The Living Wage

by Fr Brian O'Connell sm

In February 2013 the NZ government set the Minimum wage at $13.75 an hour, an increase of 25c. There was muted comment at the time, as this is a regular adjustment. Some economists said that if there were a greater rise, then businesses would fail and jobs would be lost. The labour unions are talking more about a Living Wage which is not set by the market or fixed by the Government, but is agreed on as the minimum income necessary for a worker to meet basic needs of food, clothing and shelter over an extended period of time and so maintain a safe decent standard of living, with the ability to save for future needs. A recent Symposium on the Living Wage tabled a report by an independent policy unit setting the Living Wage at $18.40, which is 33% higher than the minimum wage.

There is plenty about just wages in the social teaching of the Church from Leo XIII’s Rerum Novarum to John Paul II’s Laborem Exercens. These statements are at the level of principle, and it is up to economists to come up with a mechanism to fix wages that will suit both employers and workers. It is in this context that the Living Wage movement is catching on and gaining traction both overseas and in New Zealand. Henry Ford  set the wages of his employees so they could save and purchase a car, so the idea is hardly new.

Some NZ employers and leading economists have endorsed the movement, while others have pointed out the dire consequences of such a change. An employment lawyer, Max Whitehead, stated that a set living wage would send thousands of small business owners over to Australia to restart their failed businesses.

Mr Reid, a union economist, replied by asking whether these small businesses have a right to be in business if they cannot afford to pay their workers a living wage.

So the debate continues. A steady line of business groups are committing to paying a living wage eventually without giving details. Until the big employer groups like central and local Government come on board it is likely to remain a work in progress.