Minimum wage a 'subsidy' for business owners

The living wage campaign has upped its rate to $20.55 an hour.

"It's the amount that workers need to survive and participate in society," convener Annie Newman told The AM Show on Thursday.

The voluntary rate has been adopted by around 90 employers so far. The biggest, and first corporate employer, is Vector. The Warehouse promised to years ago, but bailed.

"They could afford to it, but they chose not to," said Ms Newman. "They constrained it by saying you had to work 5000 hours or three years before you could get it .You could do a lot of churn and burn on people on less than that, especially young people."

Annie Newman.
Annie Newman. Photo credit: The AM Show

The minimum wage just went up 75c to $16.50, the biggest jump since 2007. Ms Newman says though significant, it still leaves people in poverty.

"They're living in poverty. As one wonderful Living Wage employer said yesterday - Rogue and Vagabond, a bar in Wellington - if you're paying people less than the living wage, effectively you're asking them to subsidise your business."

That's because low earners get more tax credits and subsidies from the Government, for example through Working for Families, which costs taxpayers $2.2 billion a year.

The living wage takes Government subsidies into account.

"It would have gone up by another $2 an hour if that Families Package hadn't come in."

Labour cancelled National's tax cuts to pay for its Families Package. Labour said National's planned tax changes would have benefitted high earners more than low.

Ms Newman says three other big corporates are in talks to adopt the living wage.

"We're sure this is a tipping point for the living wage."

UNICEF estimates around a quarter of all children in New Zealand were in households below the poverty line in 2017. Research released last year pinpointed the early 1990s benefit cuts were largely to blame for ongoing deprivation.