Country’s living wage goes up to $20.20

A leading budget adviser says New Zealand should scrap the minimum wage because it encourages employers to pay staff less than they are worth.

The call comes as the country’s living wage is adjusted today in line with movements in wages. It now sits at $20.20, to come into effect on July 1.

The original living wage was calculated in 2013. It’s defined as the income necessary to provide workers and their families with the basic necessities of life and let them participate in society.

Since being adopted by ‘‘accredited living wage employers’’, it has been updated annually to reflect movements in the wider employment market. At $20.20, the figure is 68 per cent of the country’s average hourly earnings.

Darryl Evans, chief executive of the Mangere Budgeting Service, said staff who were paid at least the living wage would feel more valued.

They were likely to work harder and be more committed so their employer could expect a smaller staff turnover.

He described it as a win-win for businesses and staff. But the minimum wage was a problem. ‘‘I strongly believe we need to not have a minimum wage.’’

Evans said it drove employers to pay people that minimum rate, rather than considering what value staff offered their business.

The minimum wage is set to increase to $15.75 on April 1.

Evans said it was almost impossible for families to survive on that amount.

Kirk Hope, of BusinessNZ, said the living wage was not a relevant benchmark because it did not come with increased production.

‘‘All you are doing is artificially inflating wage prices, and production prices.’’