Nicola Young on living wage

Wellington City Councillor writes in the Dom Post:

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”.

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 “” 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).

The Council voted to outsource their wages policy to Rev Waldegrave. Whatever he says they should pay, they will pay it. It is the opposite of evidence based policy.

A review of the research that produced the New Zealand rate of $18.40 by researcher Brian Scott concluded the rate is over-stated and questioned its method and data (as did Treasury). It also questioned whether conclusions reached from overseas research on productivity, morale and poverty could be safely applied to New Zealand’s situation.

Preliminary research by the Auckland Council came to the same conclusion. Not everyone would agree that Sky TV, pets, international travel and video games are “basic necessities”; some expenses – childcare costs, for example – are counted twice and money is allowed for building and mortgage insurance, despite the stated assumption that recipients are tenants.

Good to see politicians taking notice of the Scott analysis.

Wellington may be a comparatively wealthy city, but with an older population; much of the council’s largesse will be funded by pensioners struggling on fixed incomes, well below the “living wage”.

The “living wage” is a one-size-fits-all tool, based on a two-adult, two-child family.

The reality is that almost 80 per cent of those earning less than $18.40 have no children; many are students living at home.

The concept of a single living wage is fundamentally flawed. Each different household composition will have its own level of needed income. A family of four has different needs to a single 18 year old living at home.

Wage policies shouldn’t be based on emotional arguments; it should be based on careful analysis and facts. The lack of consultation, research and analysis of this policy is a failure of governance, and will damage our city’s economy and reputation as a place to do business. The “living wage” policy is a poor solution looking to solve a complex problem.

Well said.

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