Can businesses afford a ‘living wage’?

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The Living Wage Campaign in New Zealand, an association of community and faith-based organisations and unions, are lobbying for employers to re-evaluate what they pay their staff. “A living wage is the income necessary to provide workers and their families with the basic necessities of life,” according to their definition.

They have calculated that a ‘living wage’ in New Zealand would be $18.40 an hour. The minimum wage has just been raised to $13.75 an hour.

But the issue is a ‘difficult’ one, according to Tarryn van Niekerk, HR manager – Harvey Norman. “Obviously, from a business perspective, we’re looking at it and thinking, ‘Wow, that’s really not affordable,’” she said.

Van Niekerk does not think that the Government should legislate on the issue. Implementing a ‘living wage’ overnight could have two pernicious consequences, van Niekerk warned. First, more manufacturing and call centre roles could move overseas; secondly, an increase in the costs of goods would be passed onto the consumer, resulting in the status quo for workers.

“If it was an ideal state that New Zealanders were working towards, and businesses were allowed to determine that, I think you probably would see a bit of economic growth from it, but legislated, as a consumer, you’re just going to end up paying more for the goods and services that are essential for you to live,” van Niekerk added.

But not all HR managers are opposed to the idea. Katrina Lee-Guard, HR manager – Metal Skills Ltd, sympathised with workers on lower wages. “A lot of our staff are in that $18-22 bracket and they still can’t make ends meet,” she said. Introducing a ‘living wage’ could improve the lives of low wage workers and indirectly benefit their employer, through lower absenteeism and higher productivity. “Some employers may benefit in the long run as more money is spent in the economy. With low income families, I would presume more would be used to make their lives a bit more comfortable,” Lee-Guard added.

Like van Niekerk, Lee-Guard believes instituting a ‘living wage’ should be a government-led initiative.

However, she also acknowledges that part of the problem is a lack of financial literacy on the part of workers. So Lee-Guard encourages her staff to learn how to budget. “I do a budget piece for them, every month in the newsletter, and they’re starting to read it and put that into practice as well with their lifestyles,” she said.

  • John on 8/03/2013 2:22:39 p.m.

    It is an admirable goal to increase wages but it is simplistic to think that the impact will be all positive for the low paid. For example, in Ireland during their economic boom, they significantly increased minimum wages which led to a significant increase in the cost of living . It is a reality that any increase in wages will be passed on to the customer and to think otherwise is really only idealism. I believe that reducing the GST on essential food and clothing items would be more effective in assisting the low paid.

  • Mary-Ann de Kort on 8/03/2013 1:41:57 p.m.

    If we dont pay a living wage there Taxpayer have more of a burden. Many businesses pay little tax but the rest of us subsidise employers every day with Working For Families, rent subsidies, hospital care for poverty specific conditions, crime rates, low educational achievement by the poor etc.
    Many employers think that a house in a desirable suburb or a car they wouldnt embarass them is more important than a worker's welfare yet many can afford more.

    Sick and broken people who have worked too hard and too long for little reward will cost more down the track so low wages needs to be addressed now.

  • James on 6/03/2013 4:09:55 p.m.

    The issue is a complex one - certainly not "as simple as that". What is a "living wage" for one person isn't necessarily a living wage for another ... it depends on the choices a person makes as to what they need to have as a living wage.

    To say that it is appalling that public sector does not always meet the suggested living wage is quite unfair; all levels of public sector are under extreme pressure from taxpayers and ratepayers for cost reductions ... government is not some amorphous third-party - it is tax and rate payers who don't really have another supplier to go to if they don't like the prices. Businesses can at least have competition between them but higher cost does come back to higher prices in some form. Just upping the minimum wage is not the total solution.

  • Robyn Tucker on 6/03/2013 1:28:53 p.m.

    When the Equal Pay Act was passed employers said they could not afford to pay women the same wage as men. I do not believe that the majority of employers now cannot pay a living wage. It is appalling that the public sector does not. The growing inequality in New Zealand needs to be addressed and it is insulting for Lee-Guard to apportion blame for poverty on the lack of budgeting skills by low-wage employees. Employees are entitled to be paid a wage that they can live on - it's as simple as that.

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