Can businesses afford a ‘living wage’?

The idea of paying a ‘living wage’ has provoked plenty of debate, but what do those in charge of payroll think of its practicalities?

Can businesses afford a ‘living wage’?

The Living Wage Campaign in New Zealand, an association of community and faith-based organisations and unions, are lobbying for employers to re-evaluate what they pay their staff. “A living wage is the income necessary to provide workers and their families with the basic necessities of life,” according to their definition.

They have calculated that a ‘living wage’ in New Zealand would be $18.40 an hour. The minimum wage has just been raised to $13.75 an hour.

But the issue is a ‘difficult’ one, according to Tarryn van Niekerk, HR manager – Harvey Norman. “Obviously, from a business perspective, we’re looking at it and thinking, ‘Wow, that’s really not affordable,’” she said.

Van Niekerk does not think that the Government should legislate on the issue. Implementing a ‘living wage’ overnight could have two pernicious consequences, van Niekerk warned. First, more manufacturing and call centre roles could move overseas; secondly, an increase in the costs of goods would be passed onto the consumer, resulting in the status quo for workers.

“If it was an ideal state that New Zealanders were working towards, and businesses were allowed to determine that, I think you probably would see a bit of economic growth from it, but legislated, as a consumer, you’re just going to end up paying more for the goods and services that are essential for you to live,” van Niekerk added.

But not all HR managers are opposed to the idea. Katrina Lee-Guard, HR manager – Metal Skills Ltd, sympathised with workers on lower wages. “A lot of our staff are in that $18-22 bracket and they still can’t make ends meet,” she said. Introducing a ‘living wage’ could improve the lives of low wage workers and indirectly benefit their employer, through lower absenteeism and higher productivity. “Some employers may benefit in the long run as more money is spent in the economy. With low income families, I would presume more would be used to make their lives a bit more comfortable,” Lee-Guard added.

Like van Niekerk, Lee-Guard believes instituting a ‘living wage’ should be a government-led initiative.

However, she also acknowledges that part of the problem is a lack of financial literacy on the part of workers. So Lee-Guard encourages her staff to learn how to budget. “I do a budget piece for them, every month in the newsletter, and they’re starting to read it and put that into practice as well with their lifestyles,” she said.

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