Article: The Living Wage in NZ – issues and alternatives

Socio-economic issues are still a problem in contemporary New Zealand, as nice as it would be if they weren’t. Living Wage Aotearoa, a non-profit organisation dedicated to raising awareness about those financially struggling has been encouraging businesses to raise the salary of lower paid employees.

Most companies have chosen not to join the movement for a variety of reasons…

Issues with the Living Wage

One of the main concerns with the Living Wage is that the original analysis, conducted approximately five years ago, it’s calculated around two-parent families. While it’s always difficult to choose the right demographic base and there was some logic to the decision the researchers made, overseas calculations are vastly different causing concern as to what the right model of calculation should be.

The families most in need are single-parent families who aren’t working, or who are only working part-time. If we say our concern is these families, this structure is probably not going to help them.

Another reason Kiwi companies aren’t all hopping on board with the Living Wage is that many of them are already paying most of their employees more than the annual amount set out by the organisation. Businesses that may otherwise be interested in paying a higher wage aren’t so keen on being audited by a trade union and held captive by a piece of analysis that they also have their doubts about.

How can we ensure people have liveable wages?

Although there are some issues that the Living Wage does not address, it has undoubtedly sparked a conversation across corporate New Zealand concerning the wages their employees need to sustain themselves and their families. One great example of a company that has taken such steps of its own is The Warehouse.

What The Warehouse did was introduce a skills-based pay system, so it has a training program for its lower paid staff. Their pay increases as their skill level increases. The organisation wanted to do something internally so they developed a model that was best for their people.

The main issue with the New Zealand payscale isn’t low wages – it’s getting held down with those low wages in the long term. Lower levels of pay aren’t evil in themselves, the evil comes with groups that get stuck.

Even if they aren’t on board with the Living Wage, companies concerned with the issue can review their own pay levels across a variety of criteria.

If you are interested in hearing more about how you can restructure your remuneration and rewards packages, Strategic Pay would be pleased to talk to you.

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