New Zealand living wage set to increase in September 2023 to $26 as Kiwis feel inflation pinch

In response to the rising cost of living, the living wage is also being raised, which experts say will help people to participate in society and live in dignity.

However, an employment law expert, whose company is committed to paying the living wage, told the Herald they were concerned about rising expenses and inflation for businesses, which are a key reason for increased individual costs and may see future job cuts as employers struggle to pay staff.

Kiwis across the country are feeling the pressure of the cost of living crisis as inflation - which sits at 7.2 per cent - and in particular food prices reach a 30-year high. Tomatoes have more than doubled in cost and potatoes, a staple people rely on being cheap, are almost 50 per cent more.

From September 1, the New Zealand Living Wage rate will increase to $26 an hour, a 9.9 per cent increase on the 2022/23 rate, or $2.35.

Reverend Stephen King, chairman of the Living Wage Movement in New Zealand, said the rate considers what families need to live with dignity and participate in society, which includes the cost of recreation and saving for emergencies.

“With rising costs and pressures on low-waged workers, we are seeing increased hardship in the community,” King said.

“The full recalculation ensures the living wage will continue to address in-work poverty, and offer working people greater security and wellbeing.”

In a statement, the Living Wage Movement used the example of cleaner Rose Kavapalu, who is currently paid a living wage.

She said the increase would mean more time with family.

“Since petrol prices have gone up, we’ve cut down on visits to extended family. Now, I’ll be able to take the grandkids to visit their cousins. We would feel like a family again,” Kavapulu said.

“The living wage might feel like five cents to some people, but to me and my family, it means finally living a life.”

Living Wage Employer programme lead Felicia Scherrer said employers who pay their employees the living wage have “transformed thousands of lives”.

“We know that Living Wage Employers reap the benefits too,” Scherrer said.

“Research has shown that paying the living wage can reduce staff turnover, improve productivity and boost employee morale.”

The most recent living wage employer to be certified is Environment Canterbury (ECan). It’s an honour, according to ECan chairman Peter Scott.

“Living wage accreditation is something we’ve been working towards for some time,” Scott said.

“Being a Living Wage Employer means our people and contracted providers are paid fairly for the great mahi they do.”

Director and principal lawyer of employment law firm Black Door Law, Caro Rieger, who is an accredited Living Wage Employer, said her company is committed to paying the living wage, and they think it’s a vital social issue for people to be able to live with dignity.

“I think like everyone in New Zealand, both individuals and also businesses are struggling with the increasing costs of everything,” Rieger said.

The majority of her staff are paid above the living wage. However, she also ensures all contracted workers, such as cleaning staff, are paid the living wage, as “everyone is feeling the pinch”.

Rieger explained one of the reasons costs are going up for individuals is that costs are continuing to go up for businesses.

“We’re seeing this from our clients - businesses aren’t able to sustain the increasing costs, and that’s, that’s really, really concerning moving forward,” Rieger said.

She said while the increase in living wage will be welcome news for some people, for others, it might mean their jobs are cut due to the businesses not being able to afford to keep them on.

“It gets to a point where the market, you know, where consumers won’t pay the costs that businesses have to increase their prices too, to be able to cover their own cost,” Rieger said.

“And so then you see falls in revenue, and that’s when restructures and things occur, which is really not what we want to see.”