Cr Nicola Young, whose motion to consult before Wellington implemented the living wage was defeated 8 votes to 5, writes in today's Dominion Post.
Wellington City Council has lit a fuse leading to a bomb of unknown size, with its vote to implement a "living wage" for its employees from January 1.
Councillors often stress the need for evidence-based, reasoned and clear decisions; correct process; and the need to avoid writing blank cheques but there was little - if any - consultation and analysis of the impact this wages policy would have on Wellington households and businesses. Ironic, considering the council has also committed to the capital being "open for business".
This is key. As we've pointed out before, the study by Auckland Council, and advice from the Treasury on the question of whether a living wage policy is a good tool to reduce poverty is damning.
Mayor Celia Wade- Brown has defended this Alice in Wonderland approach by pointing out the council didn't consult on the chief executive's salary either. The reality is that the CEO is paid the going rate in a competitive international market, whereas the "living wage" is an artificial intervention to boost incomes of lower paid workers who happen to work at the council.
The "living wage" proposed by the Living Wage Aotearoa New Zealand Campaign, is higher (relative to GDP per capita) than the United States, United Kingdom, Australia, and Canada. Incredibly, ours is higher than London's; the 18th most expensive city in the world (Wellington is ranked at 74th in Mercer's Cost of Living survey).
This is incredible. Wellington Council want low income Wellintonians to pay more in rates to fund a 'living wage' higher than London's!
We're all for higher wages, but taxing more in rates to artificially pay some more is not the way to get there.
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.