Auckland Mayor Len Brown will propose a "living wage" of $18.40 for all Auckland Council staff at a council meeting today.
The policy, which will cost $3.75 million a year, will be paid for through savings in other parts of the council and phased in over three years, starting in 2014.
The mayor also wants the council to look at a living wage for staff of contracted organisations.
The new pay-rate would apply to both council and council-controlled organisation staff, and was based on data by the Family Centre Social Policy Research Unit.
Mr Brown said Auckland relied on low-paid workers, many of whom found it difficult to survive on the minimum wage in the city.
"It's only fair that these people are able to enjoy a decent standard of living," he said. "While I would prefer this was an issue addressed by central Government through adjustments to the minimum wage, I am supportive of moves to pay our frontline staff a reasonable wage, provided it doesn't impact on ratepayers."
Living Wage Aotearoa co-ordinator Annie Newman said the policy was a positive move. "I think it's great that Len Brown has decided that the living wage is a priority for the city," she said.
"He's recognised that communities benefit when workers are being paid properly because they invest the money straight back into the communities."
Mrs Newman said the wage would not have a big impact on ratepayers.
"It's an incredibly small amount of money in the multibillion-dollar budget that the council has."
It was also important that Mr Brown had indicated that he would support a living wage for contracted staff, said Mrs Newman.
But not everyone agreed. Employers and Manufacturers' Association chief executive Kim Campbell said a living wage was "a dumb idea", despite being well intentioned.
"They haven't taken into account all the people that are now on $18 an hour who will want $5 an hour more. You can't tell me anyone who has a margin ... is not going to put his hand up for more?"
The "living wage" of $18.40 is calculated as the minimum required to meet the basic needs of two adults and two children where one parent works full-time and one half-time. The council has 1,623 employees who earn less than $18.40 an hour, while 1,500 earn more than $100,000 a year.