Hamilton City Council has voted six to five against the adoption of a ''living wage'' for its lowest paid employees.
In May, the council's strategy and policy committee recommended the council introduce a minimum ''living wage'' of $18.40 per hour.
Mayor Julie Hardaker said councillors were presented with a report by staff on Thursday that enabled them to make a more informed decision than the last time they considered the matter.
Ms Hardaker said paying the ''living wage'' from the existing salary budget could prevent the council from giving pay increases to other employees who deserve them.
She said the council has an obligation as an employer to all its employees, not just those on lower salaries.
PSA national secretary Brenda Pilott said the council only considered a report written by council staff and should have consulted more widely.