Govt’s bid to axe living wage sparks outcry

The Government's proposal to scrap the living wage requirement for new contracted workers in cleaning, catering, and security services is facing significant opposition.

Critics warn of severe consequences for low-income workers, particularly in Pacific communities.

Speaking on Pacific Mornings, living wage advocate Teisa Unga criticises the Government’s proposal, labelling it a setback for workers who rely on fair pay to support their families.

“Taking things backwards is, I think, the motto of this government at the moment, to be honest,” Unga says.

A blow to Pacific workers

Unga says Pacific workers are overrepresented in industries such as cleaning and security, which means they will be disproportionately affected by the removal of the provision of a living wage.

She says the consequences extend beyond statistics, impacting everyday life significantly.

“It might be a dollar for people in Parliament, but it’s actually petrol to take people’s kids to school. It’s bread and butter. It’s money that allows them to actually live in their community and just thrive in it,” she says.

Unga also highlights these workers’ vital role in maintaining public spaces and recalls their status as frontline workers during the Covid-19 pandemic.

“I spoke to one of the workers just before, and she said that health and safety in these public offices is dependent on them.

“If they’re not there to do their job, clean, disinfect all the desks, these public workers wouldn’t be able to deliver the services that this government says it’s delivering.”

Teisa Unga. Photo/Supplied

Government's justification: Economic growth and business support

Economic Growth Minister Nicola Willis defends the proposals as part of a broader effort to simplify procurement rules and make it easier for New Zealand businesses to secure government contracts.

The Government argues that reducing the number of procurement rules from 71 to 47 removes unnecessary obstacles and streamlines processes for businesses bidding on government work.

“The changes include introducing a new economic benefit test and scrapping 24 rules that put unnecessary obstacles in the path of Kiwi businesses,” Willis announces in a press release.

“This is part of our plan to increase jobs and incomes by shifting New Zealand to a faster growth track.”

The new ‘economic benefit’ test requires government agencies to consider the wider benefits to New Zealand when awarding contracts, aiming to create export and employment opportunities.

According to Willis, this new economic benefit assessment will compensate for removing rules like the living wage requirement.

“Many of these requirements are replaced by the new economic benefit rule,” she says. “For contracts below certain thresholds, agencies are expected to award contracts to New Zealand businesses that have the capability to deliver.”

A political battle over workers' rights

Labour Deputy Leader Carmel Sepuloni says the move shows the Government’s lack of appreciation for the work performed by some of New Zealand’s hardest-working yet lowest-paid employees.

“All we can assume is that they have no value for the work that’s being undertaken by our security guards, by our cleaners, by some of our hardest-working New Zealanders who earn the lowest incomes,” Sepuloni says.

She points out that the living wage was established under the previous Labour government to ensure fair pay for those working under government contracts, particularly in roles often held by Pacific and Māori workers.

“It’s the difference between being able to make ends meet, getting food on the table, and retaining a roof over their head,” she says.

Sepuloni says removing the living wage requirement comes when Pacific unemployment rates are rising, warning that it will only add to the hardships many families face.

Carmel Sepuloni. Photo/PMN News/Ala Vailala

“Around one in 10 Pacific people of working age are unemployed at the moment. It truly begets belief that even when our people are working, National still finds a way to take them backwards.”

Political uncertainty

New Zealand First has reportedly expressed reservations about supporting Willis' proposal.

Unga remains hopeful they will stick to their previous commitments to support the living wage.

“We held a forum last year, on election year actually, and New Zealand First came and committed to moving the living wage and ensuring that the living wage is part of the coalition government,” Unga says.

“So it’s good that we hear that New Zealand First actually wants to continue with that promise.”

Photo/First Union

The Government is conducting public consultation on the new draft rules, which will close on 8 April 2025. After this period, the Cabinet will consider the proposed changes.

Unga urges decision-makers to listen to the voices of those affected.

“Take it out to the people who actually matter, take it out to the people who will actually be impacted by this and talk to them and they'll hear from there why this is more of a need rather than just something they can just chop off one of their budgets.”

Watch Teisa Unga's full interview here.