WELLINGTON (REUTERS) - New Zealand's government on Wednesday (Dec 19) said the mandatory minimum wage would be boosted by NZ$1.20 to NZ$17.70 (S$16.60) an hour from April, in a bid to reduce inequality.

Prime Minister Jacinda Ardern's centre-left coalition government has been steadily lifting the minimum wage towards its goal of NZ$20 an hour by 2021.

"The government is determined to improve the well-being and living standards of all New Zealanders as we build a productive, sustainable and inclusive economy," Minister for Workplace Relations Iain Lees-Galloway said in an e-mailed statement.

Some businesses have said the minimum wage hikes are putting them under pressure. Business confidence sank to a decade low earlier this year, but has since improved.

New Zealand's wage growth has been relatively sluggish in recent years despite unemployment dropping to a 10-year low of 3.9 per cent.

Ms Ardern's government came to power in October 2017 after a decade of centre-right National Party rule, promising to tackle inequality.

The latest wage increase would come into force from April 1 and put about NZ$231 million a year extra into workers' pockets, the government said.