The Prime Minister says wage growth isn't expected to exceed inflation until 2023 as Kiwis struggle with the sky-high cost of living.
Inflation hit 6.9 percent in the March quarter pushing the costs of goods and services up. And while wage growth is still high, hitting 3 percent in the March 2022 quarter, it's being offset by inflation.
Speaking with AM's Ryan Bridge on Monday, Jacinda Ardern said Kiwis will need to wait until at least next year before wages catch up again.
"Since 2017 wages and wage growth in New Zealand has been growing at a faster rate, at a higher rate than the cost of living and until this year. Then it changes back next year.
"In the Budget forecast, you will see we get back to that position of wages growing faster than the cost of living [in 2023]. We just happen to be in a difficult moment here and now," Ardern said on Monday.
For the past decade, wages have tended to exceed inflation but this changed as inflation spiked.
It comes after the Prime Minister was forced to defend the Government's one off payment aimed at helping low and middle-income Kiwis earlier in the show.
Last week Finance Minister Grant Robertson announced the 2022 Budget - which included a one-off $350 payment for the roughly 2.1 million Kiwis who earn less than $70,000 a year.
The payment is one of several measures introduced by the Government to try to mitigate high inflation and the ever-increasing cost of living.
But the payment was attacked by the Opposition, which highlighted Treasury advice that warned against the payment and described it as a "poor mechanism for supporting households with a longer-term problem".
The policy is part of the Government's $1 billion response to skyrocketing inflation in the Budget.
It says Treasury "recommended against progressing a broad-based payment, instead recommending investigating a more targeted form of support to lower-income households".
But Ardern defended the policy and its timeline saying it was a short term measure aimed at helping Kiwis struggling with the cost of living crisis.
She acknowledged the $350 payment won't solve everything but said it's designed to "take the hard edges" off.
"We know it is not a solution for everything but it is designed to help Kiwis get through the latter part of the year where we expect inflation to start easing."
The Prime Minister also hit out at the National Party, saying the Government decided to introduce the payment because it won't be inflationary, unlike National's proposed tax cuts.
"The reason we have decided to do something that is targeted and short term is because Treasury also raised their potential for the payment, if it was long term, to have an inflationary impact - to actually make the problem worse. We didn't want to do that either.
"That's why unlike the National Party… their proposal gives less to lower and middle-income New Zealanders but also would be inflationary because it is not targeted in [the] short term so that's why we designed this alternative."
The National Party is proposing increasing the tax thresholds resulting in tax cuts. But the policy has been criticised because the richest Kiwis would save thousands a year while most minimum wage workers would only get a few extra dollars a week.
