What could a New Zealand living wage look like?

A team of researchers have begun investigating the concept, which they say could help struggling, low-paid workers and tackle mounting challenges regarding poverty and productivity.

Massey University psychologist Professor Stuart Carr, who is co-leading the new three-year study, said living wages usually refer to higher minimum wage rates, derived from calculations of the material cost-of-living needs of a hypothetical household unit.

"However, the broader concept of living wages goes much further," he said.


"It implies that not just cost-of-living, but also human quality-of-living will follow from meeting everyday material needs."

About 70 organisations in New Zealand voluntarily accredit with the Living Wage Aotearoa New Zealand to pay their staff a living wage, when they could legally pay them less.

The minimum wage in New Zealand was currently $15.75 and will rise to $16.50 in April 2018 – a change introduced by the new coalition Government.

The current living wage in New Zealand is $20.20, set by the Family Centre Social Policy Research Unit, and is the amount the new government has said it will increase the minimum wage to in four years.

The research team saw an urgent case to examine the area.

They said working poverty had "soared" due to low pay, insecure work that provided interrupted or insufficient hours of paid employment and rising housing, energy and food costs – all of which disproportionately affected women, younger and older people, and Maori and Pacific people in particular.

Researchers say that while a national minimum wage is a legal floor intended both to provide protection for workers and encourage fair competition among employers, minimum wages were now widely recognised as failing to provide sufficient cost-of-living income.

"This is due not only to the growth of informal work, poor awareness and weak enforcement of wage laws, but mainly to minimum wage rates not matching increasing living costs and the realities of precarious work," said Professor Jim Arrowsmith, of Massey's School of Management.


"This generates a growing interest in living wages from stakeholders, including local and central government and employers needing to recruit, retain and motivate staff as well as social campaigners, employees and trade unions."

In the study, supported with an $845,000 grant from the Marsden Fund, researchers from Massey and AUT will look at whether a living wage could be feasible to both workers and employers, and what difference it might make to quality of life and wellbeing.

The work will canvas a range of workplaces, including a city council; a public-sector Maori organisation; a Pacific social enterprise; and a local small or medium-sized enterprise.

The researchers hoped the findings will help inform benchmarking and policy development, and said its longitudinal approach would prove critical.

Arrowsmith said some employers in low-paying sectors might at first struggle with the consequences of paying a living wage.

"But over the longer-term, higher pay could lead to returns through improved recruitment, motivation, retention, productivity and consumer branding, including in small firms.

"We clearly need to learn more from the experiences of employees and employers along a wage spectrum, especially in low-paying organisations and sectors."