Thursday, 7th November, 2013

For Auckland Mayor Len Brown to suggest his “living wage’ of $18.40 for all Auckland Council staff will be paid for from savings in other parts of the council confirms that there are inefficiencies that ratepayers are paying for.

“What the Mayor is saying is that he will fix inefficiencies that should have been addressed long ago and use the savings to increase the pay of a favoured few – its populist politics,” said Auckland Chamber of Commerce head, Michael Barnett.

The next step will be that firms associated with council will be expected to do the same – this may only be implicit but then the snowball will roll.

“We strongly support a high wage economy for Auckland. However, we seriously question whether the so called ‘living wage’ concept of paying no less than $18.40 per hour is the way to achieve this.”

As the Chamber pointed out some time ago, we support the existence of a minimum wage to prevent unscrupulous employers paying too little. But the ‘living wage’ concept of $18.40 is a big jump from the existing $13.50 minimum wage and does not sit far below the median wage of $20.86. Clearly it is not realistic to try and ratchet all wage earners up to the median wage in this way.

Furthermore the $18.40 ‘living wage’ concept assumes that an 18 year old starting out and a two parent family supporting two children by working for 60 hours per week combined both require the same wage to “survive and participate in society”. This is clearly wrong when their circumstances are different.

Instead, businesses see the best way to achieve a high wage economy as being through policies that focus on increasing productivity, improving skills and enhancing the business environment.

“Businesses also believe strongly that as the risk takers and entrepreneurs it is their prerogative to determine wage rates based on the job in question and productivity levels,” said Mr Barnett.

We recognize that low wages can make it difficult for workers and their families to fully participate. Government welfare policies exist to address this. Businesses which take on workers pay what the job is worth. “It is not appropriate to look to them to close this gap. It is certainly not the role of local government to address social issues in this way and some members see it as completely inappropriate interference in their business affairs,” said Mr Barnett.

Many Auckland businesses would struggle to pay all their employees $18.40 an hour. If we consider how many hospitality and retail stores choose to close on public holidays to avoid the higher wage rates which make their business unprofitable for the public holiday this could be a concerning indicator of how many businesses in just these sectors may not survive by paying $18.40/hour.

More important at this time is the creation of jobs so more people are in work. Growing businesses will result in more jobs.

“It is most concerning that councils in New Zealand are leading the charge on this flawed concept and would be extremely negative for Auckland joined in,” concluded Mr Barnett.

For more information contact Michael Barnett, mobile: 0275 631 150.
Michael Barnett, Chief Executive, Auckland Chamber of Commerce.