Wellington Chamber of Commerce Statement on Council Becoming an Accredited Living Wage Organisation

Date Added: 4th September 2018 from

Wellington City Council has announced it is now a living wage accredited organisation. This will require core external contractors providing services to the Council to pay their staff the living wage while working for the Council.

This is in addition to the Council’s decision in 2015 to pay the living wage to only existing selected core external cleaning and security services.

At that time, the Council and the Chamber agreed the Council would consult the Chamber if the living wage were to be extended to other external core contractors. If there was disagreement about such an extension, the parties would jointly seek a declaratory judgment to clarify the legality of such extensions.

The Chamber believes the Council’s latest move to extend the living wage to all core external contractors is outside its current remit. The Chamber has strong reservations about the additional costs, estimated conservatively to be in the hundreds of thousands of dollars, with ratepayers footing the bill.

Chamber Chief Executive John Milford says the Council’s change in direction is not unexpected, given the political context.

"There is legislation going through Parliament that would allow the Council to extend the living wage to core external contractors, even where that would be contrary to the Council’s legal obligation under the Local Government Act to deliver services in a way that is most cost-effective for households and businesses. It would give the Council broader spending powers without the current restraint of the ‘cost-effective’ test.

"Given that this legislation will make the issue of payment of the living wage to core external contractors a fait accompli, the Chamber will not be enforcing the agreement with Council that would allow us to pursue the matter through the courts."

The Chamber recently met Council officials to discuss the issue.

"We do not intend spending members’ money and time on an issue that will be legislated for in the near future anyway," says Mr Milford. "But we do have questions that we believe the Council should explain to ratepayers:

-How much has and will the implementation of the living wage cost as a total after requiring it to be paid to all direct Council staff, all CCO staff, and the Council’s and the CCOs’ core external contractors?

-What have been the flow-on costs of wage adjustments to those staff close to the living wage figure, and what are these estimated at as a result of the latest decision?

-What is the Council’s comment on the risk of abdicating, to a third-party self-appointed organisation, control over setting part of the Council’s remuneration policy, and in turn that of its core external contractors?

-The implementation of the living wage in 2015 to Council staff was justified as part of an HR package to reduce turnover, increase morale, productivity, and Council revenue, and upskill employees. How effective has this programme been to date, what does the quantitative and qualitative evidence show, and how do the results compare?"