Closing the gap between the minimum wage and the living wage


The unions and the broader labour movement need to set the goal of closing the gap between the minimum wage and the living wage.
The living wage is calculated in a particular way but has remained about two-thirds of the average wage.
The new living wage number of $21.15 is 66.8% of the average ordinary time wage for the December quarter 2018 of $31.63.
This is useful for us as the CTU goal for the minimum wage is the same ie two-thirds of the average wage. That goal was also the official promise of the Labour Party in the past.
As the minimum wage gets closer to the living wage the goal of cementing in a  living wage rate (or preferably the two-thirds of the average wage goal) to be written into our collective employment agreements becomes more realistic.
The minimum wage is now $17.70 an hour. It is scheduled to increase to $18.90 next April 1, and then to $20 on April 1, 2021.
The current minimum wage is 56% of the average wage.
By the time it reaches $20 an hour in April 2021 it should be 60% of the average if the average wage moves at the same rate over the next two years as it did over the last.
I estimate the gap between the minimum wage and the two-thirds rate at that time will be about $2.15 an hour. Closing that gap as much as possible should be our goal.
In the last collective agreement negotiations in the fast food industry, we got employers to agree to increase their start rates by 10 cents an hour above the minimum wage and for the margins to be maintained for all rates above.
This means that the start rate at McDonald’s, Burger King and Wendy’s is now  $18 an hour or 30 cents an hour above the minimum wage. This is very modest but it is a huge advance in this industry which has successfully resisted ever paying more for their start rates than the minimum in the past. As a union, we also focussed first on getting rid of youth rates and ending zero hours before focussing on getting above the minimum in the last round of negotiations.
Keeping on closing that gap has to remain the goal.
The government has also committed to paying contractors the living wage. If that happens it will be a nightmare for employers like Armourguard who keep nearly all staff on the minimum wage but have contracts at WINZ for example. Having some staff on the minimum and some on the living wage will be untenable in the longer term.
Some major employers like Bunnings have committed to the living wage already.
We need to get the parties that are part of the governing coalition to commit to continuing to increase the minimum wage to two-thirds of the average wage.
An increase of a $1 an hour each year for three years would probably achieve that goal. This is a modest increase after the last three years but will still achieve our goal.
Make the minimum wage the living wage for all workers.


  1. I’d dearly like to see a living wage, that’s fine but every employer is going to respond by raising prices, and pushing for more work per hour. Employees will run harder and their extra pay will get consumed by higher prices. End result, we all lose. There has to be a better way.

    • Corporate culture really wants to believe that workers are disposable machine parts and utterly unwilling to comprehend how toxic this is to having productive workforce with adequate morale, loyalty, and experience of the homo economicus, indeed. That’s why they want to crash the economy so they can go back to that glut of desperate workers they can abuse. Any sane progressive would not allow corporate culture easy access to precarious workers.

    • Employers could still keep prices the same. However more money in workers pockets would result in more products required and therefore the same profit margins for employers.

  2. Wasn’t it that if the minimum wage was increased to fast that that would just incentivize the double edged sword of progress & automation wiping out a lot of the low wage McJobs. Could you imagine McDonalds vending machines? That would be Glorious, to maintain demand we’d have to implement some kind of UBI and again, glorious.

  3. Im not sure if that’s your picture associated with this post Mike Treen? I do know that at least one of Unite’s current leaders worked in parliament in the past and I am sure was paid a lot more than minimum wage as he should have been. I never subscribe to the idea that paying politicians less will drive change. After all, take a look at John Key; it would have made no difference to him. He was rich enough to supposedly donate his salary to charity. All this does is ensure that ordinary working people can’t afford to be elected and only those with means will be there. Like the good old days in our early colonial history when only the toffs could afford to be our represerntatives. The answer is to push up wages, not drive them down. Yes, by all means call out politicians, but also campaign, both politically and industrially.

    • A living wage might be a pinch too high for right now, but wages should go up due to inflation (Which the minimum wage used to be pegged at.) As well as skyrocketing cost of living. Not helped by how wages have been stagnant for years. Some say well that’s too American, New Zealand wages went up and yeah, they went up if you mix MBEI definition of a full time worker doing 1hr-40hrs per week and mix them with our highest earners.

      But as far as the minimum wage being pegged to inflation and other economic factors like cost of living, income and demographics will conintue to be a thing as long as politicians court votes from workers.

  4. And below the minimum wage we have beneficiaries and pensioners…

    Raise the rate all you like – the system is broken.
    Any time people at the very bottom have to get a top up just to pay rent, rates, power and fuel is the time when corporate NZ is being propped up by tax money, rather than improving efficiency.

    The people who have no hope at all of supplementing their income are closer to 60% of the minimum wage than the ‘average’ (exclusive of grossly inflated pay rates, of course.)

    • Well Said Andrea .

      But below them are people who winz won’t even give benefits too .
      Like people in a relationship who have long term illnesses like diabetes with additional health issues on top who can’t even get a damn cent.

      Who have to beg from friends and on Facebook and unless it is cancer people completely ignore them, to get the money to pay for subsidised and unsubsidised meds and food and or Friends have to take out multiple pay day loans to pay for what winz wont and Funding pages won’t.

      Meanwhile everyone ignores the reality our Social Welfare and Health and Medicines system is rotten to the core.

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