The Moral Force of the Living Wage

The Living Wage movement continues to go from strength to strength with the 2018 Living Wage rate of $20.55 announced on the 4th April marking another step in the journey to lift low wages and set a benchmark for decent incomes. NZCCSS is one of nearly 100 organisations that are now accredited Living Wage Employers.

In Parliament, the Speaker Trevor Mallard has announced the Living Wage for cleaners and catering workers in Parliament, who will receive a significant boost in pay when the changes come into effect from 2019. Other workers employed by the government are also hoping to the Living Wage implemented. One of those workers is Maopa Vea, who is a cleaner at Manukau District Court earning the Minimum Wage of $16.50, with a twin boy and girl, aged 5 years old. Maopa believes her employer, the Government, could do more:

“We deserve to be paid the Living Wage rate. Another 3 or 5 more years or never… Just be fair and do the right thing.”

New Zealand has become a low-wage economy compared to other wealthy countries in the OECD. Around one third of workers earn less than the Living Wage.  The result of this is that finding paid employment is often not enough to lift families out of poverty, with around 40% of children in poverty live in households where at least one adult is employed.

The Living Wage is a moral force in the work to increase wellbeing and overcome poverty and exclusion. It tests the ethics of businesses and employers because it does not require a law change to be implemented, the decision to pay the Living Wage can be made any time.

The 2018 rate is $20.55

The 2018 Living Wage is $20.55 per hour, up from $20.20 in 2017-18 and will apply from 1st September.  Family Centre Social Policy Research Unit has completed the first full review of the rate since the original Living Wage was announced in 2012, when it was $18.40 per hour.

The Living Wage calculation is based on a model of a two adult, two child household where there are 60 hours of employment. The new Living Wage of $20.55 over 40 hours of work means a total gross income of $42,744.00 or over a household income of 60 hours, $64,059.

The updated calculation has been able to draw on new information about the needs of workers, including food and rent costs, energy, health, communication and education, as well as using established sources such as Household Economic Survey data from Statistics NZ. A better picture emerges of what it really costs to survive and participate in society.

The Living Wage gives households an income that is above the poverty thresholds similar to those being used for the Child Poverty Reduction Bill such as 60% of the median household disposable income. The income after tax and transfers is 73% percent of median disposable household income in New Zealand, roughly the mid-point between the poverty line and the median income.

The impact of poverty reduction policies such as the Government’s new Families Package is striking. The Families Package boosts the Family Tax Credit and raises the abatement threshold, which along with accommodation supplements, reduces upward pressure on the level of the Living Wage. Without this package, the hourly rate would have needed to be almost $2 per hour more ($22.45).

Read the full Living Wage review report on the Living Wage Aotearoa website