Increases to the minimum wage will give hope to those struggling to make ends meet according to an Auckland charity.

The coalition government has announced it will raise the minimum wage to $16.50 next year as part of its plans to make it $20 an hour by 2021.

The CEO of the Mangere Budgeting Services Trust, Darryl Evans, said the current wage, $15.75, puts hundreds of parents he works with in a difficult position, with much of their income going towards increasing rental costs.

"People are having to make choices, and possibly it's week one you pay the rent, week two you buy the food, week three you pay for the electricity. The increase to $20 does give people hope," he said.

While there is some fear the increase will put a strain on businesses, others say that the country should cope.

Christchurch Central City Business Association Chair, Brendan Chase, personally believes that the many new businesses in the city should be able to cope with the increase.

"I don't know that we're particularly vulnerable in that regard. I like to think that the businesses are sustainable anyway and are not just hanging on by the skin of their teeth," he said.

Auckland Chamber of Commerce chief executive Michael Barnett, meanwhile, is hopeful that tax breaks for small businesses will dampen the effect of minimum wage rises.

He told Mike Hosking worried employers must work with the new Government on ways to do this.

"I think the big thing is for business is not to put up resistance but how can we work with government to make these things work," he said.

The first minimum wage increase will take effect in April 2018.