The Presss reports:
The Christchurch City Council is under pressure to find extra money to ensure all its employees get paid at least $18.40 an hour but its finance chairman is warning it cannot afford it.
“We are going through a process of cutting costs, not adding to them,” Cr Raf Manji said yesterday as councillors met to consider a report on the implications of introducing a Living Wage.
By law, workers must be paid a minimum of $13.75 an hour, but $18.40 is what the Living Wage movement believes a family of two adults and two children, where one adult works fulltime and the other works part-time, needs to meet basic living costs.
That is the key point. It is a calculation for one specific family type. That type of family is only around 10% of families earning under $18.40 an hour. Claiming that a 16 year old boy living at home must be paid $18.40 an hour because that is the income needed to support a family with two kids is ridiculous.
A report prepared for the council’s chief executive and employment matters committee, which met publicly for the first time yesterday, estimated the cost of increasing their hourly rate to $18.40 an hour at $1.1 million, excluding KiwiSaver, overtime and penal pay.
It also warned that introducing a Living Wage was likely to have a knock-on effect for other staff as the council would need to maintain relativities in remuneration.
That could add another $1 million to the council’s wage bill.
So proponents want ratepayers to pay an extra $2 million a year. Are ratepayers in Christchurch not already struggling enough?
Also the Councils seem to ignore the very serious flaws in the calculation by Rev Waldegrave, which include:
- Only 12% of low income households are two adults and two dependents, which the Waldegrave calculation is based on
- They assume you need 10 hours of childcare a week, even if the children are aged over 14
- They calculation of level of “basic necessities” is not based on any empirical measurement of the lowest cost of necessities, but merely a proportion of the average expenditure in deciles 1 to 5 (this one is key – it is a calculation based on the Browns should be spending as much as the Jones, and is not a calculation on how much income the Browns need)
- The calculation doesn’t account for some sources of household income such as trade-ins, sales, teenagers income (yet does include their costs) and school donation tax refunds
- The calculation double counts some expenditure such as childcare costs
- The calculation includes as a basic necessity costs such as Sky TV, pets, international travel and video games
- The calculation includes insurance for dwellings and mortgages, despite assuming they are renting
Any politician that advocates the living wage calculation as a serious way to do policy should not be trusted with finances.