Simon Collins

Simon Collins is the Herald’s social issues reporter.

Living wage estimate rises to $18.80/hour

Photo / Thinkstock
Photo / Thinkstock

Living wage campaigners say it now costs $18.80 an hour to feed two adults and two children in New Zealand.

The new figure, up 2.1 per cent from the campaign's original estimate last year of $18.40 an hour, is more than $5 higher than the legal minimum wage of $13.75, but the Government is expected to lift the minimum from April 1 to about $14 an hour.

The figure is based on calculations by the Anglican Family Centre research unit of the gross hourly wage required for a family with two children where one adult works fulltime and one half-time at the same wage rate.

The gross wage had to go up by more than the inflation rate of 1.6 per cent in the past year because higher wages reduce the family's entitlement to family tax credits.

The campaign, backed by unions and churches, also unveiled a "living wage employer trademark" at a function today at a Mt Eden restaurant, O'Sarracino, which has committed to paying the living wage when it can afford it - though not yet.

A report by Family Centre analysts Rev Charles Waldegrave and Dr Peter King said the living wage was never intended to be compulsory.

"It carries moral force and tests business ethics," they said. "The living wage enables an employer to know that what s/he pays a worker is sufficient for them to live modestly and participate in society."

The calculation is based on surveyed spending by the poorest half of Kiwi families with two adults and two children, adjusted to include average NZ-wide rents for the cheapest quarter of three-bedroom houses taken from tenancy bond data, and food costs which meet Otago University nutritionists' calculation of a "basic"diet of nutritious food.

The effect is to give much more weight to both housing and food than the weightings used in Statistics NZ's broad-based consumers price index. Average lower-quartile rents rose 1.8 per cent from $275 a week in June 2012 to $280 last June, and the cost of the basic food diet for two adults and two children rose by 2.7 per cent, from $226 to $232.

As it did last year, the report notes that the average rent figure falls far short of the lower-quartile average in Auckland, which was $438 a week last year. But once again the researchers decided against calculating a separate "Auckland living wage"because of the advantages of a single national figure for employers to aim for.

They said last year that Government criteria for the accommodation supplement should be adjusted to take account of much higher rents in Auckland, but Housing Minister Nick Smith said this month that there no current plans to review the supplement.

The report found that the total living costs for the average national lower-quartile family rose by only 01.1 per cent in the year to last June, from $1038 a week to $1044.34.

It said gross wages would need to rise by 4 per cent, from $18.40 to $19.14 an hour, to yield a 1.1 per cent increase in net income, because of the clawback of family tax credits.

But it plumped for an increase of only 2.1 per cent to $18.80 an hour in line with the average ordinary-time hourly wage, which rose from $26.96 an hour in June 2012 to $27.53 last June.

"Because the living wage functions like any other wage agreement once it has been introduced, it is considered that updates, as opposed to full reviews, should relate primarily to wage movements," it said.

Labour Minister Simon Bridges said the figure seemed to be "much more what they feel rather than what good evidence suggests is right".

He said raising the legal minimum wage to the original figure of $18.40 would cost employers $2.5 billion a year and wipe out 25,000 jobs. He said the Government would announce a new minimum wage for the tax year starting on April 1 "soon".

- NZ Herald

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