New costs 'will hit workers'

Updated at 6:07 am on 2 April 2013

Budgeting services and opposition parties say struggling workers will be hit hard by increased costs that came into effect on 1 April.

Minimum KiwiSaver contributions rose from 2% to 3% and student loan repayments went up from 10 cents to 12 cents of every dollar earned over the current threshold of just over $19,000.

At the the same time the minimum wage rose 25 cents to $13.75 an hour.

The Government says people have to start paying back student loans faster to get the $13 billion debt down, and the increase in KiwiSaver contributions is to encourage a higher level of private savings.

The Federation of Family Budgeting Services says it expects its clients to struggle with the increased costs, especially given increased food and electricity prices.

The Labour and Green parties say some workers already struggling financially may choose to opt out of KiwiSaver rather than make the higher payments.

Two unions representing low paid workers, Unite and First Union, describe the new minimum wage as a starvation wage and say the KiwiSaver increases will reduce workers' take home pay.

However Business New Zealand does not think increases in KiwiSaver contributions will hit workers as is being suggested by unions.

It says while some low-paid workers may feel worse off having to invest an extra 1% into KiwiSaver, many will be eligible for other Government support.

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