How many people has the living wage actually helped?

Sunday, 14 July 2024

Victoria University of Wellington Te Herenga Waka is under pressure from living wage campaigners to prove it truly believes in its philosophy that “public good values dominate over market values”.

The university is the latest target for a moral pressure campaign that has been successful in lifting wages for thousands of cleaners and security guards across dozens of large employers from councils to banks.

Lyndy McIntyre, author of Power to Win, a history of the living wage movement, published this week, says the university has around 500 directly-employed workers who do not yet earn the living wage.

“It’s a disgrace,” McIntyre says of the second biggest employer in Wellington.

Her pugnacious stance illustrates that McIntyre is not an impartial historian of the living wage movement in which she worked for a decade.

Launched in 2012 from a church in Ponsonby, the living wage movement represented a new set of tactics to tackle what its founders saw as poverty wages.

And the brand it built was one organisations including Westpac, ANZ, ASB, BNZ, Kiwibank, Booster, councils up and down the country, Dunedin Airport and Genesis decided it served their purposes to tie themselves to.

The goal of the living wage movement was “to end poverty wages and achieve a living wage for all workers”.

The founders, including trade unionist John Ryall, hoped that would mean an end to the most lowly-paid workers having to slave for 60 to 70 hours a week at menial jobs just to make ends meet.

St Stephen’s Presbyterian Church was a fitting place for the 2012 launch because the living wage was designed as a partnership between community organisations like churches, and unions.

It was not party political in the traditional sense.

The Labour Party had to be headed off, as rumours got out that it was planning on launching its own living wage campaign, McIntyre says.

It was a time when unions were struggling to connect with many lower-paid workers, and it offered a new way of pushing back against “poverty wages”.

The idea, says McIntyre, was to target large taxpayer and ratepayer-funded employers like councils, universities and government ministries, and wealthy private-sector financial companies with handsomely-paid chief executives, like banks and insurers.

The aim was to bring moral pressure to bear on institutions that would not wish to be seen as exploiting the lowest tier of their workers – the likes of cleaners.

It was a mechanism to counter market forces, where organisations like banks and universities contracted services like cleaning and security out to private businesses, which were engaged in a race to the bottom on wages.

The New Zealand campaign was modelled on living wage campaigns in the UK, Canada and the United States.

Ryall and his partner Muriel Tunoho had seen first hand in early 2000s the London living wage campaign win wage rises for cleaners at Barclays Bank, and a commitment from London mayor Ken Livingstone (aka Red Ken the bette noir of Margaret Thatcher) to adopt a living wage for all London council workers.

“What struck me was that there were other forms of leverage we can use,” Ryall said in a report he penned when he returned from a study trip to London.

“It was about how you give workers the ability to exercise collective power. This didn’t rely on a union, although the union was there to support it.”

It also wanted to change the way people talked about wages to lift what was considered a respectable lowest wage paid by organisations from the government-mandated minimum wage, currently $23.15 per hour compared to the current living wage of $26, rising to $27.80 in September.

“We would say that since the living wage has been introduced as a concept, that’s changed the way we talk about wages,” she says. “The benchmark for a fair wage is no longer the minimum wage. A more generally-accepted benchmark now is the living wage as a fair rate of pay.”

Employment relations company Three60 Consult agreed: “The minimum wage increase [for 2024] has received criticism for not mirroring the rate of inflation (which was at 4.7% at December 2023),” it said.

However, it said many now held the view “that the living wage should be the bench mark for wages”.

McIntyre said the minimum wage could be seen as a band aid for poverty wages, but the minimum wage represented the aspiration for all workers to be able to lead decent lives, live in dignity and participate and contribute to their communities.

“Poverty wages go counter to the fair go approach of New Zealanders, and the valuing of fairness and equity that I hope is a value that we have had for a long time in New Zealand,” McIntyre says.

“It’s actually good for the economy. It really makes sense too. It reduces the cost to government of subsidising poverty wages, so the cost for employment falls on employers not the government.”

She says the movement gathered momentum so quickly that in 2013 the first pirate attempt by a corporate to use it for publicity happened when The Warehouse tried to cash in on the cache of the brand by announcing it would pay a “living wage” to many of its workers.

It was “virtue signalling”, says McIntyre. “Riding on the coat tails of the living wage brand.”

The struggling retailer is still not a living wage accredited employer, and last year there were strikes at two The Warehouse stores in Auckland and Palmerston North with workers calling for it to pay at least the living wage.

The living wage is set each year by the Family Centre Social Policy Research to represent the income necessary to provide worker about around 68% of ordinary hourly earnings.

There are 384 accredited living wage employers, she says, though Auckland Council is working its way towards gaining accreditation.

The campaign also secured a big political win. Government tenders are now predicated on those bidding paying the living wage to their workers, McIntyre says.

“That policy remains in place,” she says.

“Thousands of workers have benefited from having their pay lifted,” she said.

Exactly how many is a moot point.

“It’s impossible to say,” says McIntyre.

But she says when Westpac became a living wage employer in 2019, 500 workers got a pay bump, with an average boost of $100-a-week.

Wellington City Council’s 250 directly-employed workers were moved onto the living wage when it adopted the living wage in 2018.

Some blue-blooded names have endorsed it, including former National Cabinet minister Simon Power, when Westpac, his employer of the time, agreed to become a living wage employer.

“This change will mean a weekly pay rise of more than $100 in the hand for the roughly 500 workers who provide these services to Westpac,” Power said at the time.

“We believe this will improve their financial wellbeing, and reduce pressure on households. It might mean working one day less a week, allowing more time with family, being able to afford a new pair of shoes for their kids, or being able to save for a holiday.”

Power was speaking directly from the living wage script.

In addition to the direct wins when employers large and small become accredited living wage employers, McIntyre says there has been an uncounted “flow-on” effect with non-accredited employers deciding they will pay at least a living wage to every one of their workers.

The Victoria University pressure campaign indicates how the living wage campaign still hasn’t hit all its goals, and so does data compiled by Craig Rennie, the chief economist from the Council of Trade Unions.

About 80,000 people are being paid the minimum wage, and 360,000 more are earning between minimum and living wage, he says.

The university is under pressure from within and without. The campaign has recruited students to help it campaign, and bring public pressure to bear over pay for its contracted cleaners and security guards, as well as some of its tutors.

Mark Daldorf, the university’s director of people and capability, said the university was committed to working towards paying its “directly-employed” staff rates that are at least at the current living wage rate.

But it did not intend to seek living wage accreditation, and would make no further comment while collective bargaining was underway with the Tertiary Education Union, which has raised the living wage as one of its claims.

To become an accredited living wage employer, an employer has to be able to prove these workers were being paid a living wage, and the university is not ready for that.

“To be a living wage employer means no worker is left behind,” McIntyre says.

“These people work for you just as your directly-employed workers do,” she says.

Universities are not the only taxpayer-funded education employers the living wage campaign is targeting. Last year, Living Wage Schools launched, hitting the idea that it was not okay to teach children kindness when school caretakers were paid poverty wages, McIntyre says.

“As long as wages are low, there’s still a lot of work to do,” she says.

“The fact that there’s not a single supermarket that’s accredited as a living wage employer … that’s just not right.”