The government's announcement of an increase to the minimum wage has been called an 'April Fools' joke” by NZ First MP Clayton Mitchell.

The April 1 increase will bring the minimum wage to $15.75 – an increase of 50 cents an hour, or a 3.3 per cent pay rise.

For a worker doing a 40-hour week, that amounts to an extra $20 before tax on their payslip.

In November 2016, members of parliament voted to give themselves only a 2.5 per cent pay rise. However, for the Prime Minister, that results in him taking home an extra $215 before tax a week – over ten times that of a worker on the minimum wage.

A backbencher now takes home an extra $75 a week, taking them to a weekly income of $3077 before tax, or nearly five times what a worker on the new minimum wage will be paid.

NZ First MP Clayton Mitchell, who has owned businesses in Tauranga, calls the increase a joke.

'They do their 50 cent April Fools' joke every year. More needs to be done, but not at the expense of driving up inflation. It needs to be a balanced approach of a fair day's pay for a fair day's work, without pushing up living costs.

'Businesses should have a tax incentive so they don't pass the costs onto consumers.”

In his experience, Clayton says, increased productivity is linked to increased wages.

'I've always paid my staff very well, and I've always got good productivity as a result. If you look at the OECD, New Zealand is second-lowest for productivity, and I think that's a result of low wages.”

Tauranga Budget Advisory Service manager Diane Bruin sees the reality of low wages every day, but believes every little bit helps.

'For our clients this is very welcome and even $20 a week would help towards the cost of accommodation, education and general household expenses.”

She hopes it will reduce the need for her clients on low incomes to get quick payday loans.

'On the other hand, wages are the biggest cost for most employers, and if they increase too much, it could reduce staffing numbers. But if the increase is reasonable then most employers would be able to accommodate the cost.”

Toi Ohomai Tauranga Head of Business School and economist Peter Richardson believes the increase will have little impact on the job market.

'You could argue the increase will influence employer decisions to hire people, making it harder for unemployed people to get a job. However, I would say 50 cent increase is not likely to have that sort of effect, especially considering the growth we have here in Tauranga.

'In this region particularly we seem to be able to afford an increase in the minimum wage, and as long as it's not too high, it doesn't become a disincentive to hire.”