Editorial: Tough choices in quest for a living wage

Last updated 05:00 15/02/2013

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OPINION: The intent of the campaign for a living wage cannot be faulted. However the road to hell can be paved with good intentions.

The campaign got off to a good start by relying on moral argument rather than legislative force, but those seeking immediate change need to recognise aspiration must be tempered by reality.

For their part, employers cannot presume patience is inexhaustible.

No-one can argue that a wage of $18.40 an hour is unreasonable. Although set well above the present minimum wage of $13.50 an hour, the living wage does not open the doors to a life of luxury.

Rather it is a figure those who demand it say will sustain a life that allows participation in society rather than one of simple survival.

That means allowing for such things as a monthly trip to the movies within a $1038 a week budget for a family of two adults and two children.

It is clear that wages paid at the lowest level do not allow even for survival. That is made explicit in the top-ups already supplied through tax credits and other subsidies.

It is too easy to forget that those subsidies benefit not only those receiving them but their employers, who can pay less, confident taxpayers will make up the shortfall between the pay packet and what is needed to survive.

Critics of the principle are hard to find, but it is equally difficult to find employers who are ready to fatten pay packets immediately.

Bringing workers in the lowly-paid hospitality and retailing sectors up to $18.40 an hour has been estimated to cost $1.6 billion, which would leave employers looking at a 6 per cent to 8 per cent rise in prices, something many rightly see as unsustainable in the current economy.

A living wage that bankrupts a business, or leads to workers being sacrificed to provide it, is not worth it.

The alternative that is gaining favour is to back the idea, but not for a while, recognising that, in the words of one employer, businesses cannot suddenly pluck money out of thin air.

Workers could be forgiven for treating with scepticism those promises to do something in the future when conditions are better.

Wellington Employers' Chamber of Commerce chief executive Raewyn Bleakley's view that "our members would be the first in line to pay more if they could" will strain the credulity of many workers who waited in vain for a bit of trickle-down during the boom years.

Living wage advocates are targeting councils, calling on them to lead the way. Wellington Mayor Celia Wade-Brown has backed the idea, subject to a feasibility study.

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For Wellington City, it would mean pay increases for around 400 staff and seeking to have its contractors pay the living wage as well.

Achieving that is easy enough. It can simply up rates to cover the cost, secure in the knowledge ratepayers cannot shop round for a cheaper alternative.

However, raising rates would create its own hardships, and do nothing to make the city an attractive base for business.

No-one argues that life on the bottom rungs of the wage ladder is anything other than hard. The question is not whether people should move up, but how that can be done.

- Wellington

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