Closing the gap between the minimum wage and the living wage

Closing the gap between the minimum wage and the living wage

The unions and the broader labour movement need to set the goal of closing the gap between the minimum wage and the living wage.

The living wage is calculated in a particular way but has remained about two-thirds of the average wage.

The new living wage number of $21.15 is 66.8% of the average ordinary time wage for the December quarter 2018 of $31.63. This is useful for us as the CTU goal for the minimum wage is the same ie two-thirds of the average wage. That goal was also the official promise of the Labour Party in the past.

As the minimum wage gets closer to the living wage the goal of cementing in a living wage rate (or preferably the two-thirds of the average wage goal) to be written into our collective employment agreements becomes more realistic.

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The minimum wage is now $17.70 an hour. It is scheduled to increase to $18.90 next April 1, and then to $20 on April 1, 2021.
The current minimum wage is 56% of the average wage.

By the time it reaches $20 an hour in April 2021 it should be 60% of the average if the average wage moves at the same rate over the next two years as it did over the last.

I estimate the gap between the minimum wage and the two-thirds rate at that time will be about $2.15 an hour. Closing that gap as much as possible should be our goal.

In the last collective agreement negotiations in the fast food industry, we got employers to agree to increase their start rates by 10 cents an hour above the minimum wage and for the margins to be maintained for all rates above.

This means that the start rate at McDonald’s, Burger King and Wendy’s is now $18 an hour or 30 cents an hour above the minimum wage. This is very modest but it is a huge advance in this industry which has successfully resisted ever paying more for their start rates than the minimum in the past. As a union, we also focussed first on getting rid of youth rates and ending zero hours before focussing on getting above the minimum in the last round of negotiations.

Keeping on closing that gap has to remain the goal.

The government has also committed to paying contractors the living wage. If that happens it will be a nightmare for employers like Armourguard who keep nearly all staff on the minimum wage but have contracts at WINZ for example. Having some staff on the minimum and some on the living wage will be untenable in the longer term.

Some major employers like Bunnings have committed to the living wage already.

We need to get the parties that are part of the governing coalition to commit to continuing to increase the minimum wage to two-thirds of the average wage.

An increase of a $1 an hour each year for three years would probably achieve that goal. This is a modest increase after the last three years but will still achieve our goal.

Make the minimum wage the living wage for all workers.