Tauranga City Council workers will not be joining their Hamilton counterparts in a pay rise.
Hamilton this week became the first city council in New Zealand to approve paying all staff a "living wage" of at least $18.40 an hour.
The minimum wage is $13.75.
However, Tauranga City Council chief executive Garry Poole said staff, who were paid "no less than the minimum wage", were fairly remunerated.
"Pay rates are related to the market data for their particular activity. I believe that this is fair and see no reason to change that policy," he said. "We would expect that contractors that work on council projects would do the same."
However, the Western Bay of Plenty District Council said its staff were already paid above the "living wage". It did not have a view on whether contractors should be paid the same.
"While the organisation engages contractors from time to time for certain projects, the organisation does not employ them," human resources manager Barbara Faulkner said.
"We do not have a 'view' as we have a commercial relationship with contractors that focuses on delivering best value service to our communities. How contractors structure their business as part of the arrangement is their business."
The living wage, calculated by Living Wage Aotearoa, is said by campaigners to be the rate needed for workers to fully take part in society.
Radio New Zealand reported the Hamilton decision would affect about 80 council staff and cost about $168,000 a year. Pressure is being put on other councils to do the same.
Living Wage Aotearoa national convenor Annie Newman said the group was excited about the Hamilton City Council going with the policy.
But councils needed to ensure workers delivering services through contractors were also paid the living wage, because they were often the lowest paid, she said.
That included workers in waste management, cleaning, catering and security, who were often paid just above the minimum wage.
"Over a period of years low-paid workers have lost a great deal of ground in terms of their incomes and what we're seeing is a growing working poor. Councils are responsible for cities and cities have large groups of low-paid workers who can't afford to survive on the money they're making," Ms Newman said.
Wellington and Auckland councils were also investigating implementing a living wage.
The Public Service Association called on other councils to follow Hamilton's lead and national secretary of the Service and Food Workers Union John Ryall said the move should be extended to workers employed by council contractors.