Minimum wage still doesn’t buy a living

Brooke van Velden. PHOTO: GETTY IMAGES
Brooke van Velden. PHOTO: GETTY IMAGES
Cost of living pressures were a major issue for the National Party during last year’s election campaign.

But one proposed solution — tax cuts — will give relief mainly to those on middle to high incomes. That disregard of the poor is reflected in the government’s setting of the minimum wage.

The Ministry of Business, Innovation & Employment advised a 4% increase would balance the objectives of the minimum wage.

Workplace Relations and Safety Minister Brooke van Velden, deputy leader of Act New Zealand, proposed 1.3%.

The government decided that on April 1 (no joke) the minimum wage will lift 2% from $22.70 to $23.15 an hour.

Council of Trade Unions economist Craig Renney said the increase was so parsimonious, compared with inflation, he initially thought it was a typo — the difference between the 2% rise and an increase that matched inflation would be $1274 a year.

That’s $24.50 a week. National’s proposed tax relief for minimum wage workers is $2.15 a week, so if the tax cuts go ahead as proposed a fulltime worker on the minimum wage could be $22.35 a week worse off in buying power than a year ago. That won’t help meet the increased cost of living.

Ms van Velden said the increase was "cautious" and the government wanted to strike the right balance between protecting the incomes of the lowest-paid workers and encouraging employment.

She hasn’t done her homework. In 2021, research by economic think-tank NZIER showed that increasing the minimum wage didn’t hurt small businesses and had no significant impact on employment. It estimated that boosting it to $25 an hour (25% up from the then $20 an hour) still wouldn’t seriously impact businesses or job creation.

She also said the minimum wage was one of the most generous in the OECD, in comparison with the median wage, having increased to 72% of the median wage in June last year.

That comparison is meaningless — it just underlines New Zealand’s low-wage economy (with its associated low productivity).

And it disregards the purpose of earning an income to be able to afford to live. That imperative invites comparison of the minimum wage with the living wage, set last September at $26 an hour, and described on the Living Wage Movement website as "the income necessary to provide workers and their families with the basic necessities of life".

"A living wage enables workers to live with dignity and to participate as active citizens in society ... it must also be sufficient for families with children.

"That’s why the living wage is calculated to support the needs of two adults and two children on 1.5 incomes."

Is it morally defensible for a business not to pay its employees enough to live on?

If it can’t survive without exploiting its workers that way, one might wonder whether it should survive, and its customers whether its ethical to choose to patronise it.

Bringing the minimum wage up to the living wage this year would have meant a 14.53% increase: much less than the 25% which NZIER said, in 2021, wouldn’t seriously impact businesses or jobs.

The minimum wage should match the living wage.

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Honor McKellar. PHOTO: ODT FILES
Honor McKellar. PHOTO: ODT FILES
Honor McKellar, QSM, died on February 2, at the age of 103.

Born in Dunedin she graduated with arts and music bachelor degrees from the University of Otago, studied at the Royal Academy of Music in London, and in 1971 became Otago University’s first executant lecturer in singing.

She retired from that post in 1985, but continued to teach, both at the university and privately.

Dunedin-born opera singer Jonathan Lemalu, whom she taught privately when he was at Otago Boys’ High School, and at Otago University, where he studied law, said he wouldn’t have a singing career without her.

"She taught me to find joy in the singing, on and offstage, and in the practice room", he told the ODT in 2021.

What an epitaph!