Council's living wage blowout

22:44, Feb 23 2014

Wellington City Council is facing a budget blowout on its living wage policy, just two months after becoming the first council to adopt it.

Councillors voted 9-5 in December to adopt the living wage for its staff at a rate of $18.40 an hour. But Living Wage Aotearoa, the group that sets the rate, has now raised it to $18.80.

Andy Foster, who voted against the living wage in December, said the increase would lift the wage bill for the 400 staff directly employed by the council by $332,000 a year.

But he warned that figure could blow out to as much as $5 million if it was extended to people working for council-controlled organisations and on council contracts, and if relativity adjustments were made for other staff.

"These are big numbers," he said.

The latest rise highlighted his philosophical concern that the council had effectively handed control of staff pay-setting to an outside organisation.


But Family Centre social policy researcher Charles Waldegrave, of Lower Hutt, who calculated the figures for Living Wage Aotearoa, defended the latest adjustment saying that, if anything, it was on the low side.

Councillor Nicola Young, who opposed the living wage when she campaigned unsuccessfully for the mayoralty, said applying the wage was going to be expensive.

"It's totally irresponsible to vote for something when you don't know what it is going to cost.

"What's worse is that they're locked into a pay policy dictated by somebody living out in Lower Hutt."

Wellington Employers' Chamber of Commerce chief executive Raewyn Bleakley warned that the council could lose control of its budget.

"It's clear now that there is a high risk the living wage will get out of control . . . Wage increases should be about performance and productivity. This is not what the living wage is based on."

The living wage is described as the income necessary to provide workers and their families with the basic necessities of life, live with dignity and to participate as active citizens in society.

The latest rise was in line with average wage movements over the year, Mr Waldegrave said. Wages in all other professions were going up and he believed the minimum wage would be going up shortly too.

So a 40-cent-an-hour rise in the living wage, based on the 2.1 per cent movement in wages reported in quarterly employment surveys over the past year, was pretty modest. If it had been based on rising costs, it would have gone up to more than $19 an hour.

He acknowledged that lifting the rate could make it harder to sell the policy to other employers. "But any organisation like the Wellington City Council, and anybody who knows anything about wage rates, knows they move."

Mayor Celia Wade-Brown defended the payment of the living wage to staff directly employed by the council, saying it was part of workplace development. No decisions had yet been made on extending it beyond those staff.

Deputy mayor Justin Lester said Mr Foster's figures were done "on the back of an envelope" and were "pie in the sky".

The rise in the living wage was going to add less than 1 per cent to the council's annual $100m wage bill, he said.

The council had a staff turnover of about 33 per cent and low morale, and it made sense to pay people a little more. He said it was curious nobody was raising a fuss about the combined $2m paid each year to the council's 10 highest-paid staff.

The Dominion Post