Journal article

Does the living wage ensure an adequate standard of living for families?

Wages Cost and standard of living Welfare state Living wage New Zealand
Attachment Size
apo-nid105996.pdf 421.74 KB

New Zealand was once held up as a model of egalitarianism to other countries. Today New Zealand is far from being that leader, with high income and wealth inequality and an unacceptable level of family poverty and homelessness. Children are particularly affected, suffering the highest levels of material deprivation in New Zealand (Perry, 2016).

Living Wage Movement Aotearoa New Zealand (LWMA) has argued that raising wages is the best way to address this problem. They believe the minimum hourly wage rate is too low and that employers ought to pay a higher ‘living wage rate’ (LWR). Currently (in 2017) the margin between the minimum wage rate of $15.75 and the LWR of $20.20 is $4.45.

Since 2013 when the LWR was first introduced, more employers have signed up to be living wage employers. Recently, the Wellington City Council implemented policies to pay a living wage rate, not just to its employees, but to all staff of council-controlled organisations (Devlin, 2016). The new mayor of Auckland, Phil Goff, has also committed to paying the LWR, first for those directly employed, and then for contracted workers (Furley, 2016). In 2017, 64 firms or organisations are identified as ‘accredited living wage employers’.

This article argues, however, that while better wages are essential, on their own  they are an insufficient response, especially to the inadequacy of family incomes. Higher basic wages must be accompanied by strengthening the generosity and effectiveness of tax-welfare policies (Boston, 2013). To this end, changes to the way the living wage rate is calculated are suggested.

Publication Details