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Council loses control of wages budget

Wellington Employers’ Chamber of Commerce

Media Statement

19 February 2014

Council loses control of wages budget

Wellington City Council has the potential to lose control of its budget because of the living wage, says Wellington Employers’ Chamber of Commerce Chief Executive Raewyn Bleakley.

“It’s clear now that there is a high risk the living wage will get out of control and blow the Council’s wages budget.

“The revelation today that the shift from the original living wage of $18.40 to $18.80 was decided using different methodology is of great concern.

“This is especially so when using the original methodology produces a new figure of $22.89.

“Those involved didn’t use their own methodology to get to $18.80 – they just used figures to suit themselves.

"Wage increases should be about performance and productivity. This is not what the living wage is based on.

“Where does that leave the Council and its budget? And more importantly the ratepayers who have to foot the bill?

“While the Council believed adopting a living wage was well intentioned, the reality is they didn’t heed advice - that it is ultimately a flawed concept.

“The Council believe the original living wage would cost $500,000. With an increase to $22.89, we’re talking well over a million dollars annually for direct employees alone.

“They say today the living wage is $18.80, but tomorrow we could wake up and it will be $22.89. Are ratepayers comfortable that pressures from one political lobby group are setting the Council’s wages budget? We know businesses that contribute a substantial proportion of rate are strongly opposed to this.

“And what’s it going to mean for Council Controlled Organisations and companies contracting to the council if they are required to adopt the living wage?

“This absolutely reinforces all the very real concerns that were initially raised about the approach of using the living wage to set wages.

“Wellington is the only Council that has adopted the living wage. We caution Council to halt their current plan that would extend it to Council Controlled Organisations and contractors."

ENDS

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