CEO slams living wage as “just bad business”

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The head of a leading business organisation has criticised the living wage, saying it’s a populist approach which can have far greater repercussions that first thought.

“If I’m going to be giving out salary increases from $15 and hour to $20 an hour – and I’m not doing it on the basis of increased performance and improved outputs – [then] to me, that’s just bad business,” said Michael Barnett, CEO of the Auckland Chamber of Commerce.

Barnett made the comments in response to a pledge issued by Auckland mayoral candidate Phil Goff – who said he plans to give all of the city’s council staff a living wage, once elected.

“The council already voted on this and they said no and I think that this is one of the populist moves that you get from people that want to be elected,” he told Newstalk. “They should leave the running of the organisation to the CEO.”

Around 11,000 employees currently work for Auckland Council and while the salary bump would only effect a minority of lower paid workers, Barnett says the implementation would undoubtedly have a knock-on effect.

“It’s going to have an effect all the way through, it’s going to have a rising tide effect, it’s going to have others seeking parity,” he stressed. “It’s not just going to be the low end of the market, those that are on the minimum wage, it’s going to run through.”

 Barnett claims that if the council gives a pay rise to those on the lowest salary tier, then the employees were previously earning a few dollars more an hour would also expect a similar increase.

“To me, it’s inflationary – cost is already high in Auckland, the cost of living, I can’t see anything sensible about this move,” he said.

“What he’s doing is he’s providing an incentive to them but not asking for an increased performance,” said Barnett. “Linked with improved performance and improved outputs, you can justify these sorts of increases but it is inflationary, it’s not good businesses.”

Auckland mayoral candidate Vic Crone is also against the proposition to implement a living wage within the city’s council.

“I am opposed to living wage and social equity policies in council,” she confirmed. “Increases should be related to performance that delivers benefits to Aucklanders, or on a case by case basis where someone is paid well under market value.”

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  • Kelly on 5/09/2016 3:05:37 p.m.

    Wow, for years we've been subject to our business leaders talking about the "trickle down" effect - improving the lot of the top earners will have a positive effect on the lower earners. This has overwhelmingly been proved as nonsense. Why on earth would we believe them now?
    The threat of inflationary effect is, I believe, just that, a threat.
    Treating workers with some basic dignity and paying a wage that reflects the cost of living might be a wacky theory but since the neo-liberal model has failed to deliver to workers, why not try it?

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