Coronavirus: Job losses and pay cuts as Auckland Council tightens belt due to Covid-19

Tuesday, 19 May 2020

Auckland mayor Phil Goff and CEO Stephen Town at a council meeting earlier in 2020.

Auckland Council is planning to cut an unspecified number of jobs, and ask higher-paid workers to take a pay cut as it tries to close a forecast deficit of $120 million due to the impact of Covid-19.

Staff heard on Tuesday afternoon that approximately 1,500 workers who earn more than $100,000 a year, will be asked to take a voluntary six-month pay cut of between five and 10 per cent.

Negotiations have also begun with the union PSA to freeze pay rises for the next year for those on the collective agreement.

'I know this will create uncertainty for you at a time which is already difficult,' chief executive Stephen Town wrote in a letter to all 7,500 staff.

Auckland Council chief executive Stephen Town said he understood the uncertainty was difficult for staff.

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Auckland Mayor Phil Goff announces Auckland Council facilities will close (video first published in March).

We are all trying to make sense of this new world we’re in and what it means for us and our households,' Town wrote.

Some of the cuts are hoped to be in place by August, and there will be a review of the council's operations.

Nearly 60 per cent of the council's $4.9 billion revenue comes from user charges, investments and other sources, and it expects a hit of $450-650 million as the economy slows post Covid-19.

The voluntary pay cut scheme is similar to one at its agency Auckland Transport, which a majority of staff earning over $100,000 are understood to have agreed to.

Those on between $100-175,000 would surrender five per cent, the next band up to $275,000 would give up 7.5 per cent, and above that, 10 per cent. Executives have already taken cuts of 10-20 per cent.

No mention has been made of how many jobs might go but the number is likely to be significant.

Auckland Council is working behind closed doors on an Emergency Budget.

For the first time, residents will be given a second chance to have a say, including on a possible 2.5 per cent average rate rise, in place of the proposed 3.5 per cent.

The council has already laid-off nearly half of 1,100 temporary or casual staff and contractors, with remaining roles still be reviewed.

Councillors will consider the Emergency Budget behind closed doors on Thursday, prior to public consultation.

The breadth of the financial impact of Covid-19 can be seen in thousands of ratepayers who have sought to postpone their quarterly bill due this month.

Nearly 5,500 want to delay rates totalling $17million, and in the next year, a special Covid-19 deferral policy being considered could mean 11,000 property owners delay paying rates totalling $85 million.

Town, in his staff email, has portrayed the impact on council finances as longer-term.

'Even if we return to ‘normal’ tomorrow, the damage to the economy is considerable, and this will continue to have a profound effect on our income (rates and non-rates revenue) for several years to come,' he said.