A Living Wage - The Current New Zealand Campaign and the International Background

Abstract

In a paper to LEW10, I asked why the concept of a living wage, formerly prevalent in New Zealand discourse, was no longer a common slogan – and suggested that it might be politic for it to be revived as a campaigning tool in the context of overseas activity. Exactly ten years later, such a campaign, led by the Service and Food Workers Union (SFWU) and with widespread union and community group support, is well under way, inspired partly by successes overseas. For example, the London Olympics used the living wage principle, while many UK local government authorities including the Greater London Council declare themselves to be living wage employers. Many other countries also have active campaigns and jurisdictions where living wages have been adopted. This paper will first discuss the political, economic, social and industrial relations context and rationales for such a campaign and the progress to date in New Zealand. It will then move on to the definitional, theoretical and practical issues in establishing the quantum of a living wage above the minimum wage, drawing on relevant overseas literature and experience. It will also discuss opposition based on lack of affordability, interference with the market, and employment implications. Basic definitions are variations on the theme that a living wage represents a minimum income required for a ‘decent livelihood’, to include the costs of paid work, particularly child care and transport/other directly attributable costs. The major methods of establishing a living wage are similar to those for establishing a poverty line, but must include the in work costs as well as often being based on a slightly more generous standard to ensure that being in paid work has some material benefit above social security minimum standards, in addition to its intrinsic benefits. There are therefore two common methods for calculating a living wage. The first uses relativities to average or median incomes, commonly 60% of the median (the NZ Poverty Measurement Study used 60% of median, equivalent, disposable, household income). The second approach builds up household budgets using one or ideally both of two approaches - published data from expenditure surveys and focus group discussions. Reconciliation or averaging of the two approaches, which often lead to fairly similar results, is common. This paper will discuss these methods, together with issues related to different household structures and regional differences, which make the living wage conceptually and practically more complex than a minimum wage. Finally, the paper will discuss the relationships, both positive and with some tensions, between the living wage campaign and various other social justice initiatives in the labour market and society generally – to improve paid parental leave, oppose changes to the welfare system, reduce child and general poverty, and reverse the thirty year increase in inequality