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Dollar difference: workers' pay not part of decision on council chiefs' salaries

Reviews of a chief executive's salary don't consider what other workers in the organisation earn, Hamilton Mayor Andrew King says. (File photo)

Councillors should consider low-paid staffers if they're dishing out sizeable CEO salary increases, a union head says.

But elected members make their decision based on the one staff member they employ - the chief executive - Hamilton Mayor Andrew King said.

There's certainly a gap between those at the top and bottom of the earning tree.

'If you're not prepared to pay the living wage but you're prepared to give the chief executive a significant wage increase, then what does that look like?' Public Service Association (PSA) national secretary Glenn Barclay says. (File photo)

You could pay about 16 living wage workers for a year using the $690,000 salary of Auckland Council chief executive Stephen Town.

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In Hamilton, the majority of councillors recently approved a $60,000 pay rise for chief executive Richard Briggs - more than the average Waikato person earns in a year.


The whole organisation suffers if the chief executive doesn't perform, Local Government NZ chief executive Malcolm Alexander says.

While there are reported cases of council bosses getting 10 to 15-per cent raises, those of their staff are more modest.

Their annual increases tend to sit around 2 per cent a year, Public Service Association national secretary Glenn Barclay said.

"If you're not prepared to pay the living wage but you're prepared to give the chief executive a significant wage increase, then what does that look like?" he said.

The living wage is calculated at $20.20 an hour, while the legal adult minimum wage is $15.75.

The chief executive is the only staff member councillors employ, Hamilton Mayor Andrew King said.

"[Councillors] don't take into account at all where other general managers in our organisation are sitting or where different other people who work for council sit on the scale... Our job is just to consider where Richard should be, as our chief executive."

The process involves getting feedback from inside and outside the organisation to give Briggs a performance rating.

An external company takes that and looks at the responsibilities he has - such as staff, money handled - and uses a scale to recommend a pay rate.

But putting staff pay rates out of mind sounds like councillors washing their hands of it, Barclay said, and they shouldn't.

Chief executive salaries - not just in local government - have taken off and lost connection with the people who work in their organisations, he said.

"The people who set those wages should find out where the salaries sit in relation to the overall organisation."

The living wage and executive pay rises are separate arguments in the eyes of Local Government New Zealand chief executive Malcolm Alexander.

"The chief executive is the most important person in an organisation so you have to pay what you have to pay."

The whole organisation suffers if the chief executive doesn't perform, he said.

"Essentially the buck stops with them. They are responsible for the organisational performance, for making sure that everything achieves the plan that their respective boards or governors put in place."

Chief executives in both the public service and local government are generally paid significantly less than their commercial counterparts for similar roles, he said - "but, to be fair, significantly more than other people in their organisations, reflecting the fact they are chief executives".

The living wage debate is about lifting people's pay above the market rate, he said, and that's a political decision for councillors.

PSA wants all councils to become accredited living wage employers and so far Wellington City Council is furthest along the track.

Some councils are making moves without becoming accredited, Barclay said.

"Porirua last year put some money into the bottom end of their pay rates. It wasn't the living wage but it was a good starting point."

No council employee is on minimum wage at Hamilton City Council, King said.

Briggs has asked for - and been granted - $750,000 for staff salaries, some of which will be used to push low wages up.

"This is the one way that Richard's got to use because when the living wage has been brought up it's been voted down."

Of the other local councils, Auckland Council has voted in a living wage for core staff and CCOs.

Christchurch City Council has recently adopted the living wage for core staff, which it said will cost about $775,000 a year, and is looking into extending it to CCOs.

Ratepayers had plenty to say about that in the comments section, ranging from "Lead by example. Great decision" to "I hope they are taking it out of their fat pay cheques and not putting our rates up again to cover it".