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Report: Increasing the minimum wage v.s. job losses

7 August 2014 6 comments

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PUT-THE-POLITICIANS-ON-MINIMUM-WAGE-AND-WATCH-HOW-FAST-THINGS-CHANGE

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Introduction

Labour recently announced a policy which evidence strongly indicates will impact positively on every low-wage earner in this country; families;  as well as benefit small-medium businesses;

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Labour pledges $2 rise in minimum wage to $16.25

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The knee-jerk reaction from Dear Leader Key and his little wannabe side-kick, Simon Bridges, was as predictable as the sun rising;

Key hit back at the announcement.

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New Zealand already had the highest minimum wage relative to the average wage in the developed world, he said.

Pushing it up too too fast would cost jobs.

“It’s pretty well documented around the world that, yes, you can make changes and do that over time but if you think about the mass of employers in New Zealand they’re not the big companies like Fletcher Building or Fonterra they’re actually the hundreds of thousands of small businesses around New Zealand and they simply will employ less staff, fire people or ultimately not take on staff in the future.”

Labour Minister Simon Bridges, reiterated Key’s claims, saying the policy would hurt businesses.

“Labour’s policy to immediately increase the minimum wage to $16.25 would cost at least 6000 jobs … If you want to make people unemployed this is a good way to go about it,” he said.

So how true is it that raising the minimum wage “would cost 6,000 jobs”?

As far back as November 2011 (the previous election campaign)  Key repeated the mantra  that  6,000 jobs would be lost if Labour increased  the minimum wage to $15 an hour.

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raising-minimum-wage-wont-cost-jobs-treasury

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However,  those bright young things at Treasury  seemed to hold a radically different view;

The Department of Labour says the rise will cost 6000 jobs. But Treasury has a counter view; “This has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs.

Indeed, according to a report on the Australian Business Insider, the notion that increasing minimum wages led to unemployment was “exploded as a myth”, after it was revealed that;

“…  a November 2011 study from Barry Hirsch and Bruce Kaufman of Georgia State University and Tetyana Zelenska sheds light on how businesses respond to increases in labour costs, and the results were surprising. 

The group surveyed managers of fast food restaurants in Georgia and Alabama as they contended with three annual increases in the federal minimum wage between July 2007 and July 2009. 

They asked the managers if they were taking any steps to offset increases labour costs. 

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…only 8 per cent of managers surveyed thought that firing current employees was at all important to make up for lost wages. 

Indeed, raising the minimum wage allowed management to extract more performance from current employees in more than half of all cases. 

Higher labour costs weren’t only offset from cuts to total labour cost, either. Management also took several steps to increase efficiency and productivity to compensate for the higher costs… “

The Georgia State University study also asserted (page 31);

Further, our study does not find evidence of clear-cut employment losses – even
over three years and a 41% increase in the MW. Possibly over a still longer time span, or with a larger
sample of restaurants, a negative effect might appear. Discussion with owners and evidence outside our
study period suggest that negative effects may manifest through reduced store openings and increased risk
of store closings. Given this important qualification, the message from our study, along with other results
in the literature, is that employment effects in the short-to-medium run are small, perhaps near zero in
many settings, and certainly smaller than expected based solely on the competitive model. It would be
surprising (at least to us) were an important reason for this result not the behavioral dimensions of wage
setting and human resource management (e.g., discretionary effort, equity concerns, management heterogeneity)
 that the standard competitive and monopsony models largely ignore.

The data

Here in New Zealand, the minimum wage has risen fifteen times since March 2000;

Previous minimum wage rates

In force from: ADULT YOUTH TRAINING
1 March 1997 $7.00 $4.20
6 March 2000 $7.55 $4.55
5 March 2001 $7.70 $5.40
18 March 2002 $8.00 $6.40
24 March 2003 $8.50 $6.80 $6.80
1 April 2004 $9.00 $7.20 $7.20
21 March 2005 $9.50 $7.60 $7.60
27 March 2006 $10.25 $8.20 $8.20
1 April 2007 $11.25 $9.00 $9.00

 

In force from: ADULT NEW ENTRANT TRAINING
1 April 2008 $12.00 $9.60 $9.60
1 April 2009 $12.50 $10.00 $10.00
1 April 2010 $12.75 $10.20 $10.20
1 April 2011 $13.00 $10.40 $10.40
1 April 2012 $13.50 $10.80 $10.80
1 April 2013 $13.75 $11.00 $11.00

 

In force from: ADULT STARTING OUT TRAINING
1 May 2013[4]
n/c
$11.00
n/c
1 April 2014 $14.25 $11.40 $11.40

 

Notes:

  1. From 2001 to 2008 the adult minimum wage applied to employees aged 18 years and over. Prior to that, the adult minimum wage only applied to those aged 20 years and over. From 1 April 2008, the adult minimum wage applies to employees aged 16 years and over, who are not new entrants or trainees.

  2. The youth minimum wage applied to employees aged 16 and 17 years. From 1 April 2008, the youth minimum wage was replaced with a minimum wage for new entrants, which applies to some employees aged 16 or 17 years.

  3. The training minimum wage was introduced in June 2003.

  4. From 1 May 2013 the minimum starting-out wage replaced the minimum wage for new entrants and the training minimum wage for trainees under 20 years of age.

[Above chart and information-notes courtesy of MoBIE/Dept of Labour]

So how do those increases compare to our employment/unemployment rates? Let’s superimpose the dates for each increase in the adult minimum wage with numbers of  employed persons. (Red vertical bars indicate increase in minimum wage. All data courtesy of Dept of Labour/MoBIE.)

6 March 2000 – Increased from $7.00 to $7.55 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2000NEW ZEALAND UNEMPLOYED PERSONS - 2000

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5 March 2001 – Increased from $7.55 to  to $7.70 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2001NEW ZEALAND UNEMPLOYED PERSONS - 2001

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18 March 2002 – Increased from  $7.70 to $ 8.00 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2002NEW ZEALAND UNEMPLOYED PERSONS - 2002

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24 March 2003 – Increased from   $ 8.00 to $8.50 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2003NEW ZEALAND UNEMPLOYED PERSONS - 2003

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1 April 2004 – Increased from  $8.50 to $9.00 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2004NEW ZEALAND UNEMPLOYED PERSONS - 2004

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21 March 2005 – Increased from  $9.00 to $9.50 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2005NEW ZEALAND UNEMPLOYED PERSONS - 2005

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27 March 2006 – Increased from  $9.50 to 10.25 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2006NEW ZEALAND UNEMPLOYED PERSONS - 2006

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1 April 2007  - Increased from 10.25 to $11.25 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2007NEW ZEALAND UNEMPLOYED PERSONS - 2007

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1 April 2008   - Increased from  $11.25 to $12.00 p/h

(Labour)

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NEW ZEALAND EMPLOYED PERSONS - 2008NEW ZEALAND UNEMPLOYED PERSONS - 2008

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1 April 2009   - Increased from $12.00 to $12.50 p/h

(National)

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NEW ZEALAND EMPLOYED PERSONS - 2009NEW ZEALAND UNEMPLOYED PERSONS - 2009

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1 April 2010   - Increased from $12.50 to $12.75 p/h

(National)

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NEW ZEALAND EMPLOYED PERSONS - 2010NEW ZEALAND UNEMPLOYED PERSONS - 2010

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1 April 2011   - Increased from  $12.75 to $13.00 p/h

(National)

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NEW ZEALAND EMPLOYED PERSONS - 2011NEW ZEALAND UNEMPLOYED PERSONS - 2011

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1 April 2012   - Increased from $13.00 to $13.50 p/h

(National)

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NEW ZEALAND EMPLOYED PERSONS - 2012NEW ZEALAND UNEMPLOYED PERSONS - 2012

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1 April 2013   - Increased from  $13.50 to $13.75 p/h

(National)

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NEW ZEALAND EMPLOYED PERSONS - 2013NEW ZEALAND UNEMPLOYED PERSONS - 2013

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The above graphs reveal the following;

  1. In eleven out of fourteen years, numbers of employed rose after a minimum wage increase.
  2. Nearly all the years which show a fall in employment numbers are post-Global Financial Crisis; 2009, 2010,  and 2012.
  3. The fall in employment numbers in 2009, 2010, and 2012, occurred post-minimum wage increases which were smaller amounts than pre-2008 minimum wage increases. Ie; 50 cents, 25 cents, and 50 cent incremental increases for respective years 2009, 2010, and 2012.
  4. One of those three years – 2010 – showed a drop in employment for only one Quarter before rising again.
  5. By contrast, increases between 2000 and 2008 range from 15 cents an hour (2001) to $1 an hour (2007) – and show continuing, sustained, employment growth.
  6. Employment fell in 2006, due in part to  a “… slowing in growth over 2005 was largely driven by the external sector.  A relatively high exchange rate and some relatively poor agricultural production seasons resulted in weak export growth, while a strong domestic economy contributed to considerable growth in import volumes.  Recently, however, growth in the domestic economy appears to have eased with weakness in the household sector as growth in private consumpti on and residential investment slow.  This has led to a significant slowing in import volume growth and has seen some rebalancing towards net exports following strong increases in agricultural production“.

So would increasing the minimum wage benefit every low-wage earner in this country; families;  as well as benefit small-medium enterprises (SMEs)?

Why do critics – usually adherents of neo-liberal dogma and National Party ministers, supporters,  and fellow-travellers – vociferously deny the advantages of raising the minimum wage?

Neo-liberals who maintain that increasing the minimum wage creates job losses see only one half of the Grand Picture. They see money flowing from employers to employees – and that’s as far as they see what is happening.

What they are missing is the second half of the Grand Picture; those employees do not bury their extra pay in the back yard, forever consigning it to the earth as compost.

Instead, employees spend their pay increases.

There are currently 54,600 workers currently on minimum wage in this country.

Increasing the minimum wage from $14.25 per hour to $16.25 per hour means an extra $80 per week for a worker (gross). That means 54,600 workers’ spending power increasing by a staggering $4,368,000 per week (gross).

That’s a whole lot of extra groceries, clothing, shoes, appliances, medication,  and other essentials and  consumer goods being purchased in our economy.

All of a sudden, small-to-medium businesses will have 54,600 potential customers spending an extra $227,136,000 annually(gross). Plus additional tax-revenue gained by the State. Plus less paid on welfare, as more people are employed.

Right-wingers will make the oft-parroted, plaintive cry, “But where will the money come from?”

The answer; from the productivity created by those 54,600 workers. They just get to keep more of that productivity, instead of  into the bank accounts of invisible share-holders or disappear off-shore to corporate owners.

And as those 54,600 workers spend more, SMEs will sell more; which will mean higher turn-over; more profits; more investment; more jobs…

The logic is clear-cut; increasing the minimum wage increases spending power; generates more economic activity; and achieves the same goal which Key & Co used to justify their 2009 and 2010 tax-cuts;

 “…The tax cuts we have delivered today will inject an extra $1 billion into the economy over the coming year, thereby helping to stimulate the economy during this recession. More important, over the longer term these tax cuts will reward hard work and help to encourage people to invest in their own skills, in order to earn and keep more money.”

If  tax cuts for the rich can help “stimulate the economy“, then so can a livable wage increase for 54,600 low income earners.

It cuts both ways.

Even as Key has stated on numerous occassions,

 

We think Kiwis deserve higher wages and lower taxes during their working lives, as well as a good retirement.” – John Key, 27 May 2007

We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008

I don’t want our talented young people leaving permanently for Australia, the US, Europe, or Asia, because they feel they have to go overseas to better themselves.” – John Key, 15 July 2009

Science and innovation are important. They’re one of the keys to growing our economy, raising wages, and providing the world-class public services that Kiwi families need.” – John Key, 12 March 2010

We will also continue our work to increase the incomes New Zealanders earn. That is a fundamental objective of our plan to build a stronger economy.” – John Key, 8 February 2011

We want to increase the level of earnings and the level of incomes of the average New Zealander and we think we have a quality product with which we can do that.” –  John Key, 19 April 2012

Summation

Evidentially speaking, the data above shows;

  1. More often than not, employment numbers rise after an increase in the minimum wage.
  2. Unemployment is affected by factors other than minimum wage increases (eg; Global Financial Crisis, drought, etc).
  3. Labour increased the minimum wage $5 per hour (2000 to 2008), and unemployment dropped to 3.4% by December 2007.
  4. National increased the minimum wage  $2.25 per hour  (2009 to 2014)  and unemployment currently stands at 6% (new unemployment stats due for release on 6 August).

Key’s assertion that lifting the minimum wage would lead to “6,000 jobs lost” is therefore patently false, and electioneering with peoples’ lives.

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References

Fairfax media:  Labour pledges $2 rise in minimum wage to $16.25

TV3: Raising minimum wage won’t cost jobs – Treasury

Australian Business Insider: A 2011 Study Exploded One Of The Biggest Fears About Raising The Minimum Wage

Georgia State University: Minimum Wage Channels of Adjustment

MoBIE/Dept of Labour:  Previous minimum wage rates

NZ Treasury: New Zealand Economic and Financial Overview 2007

MoBIE/Dept of Labour:  Employment & unemployment – December 2007

Statistics NZ: Household Labour Force Survey: March 2014 quarter

MoBIE: Minimum Wage Review Report 2013

NZ Parliament: Tax Cuts—Implementation

Trading Economics: New Zealand Employed Persons

Trading Economics: New Zealand Unemployed Persons

 

Previous related blogposts

John Key’s track record on raising wages – 5. The Minimum Wage

Dollars and common sense – raising the minimum wage

Treasury’s verdict on raising the Minimum Wage?

Treasury’s verdict on raising the Minimum Wage? – Part II

 

 


 

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Living Wage

Above image acknowledgment: Francis Owen/Lurch Left Memes

This blogpost was first published on The Daily Blog on 3 August 2014

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Radio NZ: Nine To Noon – Election year interviews – David Cunliffe

26 February 2014 Leave a comment

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- Radio NZ, Nine To Noon -

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- Wednesday 25 February 2014 -

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- Kathryn Ryan -

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On  Nine To Noon, Kathyrn Ryan interviewed Labour’s leader, David Cunliffe, and asked him about coalition negotiations, policies, polls, and other issues…

 

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Radio NZ logo -  nine to noon

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Click to Listen: Election year interviews (27′ 50″ )

A major policy statement by David Cunliffe;

@ 22.00:  “We will create incentives for private employers to be certified living wage employers, who pay the living wage  to all their employees, by giving them a preference in  Crown contracts.”

This will not only support firms that pay their staff properly – but will de facto give preference to local businesses to supply goods and services!

If this doesn’t motivate Small-Medium Enterprises to switch their allegiances from the Nats to Labour, I don’t know what will!

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Radio NZ: Politics with Matthew Hooton and Mike Williams – 10 February 2014

10 February 2014 Leave a comment

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- Politics on Nine To Noon -

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- Monday 10 February 2014 -

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- Kathryn Ryan, with Matthew Hooton & Mike Williams -

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Today on Politics on Nine To Noon,

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Click to Listen: Politics with Matthew Hooton and Mike Williams (22′ 58″ )

  • John Key’s meeting with Tony Abbott
  • CER,  Aussie supermarkets boycotting NZ-made goods
  • migration to Australia
  • low wages, minimum wage
  • National Party, Keith Holyoake
  • paid parental leave, Working for Families, Colin Espiner
  • Waitangi Day, Foreshore & Seabed, deep sea oil drilling, Nga Puhi
  • MMP, “coat tailing”, Epsom, Conservative Party, ACT
  • Len Brown, Auckland rail link

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That was Then, This is Now #22 – Lowest wages vs Highest wages

31 January 2014 3 comments

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TWT TIN 22

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This blogpost was first published on The Daily Blog on 24 January 2014.

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Previous related blogpost

That was Then, This is Now #21 – Increasing Govt Charges for Services: Labour vs National

References

Fairfax Media: PM – No money for aged care workers

NZ Herald:  PPTA ‘cautiously optimistic’ over school leadership changes

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Why the Remuneration Authority just doesn’t get it

27 December 2012 20 comments

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PUT-THE-POLITICIANS-ON-MINIMUM-WAGE-AND-WATCH-HOW-FAST-THINGS-CHANGE

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When you read media stories like this, you know that Alice has company in Wonderland,

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MPs pay rise less than other workers - authority

Full story

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(Or is it La La Land?!)

When Remuneration Authority, chief executive John Errington says,

Since fiscal year 2009 general salaries and wages have increased by 5.6 per cent and the Consumers Price Index has increased by 8 per cent. Parliamentary salaries . . . have increased by only 2.9 per cent. This still leaves members of Parliament receiving lower remuneration increases than the general population.

See: IBID

For the record, the increases mean the following,

$419,300 Prime Minister ($7790 increase)
$297,400 Deputy PM ($5600)
$262,700 Crown ministers, the Speaker, Leader of the Opposition ($4900)
$158,700 Party leader base salary ($3000)
$144,600 Backbench MPs ($2800)
$52,676 average NZ wage

See: Christmas rise gives PM $3900 backpay, $150 more a week

On top of which, the increases,

  •  are back-dated to 1 July 2012
  •  exclude a $2,000 increase in 2011, and a $5,000 increase in 2011, to “compensate MPs for the loss of their international travel perk and a significant drop in their domestic travel bill”
  • exclude a $24,000 a year subsidy toward their rent/accommodation in Wellington
  • exclude $16,100 a year for expenses such as new luggage, flowers, gifts, memberships, and meals.

Nice work if you can get it.

Meanwhile, back in the Real World,

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Resthome spy hails saint-like workers

Full story

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When the Prime Minister, our very own Dear Leader, John Key was presented with the situation of rest home workers being paid an apalling figure of around $14.61 an hour, his response was,

“Travel is one of those areas where we are looking at what we can do,” he told TVNZ’s Breakfast programme.

However, the Government could not afford to give DHBs the $140 million required to enable rest homes to pay their staff more.

It’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.

“You could certainly change the proportion of where you spend money in health. We spend about $14.5 billion in the overall health sector.

“What’s going to go to pay the increase in this area? If you said all of the increase is going to go into this area, that would be roughly $600m over the forecast period which is four years… So that would have left us $1bn for other things.

“We put the money into cancer care and nursing and various other things. On balance, we think we got that about right.”

See: PM: No money for aged care workers

Interesting that there is plenty of tax-money for subsidising businesses; rugby world cup tournaments; politician’s salaries and perks – but when it comes to the lowest paid, hardest working, people in our society  – Key’s response is; ” It’s one of those things we’d love to do if we had the cash “.

Yup. It’s La La Land.

Here’s a thought; why not link the minimum wage to that of Members of Parliament?

So when politicians get a pay increase – so do those at the bottom of the economic ladder.

In fact, let’s make it a point that any increase also applies to those earning minimum wages receiving similar perks to politicians; eg; travel and food subsidies, in the form of   weekly vouchers for petrol, food, and electricity.

The lowest paid people in our society might actually start looking forward to salary and perks increases for our MPs and Ministers. And MPs would have a whole new fanclub.

What are the chances?

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Previous related blogposts

Roads, grandma, and John Key

John Key’s track record on raising wages – 4. Rest Home Workers

Aged Care: The Price of Compassion

References

Fairfax media: Resthome spy hails saint-like workers

Fairfax media: PM: No money for aged care workers

Fairfax media: MPs pay rise less than other workers – authority

NZ Herald: Christmas rise gives PM $3900 backpay, $150 more a week

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Aged Care: The Price of Compassion

16 November 2012 17 comments

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Rest home care workers are amongst the lowest paid in the country. At around $14-$15 an hour, they are paid a pittance for the important work they do; caring for aged New Zealanders in the twilight of their lives. They tend to our parents and grandparents, keeping them safe, clean, and offering human  companionship at a time when many elderly have less and less contact with the community.

On 1 March of this year, rest home workers went on strike, campaigning to raise their wages from the pathetic $14.61 an hour they were being being. The following pics were of striking rest home workers in Upper Hutt,

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1 march 2012 - striking rest home workers - SFWU - Nurses Organisation - Upper Hutt - Elderslea

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1 march 2012 - striking rest home workers - SFWU - Nurses Organisation - Upper Hutt - Elderslea

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1 march 2012 - striking rest home workers - SFWU - Nurses Organisation - Upper Hutt - Elderslea

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1 march 2012 - striking rest home workers - SFWU - Nurses Organisation - Upper Hutt - Elderslea

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See previous blogpost: 1 March – No Rest for Striking Workers!

A month and a half later, Ryman Healthcare – one of the largest providers for aged care in New Zealand – announced a record $84 million profit, for the year ending 31 March 2012. This  was  an increase of  17% on the previous financial year.

For ten years in a row,  Ryman had posted  record profits. Quite clearly this industry is not short of a ‘bob or three’.

Chairman Dr David Kerr said “the company faced some major challenges in Christchurch over the past 18 months given the earthquakes, and had responded with a performance which had exceeded its own targets “.

See: Record profit for Ryman

So obviously productivity was not a problem for Ryman.  A 17% increase in products – in an otherwise stagnant economy and continuing global financial downturn – shows that the aged care industry is doing very nicely.

On 28 May, Human Rights Commissioner, Dr Judy McGregor, did something that few office-bound  state sector workers do; she went undercover to discover for herself what kind of working conditions rest care workers put up with for $14.61 an hour,

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Full Story

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As Dr McGregor stated,

The complexity of the job was actually a surprise for me. It’s quite physical work, and it’s emotionally draining because you are obliged to give of yourself to other people.  Saint-like women do it every day so that older New Zealanders can have a quality of life.

I’m not sure if I could have. I’m not sure I had the physical stamina and I didn’t want to hurt someone.

On any given shift you would be in charge of six, seven older people, and you would have to wake them, get them up, get them showered, get them toileted, feed them, and the whole time you were conscious that you had another five to go on your shift. It’s like working constantly to deadline.

The reliance of New Zealand, of all of us, on the emotional umbilical cord between women working as carers and the older people they care for at $13-14 an hour is a form of modern-day slavery,” she said in the report.

It exploits the goodwill of women, it is a knowing exploitation. We can claim neither ignorance nor amnesia.”

See: Ibid

National’s Associate Health Minister Jo Goodhew replied,

It is important that we take this seriously, that we look at it carefully and we look at what we are doing and what we can do before we provide a considered response.”

However, Dear Leader Key would have none of that, and firmly squashed any suggestion of paying rest home care workers decent wages.  Only a few hours after Jo Goodhew announced that this was a problem demanding that “ we look at it carefully “, her boss stated bluntly,

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Full story

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So there we have it. According to Dear Leader,

It’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.”

Falling in line,   Goodhew, conceded that whilst aged care workers were paid at  “lower end“,  she  rejected suggestions that they were being exploited,

I personally don’t believe we should be describing it as modern-day slavery.”

See: Ibid

Gosh, that’s ‘big’ of her. It’s not “ modern-day slavery “.

I wonder what she’d call it?

Especially when it was announced todat that Lo! And Behold! Ryman had posted yet another profit!?!? This time a record half-yearly profit (from 1 April),

The company added another notch to its 10-year sharemarket performance of climbing profits by posting a record half-year profit after tax of $69 million. Its share price rose 6 cents to close at $4.14.

Shareholders will receive an 18 per cent higher dividend for the half-year of 4.6 cents a share. All up, about $23 million in dividends is going to shareholders in the first half. “

See: Ryman plans cautious Aussie debut

Since listing in June 1999, Ryman Healthcare has delivered its shareholders a total return, which includes share price appreciate and dividends, of 1,043%, or 24.3%pa. By cracking the 1000% mark (i.e. returning 10 times the original investment) brokers will, with a good deal of admiration, refer to Ryman as a’10-bagger’.”  – Craigs Investment Partners

Wouldn’t it be nice if the $23 million being paid to shareholders was  instead paid  to the care workers who actually did the hard work?

Who is it that looks after granny and/or grandad – the “Saint-like women do it every day so that older New Zealanders can have a quality of life“?

Or some shareholders sitting on their arses and sipping  chardonnay?

Here’s a thought for Middle Zealand, politicians, and Ryman shareholders; the course of  Nature will not be deviated. Every one of us is growing older.

(You can see where I’m heading with this.)

There will come a time when Middle Zealand, politicians, and Ryman shareholders, and the rest of us will eventually require the services of aged care facilities.

Do we really want to be cared for by underpaid workers who may eventually give up any semblance of dedication to their job, and lose any measure of empathy for  aged folk in their charge? That rest home workers may finally one days have a gutsful of being exploited?

If we want to be treated well in our twilight years – shouldn’t we first be looking after those workers who will be caring for us?

John Key sez that paying rest home care workers is “one of those things we’d love to do if we had the cash“.

Rubbish. The money is there.

It’s just going to the wrong people.

C’mon New Zealand – sort it out!

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Previous related blogposts

1 March – No Rest for Striking Workers! (1 March 2012)

No Rest for the Wicked (23 March 2012)

“It’s one of those things we’d love to do if we had the cash” (28 May 2012)

Roads, grandma, and John Key (18 July 2012)

John Key’s track record on raising wages – 4. Rest Home Workers (11 November 2012)

Sources

Record profit for Ryman (17 May 2012)

PM: No money for aged care workers (28 May 2012)

Resthome spy hails saint-like workers (28 May 2012)

Ryman plans cautious Aussie debut (16 Nov 2012)

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John Key’s track record on raising wages – 6. Youth Rates

11 November 2012 6 comments

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Continued from: John Key’s track record on raising wages – 5. The Minimum Wage

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6. Youth Rates

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When Labour was elected into government in 1999, replacing the highly unpopular Shipley-led National administration, one of their first actions was to radically reform the  Youth Rate,

  1. From 2001 to 2008 the adult minimum wage applied to employees aged 18 years and over. Prior to that, the adult minimum wage only applied to those aged 20 years and over.
  2. From 1 April 2008, the adult minimum wage applies to employees aged 16 years and over, who are not new entrants or trainees.
  3. The youth minimum wage applied to employees aged 16 and 17 years. From 1 April 2008, the youth minimum wage was replaced with a minimum wage for new entrants, which applies to some employees aged 16 or 17 years.
  4. The training minimum wage was introduced in June 2003.

See: Dept of Labour – Previous minimum wage rates

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Source

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It did not appear to unduly impact on unemployment, which consistantly tracked downward in the 2000s, until the down-turn caused by the Global Financial Crisis began to impact on our economy, in 2007/08.

On 9 October, Labour Minister Kate Wilkinson announced that National intended to introduce a new Youth Rate, to take effect in April, next year. The rate would be set at $10.80 an hour – compared to the minimum rate of $13.50 an hour currently, and would include 16 to 19 year olds.

As Scoop.co.nz reported,

That equates to $10.80 an hour, or $432 before tax for a 40-hour week. From April next year, the ‘Starting Out Wage’ will apply to 16- and 17-year-olds in the first six months of a job, to 18- and 19-year-olds entering the workforce after spending more than six months on a benefit, or 16 to 19-year-olds in a recognised industry training course.”

See: NZ teens face $10.80 an hour youth wage rate

It is doubtful if National’s Youth Rate will actually create new jobs. More likely, a drop in youth wages will simply create more ‘churn’ in employment/unemployment numbers.

As David Lowe, Employment Services Manager for the Employers and Manufacturers Association, inadvertently revealed,

Without an incentive an employer with a choice between an experienced worker and an inexperienced worker will choose experience every time.”

See: Starting-out wage will help young people onto job ladder

So there’s no new job for the  younger worker – s/he is merely displacing an older worker. Which probably results in  older workers joining the migration to Australia.

End result; a loss of skill and experience for New Zealand, and a gain for our Aussie cuzzies.

Nice one, Mr Key. Remind us when you took on the role of staff recruiter for Australia?

On top of this, we have this bizarre rationale from Kim Campbell, CEO of the Employers and Manufacturers Association, who is arguing that young people should be paid less because they have less to pay for. I kid you not.

She said,

Remember these people are not raising a family or running a household on this money –nobody expects them to – but it does give them some money to get started on.”

Campbell’s remark are offensive on several levels.

Firstly, National’s intention to return to  Youth Rates for 18 and 19 year olds, as well as 16 and 17 year olds, is simply unreasonable. These people are  young adults, and those studying  at  polytech and  University Students will soon be earning less,  even while having to pay Student fees; course-costs; and living expenses like rent, food, power, and other financial committments.

Secondly, 18 and 19 year old are as able to have families as their older counterparts.

Thirdly, by what logic is it of  Ms Campbell’s business  that “these people are not raising a family or running a household on this money“?! It’s none of her damned business what 18 and 19 year olds spend their wages on.

Conversely, does that mean Ms Campbell will encourage companies to pay a higher,  living wage,to those workers who do happen to have families?!

Yeah, right.

If  National has a secret agenda to motivate more young people to head overseas, such a plan will succeed beyond their wildest dreams.

18 and 19 years olds – old enough to get married; old enough to get drunk; old enough to get killed in a warzone – but not old enough to be paid the same adult rate as a 20 year old?

National should take note;  it’s true that 16 and 17 year olds can’t vote.

But 18 and 19 year olds can – and do. I bet they just can’t wait to vote at the next election.

And precisely how does this raise wages, as per Dear Leader’s promises?

Next chapter: 7. Part 6A – stripped away

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Addendum

In June last year  Prime Minister John Key said the prospect of a new youth rate was unlikely,

“I don’t think there’s a high probability. Whether we’d actually bother embarking on that it’s far too early to say.”

Source: Govt reintroduces youth wage

Ten months and one election later, preparations are under way to legislate.

Is ten months “to early to say“?

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