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Living Wage - higher costs, less diversity, job losses?

We've been looking into the claims by Auckland Council politicians relating to promises of a 'living wage' for Auckland Council employees.

An Auckland Council internal report obtained by the Taxpayers’ Union raises questions about the potential for job losses and casts the $3.75m price-tag for the policy into doubt. 

The Council’s report explains that the living wage is ‘not an effective, general tool for alleviating poverty’ and that ‘large proportions of minimum wage workers do not live in poor households.’

When you put aside the political rhetoric, the economic impact of the living wage policy will be disastrous for low-skilled Council workers, diversity and ratepayers according the Council’s own analysis.

If the Council’s aim is to reduce poverty, the report suggests that living wages for Council employees is not the way to do it.  According to the report, workers aged 15 - 24, women and ethnic minorities are over-represented in the category of people not earning more than $18.40 per hour. Artificially inflating Council wages may see less of these groups gaining future employment with the Council as competition for these positions increase.

In addition to increased competition for Council positions, the report indicates the potential for job losses and shows that workers may see overtime slashed.

The living wage policy will not only burden Aucklanders with higher rates, it also threatens Council workers with the prospect of job losses.  The true cost of the living wage policy may be much higher than the $3.75m quoted in the media.  For example, the Council’s analysis only considers workers within a 10% wage differential.  It has not factored in the potential for a domino effect of wage increases emanating from the introduction of the living wage.

We've uploaded the full report here.


Jordan Williams
Jordan Williams

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