NZ Herald editorial: Pay equity deal could lift all low incomes

Nobody will begrudge residential carers the big pay increase agreed yesterday between their union, employers and the Government. The carers, predominantly women, provide services to the elderly and disabled that are not always pleasant but need to be performed with patience, compassion, professionalism and a good deal of common sense.

On all these requirements they have deserved to be paid much more the minimum wage. The reason they have no been better paid is open to conjecture but their union has argued the reason is that the workers are predominantly women. The up to 50 per cent wage increase agreed for them yesterday is therefore hailed as a breakthrough for "pay equity".

It may be the first time a wage increase has been won on a gender equity argument and the Council of Trade Unions hopes it will be the first of many, in the private sector as well as the public service. Residential care straddles the two sectors, it is provided by private companies but heavily subsidised from the public purse. That is one reason the Government has been closely involved in this wage negotiation but not the only reason.

Pay equity also presents a challenge to the whole system of wage bargaining in a competitive economy. Pay equity seeks to reinstate wage relativities between different occupations, which was the way incomes were ratcheted up reasonably equitably across the employed workforce in industries that could easily pass on higher costs to consumers in markets with limited competition.

It is a different economy today and pay equity exercises can not be as arbitrary as relativities used to be. Methodical comparisons will need to be made between quite different occupations to show that a job performed predominantly by women is being underpaid. After five years of court proceedings and discussion by unions, employers and the Government, we seem no closer to discovering how such comparisons might be made.

Many minimum wage jobs, not just those employing women, can be said to be underpaid when physical demands, unpleasant conditions, unsociable hours or other detractions are considered. Ultimately, wages reflect what employers need to pay to attract and retain sufficient labour, underpinned by the statutory minimum wage. Pay equity argues that in sectors where there may be no shortage of women prepared to work for the minimum wage, it is discrimination not to pay them a higher rate.

Now that the argument has been accepted for residential carers it will be interesting too how widely it is applied. School support staff are staking their claim next. They, too, are paid from the public purse. It may be much harder to convince industries in the private sector that they should pay more than they need to where women are concerned.

But the scale of the increase awarded to residential carers, even if goes no further than state paid or subsidised services, will be felt across the economy. Private sector employers may have to offer more than the minimum wage to keep female staff who could otherwise find work in rest homes and the like. If the decision starts to lift all low incomes, it will do a great deal of good.