Wellington Scoop

Not perverse, not illogical, and not unfair – the council does the right thing

by Lindsay Shelton
So much anger about paying security guards more than $14 an hour. The anger is coming from the Wellington Chamber of Commerce, which till recently was calling itself the Wellington Employers’ Chamber of Commerce but has now removed “employers” from its name.

And why is the Chamber so angry about the city council’s decision to pay a living wage to its security contractors? Well, as the Chamber told us yesterday, it has looked into the future and forecasts that the outcomes of the pay increase will be perverse. Not only perverse. But also illogical. And even unfair.

Unfair, of course, is not a word that would be used by the security guards. Or by the union that represents them. The union says it’s a monumental decision which is “a break in the ‘race to the bottom’ cycle that saw security firms paying the lowest wages possible to win contracts.”

But back to the Chamber of Commerce and the race to the bottom by some employers (even if they’re no longer named as being part of the Chamber). It’s not only making dire predictions. It’s also making veiled threats.

“… we do not believe that this is prudent stewardship or efficient and effective use of resources, nor is it a function that is cost-effective for households and businesses. That is councillors’ clear legal obligation under the [Local Government] Act…Any action we would not take lightly, or have any great delight in, but …”

It will be meeting to consider all options. (On KiwiBlog, David Farrar is encouraging them to take legal action against the council.) But first the Chamber will need to get its facts correct. It says, wrongly, that the pay rise

will create a significant cost to the council … in the region of $2.4 million across the seven-year life of the contract.

I think it’s trying to say that the council will have to increase the rates to cover the pay increase. But this isn’t so.

Councillors voted 8-7 to remove $250,000 from the Council’s personnel and travel budget to make the outcome fiscally-neutral.

Then there’s the Taxpayers’ Union, which is not so much angry as worried – it thinks that pensioners in Rongotai will somehow have to help the council to cover the pay rise:

Charging a Rongotai pensioner more for the Council to pay its contractors than is necessary won’t relieve poverty.

Work that out. The tiny lobby group has also failed to notice the fiscally neutral part of the decision, which it calls reckless. And it’s having trouble stringing words together.

“This is an ideological middle finger to ratepayers, some of whom don’t earn a ‘living wage’, to pay more for Council services.”

Opponents of a living wage believe that no extra value will be gained as a result of the payrise. Councillors, persuasively, think otherwise.

The Mayor:

“The decision applies to a security contract with strong public roles including noise control, cash handling, guarding and mobile patrols. We expect improvements to the quality and effectiveness of these services and greater pride in delivery.”

Ray Ahipene-Mercer says increasing the pay will reduce turnover and increase stability:

“This is good not only for workers but for the industry, the Council and the community. It’s the right thing to do – it is cruel and unusual punishment to pay minimal wages to people doing important and hazardous work – especially in a city with the highest average wages in the country.”

And Justin Lester:

“We know through our experience with our parking wardens, who are already on the living wage, that service levels improve along with staff morale and performance.”

All of which is supported by Max Rashbrooke, who this week wrote about British research which shows

when you boost the wages of low-paid staff, rewarding their efforts and showing them that they are valued, they tend to work more productively and quit less often, creating large savings for their employers. That means the true cost to the city council will be far lower than the stated figure, and may indeed be negligible in the long run.

It’s a dubious claim to predict perverse or unfair outcomes from the pay rise for council security guards. Equally dubious for the Chamber to threaten councillors over their decision. The Chember should take note of the DomPost editorial this morning: “The council is not doing anything extreme or absurd… The cost is not excessive or reckless…” And the headline: Living wage the right thing to do.


  1. JC, 30. October 2015, 12:42

    “fiscally-neutral” – you mean cutting back on some services and expenditure so that you can spend more on others. In other words… paying the same amount, for less return… how is that “fiscally-neutral”?

  2. Esjay, 30. October 2015, 20:00

    Puts paid to the Pandas! You cannot have your cake and eat it too! In other words it’s an exercise on priorities isn’t it? In the commercial world one has to respect their employees and remuneration is paid out accordingly. Wild dreams cannot be included.

  3. Hel, 30. October 2015, 22:41

    If there are savings that can be made, then these are independent of any decision about the living wage. The fiscally neutral argument is a mirage and to suggest otherwise is deceitful. There are no benefits to the ratepayers from this initiative of council, other councils not forcing the living wage on the contractor will receive an identical service at a lesser cost.

  4. KB, 31. October 2015, 9:31

    Wow there are some real grinch readers here on wellington.scoop! I think the living wage policy is a fantastic idea and I applaud the WCC for standing up for the lowest paid among us.

  5. Elaine Hampton, 2. November 2015, 14:50

    I suggest the ‘grinches’ go and work on the front line for $14/ hour and see for themselves. Yeah you lot, get out and get yourselves a dead end, demeaning, deadening job. All these excuses for maintaining a viciously unfair status quo. No one should be in business if they can’t pay the living wage. That is demeaning.

  6. The City is Ours, 2. November 2015, 16:13

    The million dollar question: does the COC have shares in these companies?

  7. Mary M, 2. November 2015, 16:49

    Yeah I suggest the CEO and mayor work for their “fair” wage (since it’s so “fair”).