A similar high-income earner tax was proposed in the United States and Argentina earlier this year. It is clear that COVID-19 has offset the balance of monetary circulation in various economies and governments are now taking action to restore this balance. Conversely, the opposing political party in New Zealand called this minimum wage and tax change an episode of “economic vandalism”. It will be interesting to see how these two new developments will play out in practice.