Who described the Living Wage as “an idea whose time has come?”
David Cameron, Conservative British PM – that’s who.
The Living Wage concept has caught on in the UK and the US and it was great to hear David Shearer put Labour’s name to it yesterday.
Everyone wants to know who, how, how much and when. But the Living Wage concept isn’t just about having a policy on paper. It’s about a movement, where communities organise to persuade the people, politicians, the council and business that paying a living wage is the right thing to do.
A Living Wage is the level of income necessary to provide acceptable standard of living for a person and their family.
It’s different to the legal minimum wage, which provides a floor below which wages must not fall, but the minimum wage is not tied to a recognised standard of living. It’s a politically decided standard, that rises or falls depending on who is in government. Labour remains committed to lifting the minimum wage (at this stage to $15 an hour), but we can do better.
We need to get to a point where there is agreement about what is fair and what families should be expected to live on.
In the UK, London Citizens have been organising for ten years, bringing together community groups, faith based organisations, businesses, trade unions and politicians. In 2011, Citizens UK, (the nationwide equivalent of London Citizens) launched the Living Wage Foundation to respond to a growing interest in other cities.
The Living Wage was an election issue in the 2004 London Council elections, and London Mayor, “Red” Ken Livingstone established a dedictaed Living Wage Unit within the Greater London Authority in 2004. Boris Johnson, the conservative Mayor who followed him has continued the Unit and now all of London’s councils pay all workers, including directly employed, contracted or temporary workers at least the London Living Wage or above.
This year’s London Olympics will be the first Living Wage Olympics in history. Imagine that.
Governments can lead by applying a Living Wage to everyone who works for the State Sector. Councils can do the same on the basis that wherever public money is used to purchase goods or services, low wages should not be the competitive factor. In the US Living Wage Ordinances apply this principal.
The current London Living Wage of £8.30 an hour would roughly equate to roughly NZ$16-17 an hour. This took into account the prices of staple items in the family shopping basket, along with relativities with the median income, to estimate a ‘poverty threshold wage’, and then added a 15% margin on top to give some protection against unforeseen events.
Of course such an example can only broadly indicative – but it demonstrates just why a Living Wage, not just a Minimum Wage is needed.
I’m confident that a Living Wage movement will develop in New Zealand and the hows, the whats, the whos, the how muches, and all the rest of it will gather force before the next election. It will need political support, and Labour’s David Shearer has given it.
I’m not given to quoting conservatives, but as David Cameron said, it’s an idea whose time has come.
A living wage is a great idea!
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Forgetting our history are we Darien? Labour has had their name on this concept for near on 25 years, thanks to Roger Douglas.
Back to the future much?
sweet…Shearer’s policies are now as progressive as David Cameron’s…no wonder I think of Labour as National-lite
And if it is broadly embraced, what do you anticipate will be the effect on subsequent increases to the minimum wage? All this does is tacitly embrace the notion that it is acceptable for the minimum wage to fall below a liveable standard.
This kind of feel-good nonsense will hold the minimum wage down and give free pr to the businesses that support it while the lower-working class toil below the poverty line.
Is it any surprise that Emperor Palpatine supports it?
Given that a lot of households have two incomes and a living wage is ‘to provide acceptable standard of living for a person and their family’ can I assume that only half of such a wage might be required per person?
Also could one fairly expect a family on such a wage to not be uplifting Working For Welfare handouts?
@The Baron – I have no idea what you are talking about. Perhaps you care to elaborate?
@Tim G – the minimum wage doesn’t rise or fall on its own. Its a political decision. Im not sure what you don’t get about Labour’s commitment to lifting the minimum wage to $15 an hour? But that aint going to happen for the next two and a half years under this government, so why wouldn’t people want to get on with doing something else – of building a movement for change like they have in other countries? In the UK, it is the “lower working class” who have benefited from the London Living Wage of $16 to $17 an hour. You don’t lilke it. Fair enough. Just watch this space over the coming months.
Darien, would Labour support a review of secondary income tax rates, as mentioned in another post?
The gross is not important it is what is left in the wallet after government deductions and give aways. From the living wage then there must be talken into account such things as WFF, tax rates, Kiwiw saver deductions and other assistance to achieve a disposable wage.
And from yours and other Labour comments this is to be voluntary. Does that mean that as you see it should it be introducted that this would apply to govt as a start. But shouldn’t contrators to the govt e.g. cleaners and other min wage earners also have it applicable to them as a stipulation of winning contracts for the govt. Then we would end up in a wage dichotomy ?
Unless this applies to all then it is just another feel good policy with no substance, as the PAYE worker sees no difference to their personal situation.
Darien, the London living wage is a unique figure to London as it’s a very expensive place to live. London weighting allowances have always been available to people living and working in London and other weighting allowances given for working in other UK cities. Would you propose, for example, the living wage in Auckland differs to the living wage in Dunedin and would you set different rates?
Darien, What I believe The Baron means is the phrase ‘living wage’ was originally used relating to proposed policy from Labour (during the Douglas years) based on a tax free threshold and flat rate of personal tax thereafter.
That idea was sensible, this… well intended, but not so much.
Roger Douglas went to ACT.
Roger Douglas left…….ACT.
Roger Douglas back to ACT.
Long time since he was in LAB
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If a living wage is introduced, it won’t be accompanied by Rogernomics!
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The idea is hardly a new one. In 1907, Justice H. B. Higgins ruled in the Harvester Judgment in Australia that employers must pay their workers a basic wage that did not allow for mere subsistence, but for workers and their families to live in a state of ‘frugal comfort’, a standard of living suitable for ‘a human being in a civilised community’.
If its time has come, why is shearer so timid about enacting it?
Sound like it might possibly ,one day perhaps but only if everyone is cool with that have come.
I’m not keen on paying a matching living wage level benefit to dropkicks. The kind of people who beat their kids and hold their hands out for more, ‘Oliver Twist’ styles. I’d imagine that this concept would be intended to remunerate workers fairly but I can’t see how it wouldn’t have a negative effect on the attitudes of no hopers. In addition it would secure an increase in living standards for select groups of individuals, in particular public servant, which is fine, but the positive effects would be less the further away from these living wage meccas. Inneresting.
living wages also assume that work is not casual, that it is secure and 40 hours a week…
Remember that the employer has to meet the gross weekly wage but the employee and his or her family have to live on the after tax amount. With that much reduced amount the employee has to pay prices inflated by a myriad of rorts and on top there is the vile GST consumption tax. Rather than taking the path of least resistance and monstering small unprofitable businesses how about committing to restoring equity to the tax system, ending the artificial housing shortage, and promising effective action in antitrust?
Dropkicks, people who beat their kids, no hopers.
Feel better for getting that out of your system?
I always look forward to your cutting in-depth analysis, Spud.
Aw shucks Bed Rater
@TG: Thank you for giving the judge’s name and outline of the 1907 judgement. I have known about it and tried to look it up before, but lacked the relevant handle.
A living wage campaign, by itself, does at least get concept into the public arena, but is not that likely, in my opinion, to go far toward bridging the poverty gap without other accompanying changes. As things stand, it is much more likely to be applied to workers who are already deemed valuable, as part of corporate PR. I remember an advertising agency in the nineties bragging about giving their office workers a day off on their birthday. No mention was made of their cleaners, who may well have had to negotiate unpaid time off for a cancer scan.
However, I would like to see a modernised version of the Higgins judgement given a central place in issues of employment, in the way that inflation is now given a central place in the considerations of the reserve bank.
This would not necessarily mean that small businesses would be driven to the wall by increased wages, since other things such as taxes, etc, would be considered in relation to it.
Telling people what a realistic wage to live on frugally is a major start. At the moment many people on higher wages beleive that the minimum wage is a wage you can live on long term and that only those who have never had employement get paid this, when in reality there are some big employers who only pay minimum wage (because it helps the bottom line)and pay this to all there staff no matter how long they have been working with teh company or how productive they are.
I can remember a owner of a business in the town i live in bragging about how little he paid his staff and how he managed to do this. this employer was not a small business owner and the staff working for him had no other choice due to the lack of jobs.
@Olwyn : “As things stand, it is much more likely to be applied to workers who are already deemed valuable, as part of corporate PR.” I heard an interesting story about Barclays who signed up for accreditation as a Living Wage employer in London thinking it would be easy because they already paid their staff above Living Wage. They forgot about the cleaners – who were contracted out. Now they have to pay them living wage. The focus of the Living Wage movement in the UK is on low paid workers. And it’s having an impact. There’s also Living Wage movements in the US and Canada. Worth you having a closer look I think. Other thing I like about this is the Living Wage applies to all – whether they are employees or contractors, which our Minimum Wage laws don’t. We have to change the attitude that it’s good for the bottom line to pay lousy wages. Cue my post on “NZ – the Next Low Wage Frontier?”
Thanks for your answer Darien; may the campaign continue to gain momentum. I take your point also, of its extending to contract workers which has to be a good thing. However, in the long term it seems worth looking at ways of entrenching the idea, as the Higgins judgement attempted to do in the early days of the Australian federation. I realise though that the concept would be harder to pin down now than in 1907, since life, and thus need, is more complex.
Just to add to what I have said, an entrenched conception of a living wage would hopefully factor in a level of proportionality where costs, rents, etc are concerned, and perhaps help to reverse the constant downward pressure. I realise though, this would have to be further down the track. Allowing such a concept back into the conversation is certainly a start. My reason for expressing concerns as to its effectiveness is that it does seem to conflict with the prioritisation of returns to the shareholder, with the cost of the workforce being cast as the variable.
“Living wage” according to wikipedia…” this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation. In addition to this definition, living wage activists further define “living wage” as the wage equivalent to the poverty line for a family of four.” – it would appear irrelevant to the concept whether a family of four actually exists or whether someone else in the household is earning – both should be able to individually support a family of four on their individual wage.
Looking at stuff from the Childrens Commissioner, the poverty line seems to regularly be taken as 60% of median income. Median 2011 household income for a family of four according to Dept of Stats is $1604. 60% of that is $962 divided by a 40 hour week is $24/hour. That’s presumably what every person should be paid?
“$24/hour. That’s presumably what every person should be paid?”
One can already hear the scorn being heaped upon any party releasing that figure, especially since we’re being told the only way forward for the country, ‘cos we’re broke, is to let sky city and the other card swipers have free reign with the chequebook in exchange for policy, a photo op and a continuation of the myth of pro-active governance.
After a decent one off increase and a commitment to keep the minimum wage moving upwards, the left wing bloc should focus on reducing everyday costs for beneficiaries and low income households. Pretty obscene to make the unemployed and sick pay gst on electricity and gas, for example.
From the bottom up, at source, making what’s in the purse last as long as it can. That’s where the real help is needed.
Sometimes it’s not how much you have, but what you do with what you’ve got, that counts.
So is the living wage for a 17 year old with a part time job and who goes to school the same a for a solo mother of three school age children (so she should be working) living in a rented house in a suburb of a major city?
I think there is a difference (and hard to argue) so what then becomes the definition of a “Living Wage”. Plenty more comparisons I could make of course. Compare then the guy living alone in his own house in a small rural community
The 17 year old, ht emother of three and the guy living alone all have different needs. That is where your arguement falls apart. Each person has different motivations and needs.
best really to pay each person what the market would pay for a particular skill set in a particular location. But the left hate that arguement. The Left like to control people’s lives.
A living wage should be thought of as an underlying necessity for the economy to function. A large group of people need to be paid enough so their consumption keeps the economy ticking over, otherwise demand is collapsed as is happening now. (Jonathon Ling: the construction industry is on its knees) We got away with low wages when credit was easy but this just postponed the inevitable crunch.
For those who want a low wage economy they need to acceot that the result of this is reduced demand, especially in a small country like New Zealand
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My two cents, where do most peeps in NZ live? Auckland!
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And there are more people in the mother’s situation than school kids!
And city dwellers outnumber the farmers! 
So why not set it for where the most people live?
If da kid earns a living wage then make it pay rent to its parents! 