Wellington Employers’ Chamber of Commerce
Media Statement
28 May 2015

Wellington Chamber of Commerce to seek legal advice on Wellington City Council’s Living Wage decision

The Wellington Employers’ Chamber of Commerce is likely to seek legal advice on today’s decision by the city council to expand the ‘living wage’ to council controlled organisations and contractors.

Chief Executive John Milford said he was very disappointed by the decision and that there was no debate held publicly on the amended recommendations by councillors, only in a public-excluded session.

“The Chamber has been opposed, from both a business and cost point of view, to the council’s decision last year paying the living wage to its direct employees. Expanding it to CCOs and requiring council contractors, which are private businesses, to remunerate at a higher rate exacerbates that mistake.

“It’s the council’s job to spend ratepayer money efficiently and effectively to benefit the wider community to support Wellington’s development and growth. This does not do that.

“It seems this has been an ideologically driven decision, and if that’s the case then we must seriously question whether this move would be upheld under the Local Government Act.”

The relevant parts of the Act are:

· Section 14(1)(g) says “a local authority should ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region”.

· Section 10(1)(b) says “to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses”.

“On this basis, the Chamber will now consider seeking advice on the legality of the council’s decision. We would then take recommendations on options open to us to our board.”

“This is also a case of affordability. While council has today allocated some money, totalling $1.75 million, we don’t know the exact cost but we’re told is that it may be in the millions.

“One reason given for expanding the living wage to CCOs is that it will help retain staff, but I have yet to find anyone who can confirm there are problems with retaining staff at the Zoo or any of the facilities run by the Museums Trust.

“It will also further undermine parity with other employees. Wage increases should be about performance and productivity. This is not what the living wage is based on.

“The decision and funding to extend this to third-party contracts is most concerning. It’s not for council to tell contractors what to pay its employees. That’s a matter for the contractor. Any interference in that area goes way beyond their brief.”

Mr Milford repeated the Chamber’s stance that though the concept of a living wage was well-intentioned, it was not the way to achieve higher wages.

“As an organisation representing the business community we have to question whether the adoption of the living wage is a prudent business decision. Lifting everyone’s wages is something we should all be aiming for, but we should be achieving that by lifting productivity, in recognition for upskilling and working more efficiently. It should not be done at the stroke of a pen.”
ends

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