After a four-year wait, people working at the low end of the pay scale are finally getting some relief. The minimum wage rate effective from 1 July will be $4.00 an hour, an increase of $1.

In July next year, this amount will increase by $0.84 taking the minimum wage rate to $4.84 an hour. In terms of an average weekly pay packet, this is an increase of $40 a week for someone working a 40-hour week.

Compared to a bump in the salaries for government leaders, judges, and civil servants, this is peanuts. How is this increase justified, what was the formula that was used to calculate the increase, and does it adjust the cost of living?

This increase was long overdue. There was resistance from some employers and as usual their argument was that this would impact their revenue. It may be the case, but the benefits of having a higher minimum wage outweigh the negatives.

One has to walk in the shoes of a minimum wage worker to realise the struggles they face. Some are asking for prolonged hours of work, some hoping to work seven days, and there are requests to the employer that the superannuation payment is not to be done.

Most on minimum wage are also subject to things such as poor nutrition. Their inability to afford nutritious meals results in lifestyle diseases.

$5 per hour would have been an ideal increase but this would lead to many employers being up in arms.

Most economists believe that a rise in the minimum wage may reduce unemployment.

Workers with higher wages tend to spend more money, which can increase demand for goods and services and create new jobs. Workers on relatively low wages tend to have a high propensity to consume.

A higher minimum wage can lift many workers out of poverty and reduce income inequality, which can lead to a more stable and robust economy.

When workers are paid a fair wage, they may be more motivated and productive, which can boost overall economic growth. Efficiency wage theory approaches the issue from this perspective.

Higher wages can make it more attractive for workers to stay in their jobs, reducing the need for employers to constantly hire and train new employees.

A higher minimum wage increases the hourly reward from working rather than remaining economically inactive.

However, it is important to note that too steep of a minimum wage increase can lead to inflation, reduced profits for businesses and potentially decreased job opportunities as companies look to reduce costs.

There is also nothing stopping employers from paying more than the minimum wage to their staff. This also comes with benefits. When workers are paid a higher wage, they may feel more valued and motivated, leading to increased effort and productivity.

Higher wages can make it more difficult for workers to leave their jobs, reducing the need for employers to constantly train new employees. Workers abandoning local jobs for seasonal work has become all too common. This is also one of the reasons why Samoa opted out of Australia’s Pacific Engagement Visa.

Higher wages may improve workers' health, as they can afford better nutrition and healthcare.: By paying higher wages, firms may be able to attract and retain higher-quality workers.

There is also a need for the government to move up the income tax threshold. People earning $15,000 per annum or less are not subjected to income tax. Once a person starts even a tala more than $15,000, the 20 per cent tax is applied.

The government needs to move the income tax threshold to $20,000. This would allow more people to increase their purchasing power and move out of poverty. The social relief measures should have been announced with the budget.

Announcing the increase in minimum wage is just part of the work. The responsible authorities need to collaborate and check compliance with not just the minimum wage, but other things that ensure fair employment.

Have a blessed Sunday.