Editorial: Key to 'living wage' will be equating it with fairness

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Employers need to pay skilled staff appropriately.

Employers, too, are probably glad that the law puts a floor under the rates their competitors can pay. Photo / Mark Mitchell
Employers, too, are probably glad that the law puts a floor under the rates their competitors can pay. Photo / Mark Mitchell

It would do no harm - and possibly a great deal of good - for New Zealand to know the minimum a person needs to be paid in this country to have a "living wage". A living wage, as the union movement is now proposing it, would not be a statutory minimum. It would be an accepted figure with moral force, no more.

The round figure, based on a calculation by the Anglican Church's Family Centre in Lower Hutt, could be $19 an hour, considerably more than the legal minimum adult rate of $13.50 at present. The Family Centre has added up the costs of a basic diet, the rent of a three-bedroom house in a lower quartile of value and some other expenses of two-child families in Statistics NZ's household surveys.

There will be plenty of scope to quibble in the detail of those costs and about whether all of them are absolute necessities. But there is no argument that life on the minimum wage must be a struggle. If a nation could simply legislate a comfortable living income for all its citizens, every democratic nation would do so.

If only economics were that simple.

If the living wage proposal was to have legislative force, raising the statutory minimum hourly rate by $5.50 at a stroke, there would be increases in both unemployment and inflation as some employers reduced staff and others increased their prices to recover their added cost. Either way, the economy would suffer and nobody would be much better off.

If economics was all that mattered there would be no statutory minimum wage, but social equity matters too. The minimum wage is about 60 per cent of the median income in this country and increased annually. Views differ on whether the ratio is equitable enough - the Labour Party's election platforms usually offer a higher rate - but there is no argument between the major parties that a minimum needs to be set.

Employers, too, are probably glad that the law puts a floor under the rates their competitors can pay. Without one, small businesses in industries with an ample supply of unskilled or easily trained workers would witness a race to the bottom that no employer wants but competitive survival might require.

Employers might be equally content to pay the "living wage" if none of their competitors could pay less and all had to recover the cost in their prices. The task for the union movement and those who support its proposed living wage is to give the idea so much moral force that all good employers feel bound to pay it, or at least as close to it as they can manage.

The campaign being launched by unions this week will start with soft targets - universities and local bodies - calling on them to make the living wage a condition of the contracts they accept for services such as cleaning and security. The Herald yesterday highlighted actors, truck drivers and casual labourers among those who often subsist on less than $19 and hour. The list includes cafe staff, caregivers, young carpenters, graphic designers and primary school teachers.

Low pay in the first few years of employment may be regarded as a training wage so long as it leads to a living wage for those qualified. Unions might not like starting rates but they should aim their campaign at industries paying too little to experienced people with families to support.

They are the workers who need and deserve the living wage. At 80 per cent of the median, the rate is reasonable. Now it needs to be locked into the public mind that $19 an hour is the fair adult minimum. Anything less is not a living wage.

- NZ Herald

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