Finance Minister Bill English says some employers are "greedy" and not paying staff what they could be.
His comments come amidst calls for the minimum wage to be increased by $5, as recommended in a report by the Family Centre Social Policy Research. It found $18.40 was necessary as a nationwide figure for a 'living wage', as opposed to the current minimum wage of $13.50.
Mr English says living on the minimum wage is tough, and conceded that there are families living in poverty in New Zealand.
However, he says the Government cannot force businesses to pay them more.
Speaking on RadioLIVE, Mr English says “lots of people on low incomes aren’t getting enough income from the market."
“If the wages go up, it saves us money. But you can’t just legislate wealth.”
Mr English says the vast majority of employers know that exploiting staff doesn’t work - but there are some who still do.
“It’s almost certain some [employers] are [greedy and don’t pass on wages they could] because the world has some greedy people," he says.
The Green Party says Mr English needs to practise what he’s preaching by paying Government workers properly first.
“It is unethical that any person working for the Government earns less than the minimum required to live a basic existence,” says Green Party co-leader Metiria Turei.
“Many chief executives in the public sector earn salaries of more than $300,000, while those that clean and maintain their buildings subsist on the minimum wage.”
Ms Turei says if the Government sets the example, businesses in the private sector making good profits should follow suit.