RE­MU­NER­A­TION

It's up to com­pa­nies, gov­ern­men­tal bod­ies and em­ploy­ees in Auck­land to de­ter­mine whether or not a re­gional weight­ing sys­tem is nec­es­sary, or fea­si­ble, in New Zealand, writes John McGill.

NZ Business - - CONTENTS - John McGill is the CEO at Strate­gic Pay.

Re­gional weight­ing: Is it fea­si­ble? By John McGill.

AS THE COST of liv­ing in Auck­land sky­rock­ets, is it time to con­sider whether or not pay in New Zealand's largest city should be higher than else­where?

If you've ever lived in the UK, you'll know how ex­pen­sive Lon­don is. You might also have heard of Lon­don weight­ing, an ex­tra al­lowance given to around one third of Lon­don-based em­ploy­ees (mostly in the public sec­tor) to com­pen­sate for the high cost of liv­ing in the Bri­tish cap­i­tal.

This is a per­fect ex­am­ple of what is called 're­gional weight­ing', or ad­just­ing wages to fit the cost of liv­ing in a par­tic­u­larly ex­pen­sive area.

We cur­rently do not have such a sys­tem of­fi­cially in place in New Zealand, but as prices in Auck­land, for ex­am­ple, con­tinue to rise, we might be see­ing a move­ment to­wards re­gional weight­ing and re­mu­ner­a­tion re­struc­tur­ing in the fu­ture.

COST OF LIV­ING IN AUCK­LAND

Many of the prob­lems that led to the im­ple­men­ta­tion of the Lon­don weight­ing can also be seen in New Zealand's com­mer­cial hub, Auck­land.

Hous­ing and trans­porta­tion, in par­tic­u­lar, have be­come overly ex­pen­sive; we all might have our ideas as to how this hap­pened but for those liv­ing in Auck­land the is­sue is around re­solv­ing it.

It's sur­pris­ing that there hasn't been more of a dis­cus­sion within some sec­tors around de­vel­op­ing an Auck­land weight­ing. Cer­tainly, our data shows that pay has crept up a bit more rel­a­tive to the rest of the coun­try, but not dra­mat­i­cally so.

We see ev­i­dence of pre­mi­ums from time to time, but there's al­ways been a re­luc­tance to for­malise any sort of weight­ing in Auck­land.

There are some com­pa­nies that do of­fer ge­o­graph­i­cally dif­fer­en­ti­ated re­mu­ner­a­tion strate­gies, but they are few and far be­tween.

Now it's up to com­pa­nies, gov­ern­men­tal bod­ies and em­ploy­ees in Auck­land to de­ter­mine whether or not a re­gional weight­ing sys­tem is nec­es­sary or fea­si­ble in New Zealand.

DO WE NEED A RE­GIONAL WEIGHT­ING?

It is un­likely that Auck­lan­ders, par­tic­u­larly in the public sec­tor, would be op­posed to the idea of spe­cial pay­ments that would help them cope with the city's high liv­ing costs.

If de­vel­oped it is likely, as in Lon­don, it would be groups in the public sec­tor that would be af­fected. Gen­er­ally the Lon­don weight­ing is not such an is­sue in the pri­vate sec­tor.

Public sec­tor or­gan­i­sa­tions pay at lower lev­els than the pri­vate sec­tor and con­se­quently are most af­fected. As to mak­ing it an of­fi­cial sys­tem, well most reg­u­la­tory bod­ies and em­ploy­ers would shy away from this as it be­comes so in­grained that it is vir­tu­ally impossible to re­view or amend.

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