Shopless Investigates The Rise of Minimum Wage and Living Wage in NZ

New Zealand - May 2, 2022 —

The rise in general living costs has been a relevant topic in 2021/22, with recent reports stating that inflation has increased to another high of 6.9%. The highest annual rise in 40 years. Increased living costs and business expenses create a strain on businesses and individuals across the country. At the beginning of April the minimum wage across New Zealand increased from $20/hr to $21.20/hr. However some believe the wage increase should rise further to meet both inflation and instead create a living wage for all New Zealanders. 

As the minimum wage has risen, so has the estimated living wage amount. Shopless, a platform for jobseekers and employers, looks into the rise of minimum wage and living wage and the difference between the two concepts. 

The Basis of Living wage.

The living wave movement came about as a universal gauge to estimate the amount a worker should be paid to live comfortably with all the necessities. It has been floated by social and governmental groups as an alternative to the minimum wage. The Living Wage Aotearoa website says that “It reflects the basic expenses of workers and their families such as food, transportation, housing and childcare, and is calculated independently each year by the New Zealand Family Centre Social Policy Unit'' 

Living wage is not a concept confined to NZ, Investopia analysed the concept stating that “Economists suggest it should be enough to ensure that no more than 30% of this income gets spent on housing. As such, living wages are often substantially higher than the legal minimum wage.” For New Zealand despite increases in inflation over the past two years the living wage for those employed in NZ is considered to be $23.65/hr and minimum wage in NZ is $21.20.

Minimum wage and the deciding framework.

Minimum wage is reviewed annually and looks at a number of important social aspects. They look into the demographics that primarily receive minimum wage. How an increase will affect small businesses. What the cost of living is like compared with previous years. How many people will be impacted positively by a minimum wage increase and how many people’s jobs may be reduced or lost due to increased minimum wage. Because there is such a large scope of things to consider and it has to be approved in parliament, the living wage and minimum wage are often different amounts. In the process of deciding on minimum wage, governmental benefits are also factored in as often there are certain thresholds of earning for members on a benefit. Or a massive increase in minimum wage may restrict eligibility for some members of society vulnerable to poverty.  

A comparison between living wage and minimum wage.

Minimum wage is governmentally considered a manageable amount for both businesses and individuals. Living wage is a wage decided by a number that would generally keep individuals out of poverty. However both numbers do not fully take into account people's circumstances and organisations still trying to save money.

Individuals have a number of different circumstances that may impact their ability to afford to live. Minimum wage increases such as this year's increase come to try to accommodate for inflation, or if there has been a long period without an increase. However as the living wage is set to estimate more of a comfortable living, it can better accommodate for exceptional circumstances of in-affordability. 

The Rise in both Living Wage and Minimum wage

There are always impacts when it comes to increasing minimum wage that does not solely impact low income workers. Living Wage is an ideal preposition when considering workers rights and valuing employers. However both wage options have pro’s and con’s for different groups of employers and employees.

Employers can be impacted by a rise in minimum wage through the need to raise prices due to increased cost of staffing. Additionally supplies and resources can also increase in price impacting businesses. This would be the same if the living wage were implemented. For employees as mentioned hours may be reduced. Living wage is intended to accommodate workers whose hours have been reduced or who live in low income positions. By having a way to allow for unexpected expenses or reduced hours. 

More about the living wage movement can be found here. As a job listing website, Shopless promotes fair pay and valuing employers and employees.

Contact Info:
Name: Hooman Bahreini
Email: Send Email
Organization: Shopless
Address: New Zealand
Phone: 0064 (0)4 90 99 741
Website: https://www.shopless.co.nz/

Release ID: 89074190

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