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The news comes as a "hard-won result" for the Tramways Union and First Union, following two years of campaigns.
The ORC agreed to include living wage funding for all Orbus drivers in its 2020-21 annual plan, which was signed off during a meeting on Wednesday last week.
The decision could see drivers’ pay increase to the living wage, $22.10 per hour.
ORC transport manager Garry Maloney said the annual plan included provisions for re-tendering of an expiring public transport contract with an operator and for new requirements of the Employment Relations Act.
Part of the tendering process would involve the ORC requiring operators to commit to paying their drivers a living wage.
Increases may not take effect until later in the new financial year, but the council would be seeking to have the wage increase back-dated to July 1 — subject to negotiation with its operators and partner agencies, he said.
ORC chairwoman Marian Hobbs said the funding passed to help negotiate a living wage with bus companies.
"I do care an awful lot about low-paid workers ... and there had been a shortage of bus drivers and if we want people to get out of their cars and ride the buses ... we need more bus drivers. For me that is all part of the climate change move."
Tramways Union Dunedin branch president Peter Dowden said it was "delighted with this hard-won result" for the workers, which came at a cold time of year, and during uncertain economic times.
Two years of campaigns from the Tramways Union, as well as First Union, included a petition with 514 signatures, and a multi-union delegation to the regional council’s public forum.
It was also welcomed by First Union southern regional secretary Paul Watson, who said it should be a "wake-up call" for other regional councils.
"This is huge news for bus drivers in Otago but also for the rest of the country, where many operators are still paying low wages to essential workers with significant public safety responsibilities."
He said the living wage should be the minimum standard required by all councils, for all workers.
Negotiating consistent terms and conditions for bus drivers across the country was the next step to ensure the industry could retain, train and deploy bus drivers, he said.