Employer and employee perspectives on the living wage in New Zealand

New Zealand has a long history of relatively generous minimum-wage (MW) regulation, informed by the concept of the living wage (LW), and the statutory MW has closed on the LW rate since the election of Labour governments in 2017 and 2020. This chapter explores employer attitudes and responses to this development, focusing on low-paying sectors. A programme of interviews with sector employer associations is complemented by in-depth case studies to further examine the motivation and effects of becoming a LW employer. The results suggest employer sympathy for the LW, informed by low unemployment context, including in small firms where employee financial struggles are often evident. However, commitment to the LW is inhibited for many firms by a dual temporal uncertainty – they do not know what future rates will be, nor whether possible productivity or recruitment and retention returns will outweigh any immediate cost implications. In these circumstances, ethical considerations are likely to motivate firms to formally become LW employers unless the workforce is already generally paid well above MW rates. The case studies demonstrate a likely win-win from adopting the LW, though there may be complications around pay differentials in larger organizations.