Living wage more costly than expected

03:46, Jul 03 2013

Ambitious plans for Hamilton to lead councils nationally in rolling out an $18.40 per hour minimum "living wage" are in doubt after official estimates of its cost nearly quadrupled.

The council voted in May to introduce a living wage over two years, from this year, on the strength of a February estimate it would cost $168,000 to lift pay rates for 80 permanent council staff now paid between the minimum and living wages.

But management now say the resolution covers 144 staff, and a revised estimate shows the cost will be at least $643,000.

The Hamilton City Council had set itself to become the first city in the country to adopt a living wage policy guaranteeing wages of at least $18.40 per hour.

Its strategy and policy committee three weeks ago voted 7-6 to introduce a minimum living wage for all staff, over two years, from existing budgets.

The cost this year will be limited, just $66,800, but by next year will reach $612,700, and more than $643,000 with overtime and contributions.


Scheme champion councillor Dave Macpherson said he had been concerned about political support and the revised estimates were "unfair on councillors, and especially staff who thought that they were being valued".

Managers have also warned that the policy could become a can of worms, with Living Wage campaigners promising to review the wage amount annually.

Scenarios costed for city councillors show that a $1 increase to the living wage rate by July 1 next year would lift the two-year cost to $959,000.

Management have recommended that council give itself the right to refuse further increases to the living wage rate unless it first considers the impact.

They say such a mechanism allowed the council to control the effects an external nongovernment organisation could have on its wages budget.

Under their proposal the first year would see the minimum wage paid to city staff lifted to $16.08 per hour, then to $18.40 in the second year.

The proposal will be decided by the full council when it meets tomorrow.


Dec 2013: Minimum wage for HCC staff rises from $13.75 to $16.08.

July 2014: Minimum HCC pay rate to increase to $18.40 per hour. 

Waikato Times