Wellington City Council And The Living Wage: An HRM And IR Perspective

Issue: Wellington City Council and the Living Wage (further background information provided below).

Provide a very brief outline of the organisation (specific industry, type of work; number of employees, types of occupations/jobs – skill levels; unionised or not; any other important or distinguishing features of the organisation or its workforce).

Then, analyse the issue:  From an HRM and IR perspective why has the employer taken this stance? How do they hope to benefit from it? Are there any risks? How could they be addressed? What are benefits or risks to employees/workers? How could they be addressed?  Are there any other stakeholders who should be considered?

Analysis of Wellington City Council

The public policy denotes the living wage as the necessary income by a labor to live life in a decent way (Guzi, 2014). The concept of living wage entails the minimum income by a worker in order to meet the basic needs of the same. There are number of definitions for depicting the living wage concept.  For example, some of the countries living wage is defined as the equivalent to the line of poverty, whereas in some countries the living wage is defined as the hourly pay (Werner & Lim, 2016). Similarly, in New Zealand the living wage is considered as the hourly pay. It is found that Wellington City Council is the first organization to become the living wage. However, there have been some issues regarding the transformation of the Council into living wage. The following section will discuss the implementation of living wage by the organization along with all the related details.

Wellington City Council is the official territorial authority of Wellington city. The organization provides various types of service to the people of Wellington. The wide range of service includes rates and property, parking and roads, environment and waste, community and culture, consents and license and many others. The approximate number of employees in the organization is more than 1500 along with wide range of job opportunities (Wellington City Council., 2017). The employees of the organization are highly skilled and competent enough to handle the organizational activities and the operations of the company are based on the service industry. Despite the organization not being unionized, the same is immensely influenced by the labor union in terms of transforming itself into a living wage. The following section will discuss the issue of living wage with regard to the esteemed organization.

It has come to notice that the Wellington City Council decided to become living wage in 2013 and executed the same in 2017 (Foxcroft, 2016). The primary reason behind such decision implies that the council wants all the employees to be paid equally with the minimum wages for living. The organization believes that the living wage is the new and most effective way to generalize all the employees with no discrimination on the ground of pay. However, the decision had to gone through several hurdles and obligations from the labor party and union. From the perspective of HRM, the purpose of becoming the living wage organization is laid in the organizational success along with the maintenance of basic human rights and capabilities for living (Prowse & Fells, 2016). In addition, the living age will provide the organization with the opportunities to pay the employees according to the working hours which will further establish the internal equity. On the other hand, presenting the scenario from the perspective of IR, Kaine & Ravenswood, (2014), mentioned that the emerging network of living wage is indicated towards more sustainable and ethical responses to the severe challenge of low pay to the labors. Hence, to mitigate the challenge in the IR context and ensuring the internal equity the employer has decided to adopt the living wage.

Benefits and Risks of Living Wage Implementation

The organization has seeking beneficial aspect to the organizational success as well as to the security of the employees from the adaptation of living wage. The avoidance of legal obligations is one of the major benefits that the Council is hoping from living wage. Among other benefits, the firm is expecting lower turnover rates, better job performance by the employees, improved customer service, enhanced company reputation and many others (Wills & Linneker, 2014).  Apart from that, the Council believes that it can gain the trust of the employees with the implementation of the living wage.

The initial risk of the organization lies in the adaptation of the living wage in terms unionized activities of the external bodies. Local Government Act is creating obligations to the organizations for paying equal as well as more than necessary to the employees on the basis of work hours without corresponding benefits (Flint, Cummins & Wills, 2013). Providing all the employees equal pay in terms of living wage can create conflicts between the organization and the employees as some employees can obligate that the organization is paying more than necessary pay to the staffs below them. On the other hand, the private limited companies can also create hazard for the organization by countering the fact that the positions of the employees are categorized on the basis of their eligibility which determine the pay. In addition, these private employers can raise the fact that the cost of business is high for them which requires fair pay based on competency and eligibility.

The organization must address the risks at the highest priority to avoid any hazards in implementing the system. The risks from the union should be addressed by conducting face to face meeting between the union and organization for mutual understanding of the issue as well as the importance of the living wage. On the other side, the firm needs to have clear and thorough understanding of the Local Government Act as well as the Employment Act in order to ensure benefits from the implementation of the esteemed system. In order to avoid any conflicts with the private companies the Council must publish its norms, procedures along with the legal considerations to the public through any press conference (Radio New Zealand., 2016). In addition, the respective entity must make others aware of the importance of adopting the living wage though various campaigning activities digital media.

However, the employees are not devoid of the benefits as well as the risks out of the living wage implementation of the Wellington City Councils. Considering the fact of benefitting the employees as the implementation of the living wage has been objectified by the Council, the employees will be able to receive fair pay for their work. Exemplifying the employees living at the poverty line will be benefitted from the system of living wage as the basic and minimum income of them will be increased on the basis of their working hour. Countering this, the employees at the higher level will be encountering risks as their hourly pay may reduce their basic pay in terms of their eligibility. However, the conception of the living wage is for benefitting the employees, the number of risks are less.

Addressing the Risks

As stated before that the living wage conceptualizes the benefits to the employees the, the risk factors are next to none. The only risk factor lies for the employees at the higher level, whose minimum wages can be lowered due to the formulation of the living wage. Therefore, to avoid the risks coming from the employees of higher level can be addressed by modifying the living wage system. the modification must include the hourly pay on the basis of the eligibility and not in general. The risk factor needs to be analyzed from both the employee and the employer perspective in terms of the preventing any conflicts between the two.

In order to successful execution of the living wage in the respective organization, the consideration of the other stakeholders also needs to be taken into account. The stakeholders of the firm are the consumers and the and the contractors with whom the organization is working with. It must be noted that the latest decision of the Council is emphasizing on the adaptation of the living wage by the external contractors of the company too (Forbes, 2015). The external contractors of the organization provide security service to the organization. The Council believes that the organization will receive the corresponding benefits from the adaptation of living wage by the contractors in terms of guarding, noise control and cash collection (Forbes, 2015).  On the other hand, the employees of the firm are referred to the consumers in terms of stakeholder consideration. The consumer price index is increasing every year and the same requires maintaining equivalent income level from the perspective of the employees (Illinois Business Law Journal., 2017). However, the Council is concerned about the fact and hence has started to pay its employees minimum wage for living from 2013.

Conclusion: 

Therefore, it can be concluded from the above discourse that the idealization and conceptualization of living wage needs to be taken seriously by the other organizations for not only benefitting the employees, but also gain effective result from the same. The report shows that the living wage is found to be creating several risks and challenges to the employers as well as to the employees after the decision of Wellington City Council to become a living wage foundation. The report also presents several recommendations to address the probable emerging risks for both the employees and the employers. In addition, the report also sheds lights on the stakeholder consideration in regard to the necessity and successful implementation of living wage by the esteemed organization.   

References:

Flint, E., Cummins, S., & Wills, J. (2013). Investigating the effect of the London living wage on the psychological wellbeing of low-wage service sector employees: a feasibility study. Journal of Public Health, 36(2), 187-193.

Forbes, M. (2015). Wellington City Council pays more staff a living wage, costing ratepayers $1.7m. Stuff. Retrieved 8 December 2017, from https://www.stuff.co.nz/business/73450003/wellington-city-council-pays-more-staff-a-living-wage-costing-ratepayers-24m

Foxcroft, L. (2016). Election results give green light to Living Wage councils. Living Wage Movement Aotearoa NZ. Retrieved 8 December 2017, from https://www.livingwage.org.nz/election_results_give_green_light_to_living_wage_councils

Guzi, M. (2014). Estimating a living wage globally. Living out of stereotypes, 59.

Illinois Business Law Journal. (2017). Where to Open a Business: Consideration of Living Wage Ordinances | Illinois Business Law Journal - University of Illinois at Urbana-Champaign. Publish.illinois.edu. Retrieved 8 December 2017, from https://publish.illinois.edu/illinoisblj/2006/09/26/where-to-open-a-business-consideration-of-living-wage-ordinances/

Kaine, S., & Ravenswood, K. (2014). Working in residential aged care: A trans-Tasman comparison. New Zealand Journal of Employment Relations (Online), 38(2), 33.

Prowse, P., & Fells, R. (2016). The living wage–policy and practice. Industrial Relations Journal, 47(2), 144-162.

Radio New Zealand. (2016). Wellington City Council softens living wage policy. Radio New Zealand. Retrieved 8 December 2017, from https://www.radionz.co.nz/news/regional/303774/wellington-city-council-softens-living-wage-policy

Wellington City Council. (2017). Wellington City Council. Wellington.govt.nz. Retrieved 8 December 2017, from https://wellington.govt.nz/

Werner, A., & Lim, M. (2016). The ethics of the living wage: A review and research agenda. Journal of Business Ethics, 137(3), 433-447.

Wills, J., & Linneker, B. (2014). In?work poverty and the living wage in the United Kingdom: a geographical perspective. Transactions of the Institute of British Geographers, 39(2), 182-194.