Setting Wages a Balancing Act
The minimum wage set to increase again as of April 1, to $15.75, reflecting a slow but steady climb over the past few years. The minimum wage is reviewed annually on December 31, and it would seem that the political pressures of an election year have prompted another increase.
Yet this has still provoked criticism about being insufficient and ineffective in addressing the poverty experienced by so many New Zealanders. According to the the Living Wage Movement Aotearoa NZ (LWMANZ), the 2016 figure sits at $19.80 (the 2017 figure is set to be released late this month), a disparity of $4.05.
The Living Wage concept is a figure given to the income necessary to provide workers and their families with the necessities of life, such as food, transport, housing and childcare, enabling them to live with dignity and actively participate in society. In other words, it’s having enough money to not merely live hand-to-mouth. It is calculated independently each year by the New Zealand Family Centre Social Policy Unit.
The Living Wage is a movement in New Zealand that has been gaining more traction over the past few years, as living expenses continue to rise – which of course are not always in line with wage growth.
It’s timely to consider if the raise in the minimum wage is reflective of our current living costs, what the real cost of actually living in our society is, and what this means for employers. Many employers are simply not in a position to offer pay rates around the Living Wage recommendations – so are there other options?
Despite concerns about affordability and impact on job losses, the movement has gained some support from local government, major enterprise and advocacy groups. The Wellington City Council adopted the living wage policy in 2013. For serious employers there is the opportunity to become accredited and to utilise their dedication to a Living Wage as a verifiable part of their EVP.
However, not all sectors are equal and for some simply offering an increase in wages does not always represent a sound business proposition. Each employment case is stand-alone when it comes to setting a wage – whether for differing skill levels and experience, the role itself, time in the industry or indeed at your company, and so on. A level of objectivity and balance is always needed, although that is often easier said than done.
What it often comes down to is your employer brand and principals – that is, your reputation as an employer and your value proposition to your employees. Have you ever sat down and thought about what that is exactly? How is your company is perceived by your current and prospective future employees?
Setting wages is always a balancing act between attracting and keeping skilled workers, and what the company can afford to pay.
We all know it’s not always about the money. Yes, paying a fair and equitable hourly rate which takes into account today’s cost of living is necessary, but there are other things a company can offer employees if they simply can’t afford to keep up with the Living Wage rates.
For example, it’s important to establish what drives your employees – would they value flexible working hours to fit around family or sport? Would it be meaningful for someone in your team to work from home one day a week? What drives and motivates them to be successful?
Remuneration doesn’t always need to be in the form of money and indeed can often be more valuable to work-life balance, with the added value of increasing your employer brand, productivity, staff retention rates – and more often than not, the bottom line.