Archive
Tips from Paula Bennett on how to be a Hypocrite
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Recent comments by Paula Bennett regarding introducing tipping to New Zealand are more revealing of National’s contempt for workers than most realise.
On 22 May, Bennett was reported as promoting tipping for reasons that – on the face of it – sound reasonable, but are questionable;
“ If you receive excellent service, you should tip. I don’t think that tipping should be mandatory in New Zealand, but I do think that we shouldn’t tell people not to tip when they come here, which we did for a while.
People will enjoy their work more and get paid more – it’s plus plus plus.I don’t want us to turn into that mandatory tipping for people just to survive, but I do think if we reward good service it’s going to make everyone smile a bit more.”
“Smile a bit more”? “People will enjoy their work more”?
Perhaps in Bennett’s narrow world, hermetically-sealed in Parliament with her ministerial salary; perks; golden superannuation; and tax-payer-funded housing.
To put Bennett’s comments into some context, in March 2012 NZ Herald journalist, Fran O’Sullivan gave us a glimpse of her privileged life;
My sense is that Bennett always knew how to work the system to her advantage – and good for her. Let’s face it, at the time she went on to the domestic purposes benefit in 1986, knowing how to rort the system was a national sport.
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At just 17, she gave birth to her only child, a daughter she named Ana. Just two years later, she got a Housing Corporation loan to buy a $56,000 house in Taupo. All of this while on the domestic purposes benefit.
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Bennett was also fortunate in getting a training allowance to go to university when her daughter was 8. Her backstory suggests that she was still on a benefit while studying.
The Training Incentive Allowance that paid for Bennett’s university education meant she was not lumbered with any of the $15 billion debt that 728,000 other Kiwi students are now facing. Her tertiary education was free.
This would not be a problem – except that one of Bennett’s first acts on becoming social welfare minister was to remove the same Training Incentive Allowance that she used to put herself through University;
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Evidently, Bennett’s working life was “too exhausting” and she made a “career move” back onto the DPB;
“ Then I pretty much fell apart because I was exhausted. I went back on the DPB.”
In opting to chuck in her paid job and return to the DPB, she became an oft-parroted cliche that many on the Right – especially National/ACT supporters – often accuse welfare beneficiaries for.
From being an on-again-off-again beneficiary on the DPB, in 2005 Bennett became a beneficiary of the Parliamentary Service and she entered Parliament on the National Party List.
Today, as Deputy PM, the tax-payer is responsible for meeting her $326,697 p.a. salary, plus free housing, and other perks.
It would be a fair guess that Bennett does not require tipping to make up her weekly pay packet, to meet the necessities of life that many other New Zealanders find challenging in the 21st Century;
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In 2007 – and for the following five years – the former Dear Leader, John Key, constantly made eloquent speeches on raising the incomes of New Zealanders;
“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
“We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere. To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.” – John Key, 6 September 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
“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, 21 December 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
Who would have thought that Key’s goal of raising wages would be achieved… with tips.
It speaks volumes about National’s disconnect with the working men and women of this country, that the best that our generously paid Deputy Prime Minister can come up with is that raising wages should be dependent on the largesse of others.
Is this the essence of National’s ambition for New Zealanders? That not only should we be tenants in our own country –
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– but that we should be paid as such?
On 18 April, our new Dear Leader, Bill English announced a $2 billion pay increase for under paid care and support workers in the aged and residential care sector.
However, there appears to be a ‘fish hook’ in the much trumpeted announcement;
“ Cabinet today agreed to a $2 billion pay equity package to be delivered over the next five years to 55,000 care and support workers employed across the aged and residential care sector.”
The pay increase will be “delivered over the next five years“.
On 22 April I wrote to Health Minister Coleman asking, amongst other things;
To date, Minister Coleman’s office has put off replying, stating that his office was busy and “response times vary between 4 – 6 weeks but also depend on the Minister’s schedule and availability“. (More on this later.)
Perhaps aged and residential care sector workers should ask for tips in the meantime, from their clients?
According to the website Numbeo.com, New Zealand wages have not kept pace with our nearest neighbour;
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Former Dear Leader Key’s grand ambition of matching Australia’s income levels have remained illusory.
In fact, despite heightened economic activity through immigration and the Christchurch re-build, wages have remained suppressed. As Head of Trade Me Jobs, Jeremy Wade, said in April this year;
“ We’re seeing small increases in average pay across growth industries such as Construction and Customer Service, but overall wages aren’t matching demand.
The number of roles advertised has exploded in recent months which in turn means that the average number of applications per role has dropped 13 per cent on this time last year. Job hunters can be more selective, which makes it harder to fill these roles.
Some employers have looked to immigration channels to address this shortage. Immigration alone won’t correct the shortfall, though it may be suppressing wage growth… ”
“Immigration… may be suppressing wage growth“.
There is no “may” about it. Immigration is suppressing wage growth. The simple laws of market supply & demand dictate that in times of “low” unemployment, wages will rise as the supply of workers does not meet demand.
This is not some marxist-leninist tenet. This is core doctrine of the Free Market;
The law of supply and demand is the theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply and demand defines the effect the availability of a particular product and the desire (or demand) for that product has on price. Generally, a low supply and a high demand increases price, and in contrast, the greater the supply and the lower the demand, the lower the price tends to fall.
The only way that the price of labour can be suppressed is to increase the supply of labour. National has opened the floodgates of immigration, increasing the number of workers, and hence the price of labour has remained suppressed (also incidentally fuelling increasing housing demand, ballooning prices, and construction in Auckland).
There is a grim irony at play here.
National has exploited high immigration to generate economic activity and National ministers continually boast to the electorate that they have boosted economic activity;
“ Despite the dairy sector continuing to be under pressure, other sectors are performing well and contributing to an overall solid rate of economic growth.” – Bill English
“ We are the fifth fastest growing economy last year in the developed world. That’s unexpected.” – Steven Joyce
“ That’s why the good economic growth we’re seeing with rising incomes and a record number of jobs available is the best way this Government can help New Zealanders. ” – Paula Bennett
“ The New Zealand economy is diverse and dynamic. Strong GDP and job growth, together with the impact of technology, is driving change in every sector.” – Simon Bridges
But the same immigration that has generated that economic “growth” has also suppressed wages. National’s exploitation of high immigration to pretend we have “high economic growth” may have worked. But the unintended consequence of suppressed wages is now starting to haunt them.
What to do, what to do?!
Enter Paula Bennett and her desperate plea for New Zealanders to tip each other.
Unfortunately, tipping each other is simply a band-aid over low wages. In the end, like a pyramid scheme, the money-go-round of tipping fails to generate long term wage increases and we are back at Square One: low paid jobs and no prospects for improvement.
To compensate for chronic low wages, Labour introduced Working for Families in 2004. This became a means by which the State subsidised businesses to ensure that working families had some measure of a livable income.
Bennett’s lame suggestion – tipping – does not even pretend to come close to Labour’s solution.
Perhaps that is because National are in a quandry; cut back immigration to raise wages? That would wind back economic growth. Increase immigration to boost economic growth – and have wages stagnate.
This is what results when a political party with the unearned reputation of being “good economic managers” is revealed to being a fraud. Their short-term, unsustainable, “sugar-hit” policies eventually catch up with them.
Here’s a tip for you, Paula; saying silly things in election year is not helpful.
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References
Fairfax media: Deputy PM Paula Bennett calls for more tipping
NZ Herald: Fran O’Sullivan – Bennett knows about life on Struggle St
NZ Herald: Student loan debt – 728,000 people owe nearly $15 billion
NBR: Bennett cutting a benefit that helped her – Labour
NZ Herald: Bennett rejects ‘hypocrite’ claims
NZ Doctor: Bennett denies women same education support she had
Scoop media: John Key – Speech to the Bluegreens Forum
Beehive: Key Notes – Boosting Science and Innovation
Beehive: John Key – Speech from the Throne
Fairfax media: Key wants a high-wage NZ
NZ Herald: PM warns against Kiwis becoming ‘tenants’
TVNZ News: Cabinet agrees to $2 billion pay equity package for ‘dedicated’ low-paid care workers
Numbeo: Cost of Living Comparison Between Australia and New Zealand
Trade Me: New Zealand job market booming but wages languish
Investopedia: Law Of Supply And Demand
Fairfax media: Record migration sees New Zealand population record largest ever increase
Fairfax media: New Zealand’s economic growth driven almost exclusively by rising population
Radio NZ: Billions for infrastructure reflects booming economy – Joyce
Fairfax media: Minister Paula Bennett – Challenge to house more people on taxpayer dollar
Kapiti Coast Chamber of Commerce: Minister of Economic Development Announces New Economic Data Tool
Wikipedia: Working for Families
Additional
The New York Times: Why Tipping Is Wrong
The Huffington Post: 9 Reasons We Should Abolish Tipping, Once And For All
Wikipedia: Paula Bennett
Other Bloggers
Martyn Bradbury – Paula Bennett’s call to tip is National’s new plan to subcontract out lifting wages without raising minimum wage
The Standard: Tipping vs fair wages
Previous related blogposts
Paula Bennett shows NZ how to take responsibility
Letter to the Editor: Was Paula Bennett ever drug tested?
Hon. Paula Bennett, Minister of Hypocrisy
Housing Minister Paula Bennett continues National’s spin on rundown State Houses
Why is Paula Bennett media-shy all of a sudden?
Health care workers pay increase – fair-pay or fish-hooks?
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Hat-tip for above cartoon: Anthony Robbins
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This blogpost was first published on The Daily Blog on 29 May 2017.
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Health care workers pay increase – fair-pay or fish-hooks?
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Some Context
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“ The National Government said that their signature 2010 income tax cut package would be ‘fiscally neutral’ — paid for increased revenues from raising GST. That hasn’t happened. The net cost for tax cuts has been about $2 billion.
[…]
When National claims it must cut spending for vital public services like health and education to control its borrowing, it carries much of the blame.” – former Green Party Co-leader, Dr Russel Norman, 14 May 2012
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“ 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.” – Judy McGregor, Equal opportunities commissioner, 28 May 2012
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“ 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.
[…]
We put the money into cancer care and nursing and various other things. On balance, we think we got that about right.” – John Key, former Prime Minister, 28 May 2012
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“ Cabinet today agreed to a $2 billion pay equity package to be delivered over the next five years to 55,000 care and support workers employed across the aged and residential care sector.”- Bill English, current Prime Minister, 18 April 2017
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The Announcement
On 18 April, Health Minister Dr Jonathan Coleman and Finance Minister, Bill English, announced that healthcare workers in the disability, residential care, and home/community support sector had successfully won their pay-equity claim;
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The response from the trade union movement was positive;
Unions representing care and support workers are pleased to be jointly announcing with government a proposed equal pay settlement to 55,000 workers across the aged residential, disability and home support sectors.
The proposed settlement is a huge win and will make a real difference in valuing the work of care and support workers and the people they support, workers in the sector say. It is a significant step in addressing gender inequality in New Zealand.
[…]
E tū Assistant National Secretary, John Ryall says the offer once ratified will mean a “once in a lifetime pay rise which will end poverty wages for this mainly female workforce and set them on the path to a better life. We’re delighted today’s proposed settlement recognises the justice of Kristine’s case and the wonderful work of Kristine and other professional carers.”
New Zealand Nurses Organisation Industrial Services Manager Cee Payne says that “This equal settlement delivers pay rates that truly reflect the skills and importance of the work that care and support workers undertake every day. Decent pay rates and the right to achieve qualifications will grow and retain skilled workers to care for our elderly. This will build public confidence that high quality care will be delivered to our families’ loved ones in our rest homes and hospitals.”
PSA National Secretary Erin Polaczuk says: “This settlement will make a real difference to our members. Our members in home support and disability support play a vital role in empowering people to live independent lives in their own communities. This settlement recognises the value of the work they do – and the people they support.”
Unions say the government is to be commended for agreeing to negotiate this settlement offer, rather than waiting for years before the legal process was finally exhausted.
However, there remain unanswered questions to this “deal”.
Questions raised
On 22 April I wrote to Health Minister Coleman;
On 18 April you announced that disability, residential care, and home and community support services will have their pay increased in a pay-equity settlement costing $2 billion over five years.
In your 18 April press release you stated;“A care and support worker on the minimum wage with three years’ experience and no qualifications will receive a 27 per cent increase in their hourly wage rate moving from $15.75 to $20 per hour from July 1. That rate would progressively increase to $23 by July 2021 and would rise further if they attain a higher qualification.”
I have some questions regarding this issue, namely;
1. Why was the settlement not back-dated when MPs automatically have their pay-increases backdated? Especially when negotiations with relevant parties was announced nearly two years ago on 20 October 2015 (by yourself) and has been on-going since.
2. Will workers who are deemed to qualify for pay-equity wage increases be determined solely by their employer?
3. What measures will be put in place to ensure that workers are paid appropriately and pay increases not arbitrarily with-held by employer(s)?
4. You state that the amount of $2 billion will be “spread over five years” and increases will be implemented incrementally over an annual basis. If so, how will that incremental amount be determined?
5. If the answer to Q4 is “yes”, will the planned increases be inflation-adjusted, to prevent any increase being watered-down by inflation?
6.Will the settlement amount be increased over time to compensate for annual rises to the Minimum Wage?
7. Will the equal-pay settlement and increase in wages have any impact on future Union-Employer wage negotiations? Or will future negotiations and demands for pay rises be considered a part of the pay-equity settlement?
8. Will NGOs who qualify for the pay equity settlement for their workers have their Budget-allocations cut in other areas?
9. How will pay rises for workers who quality for pay equity settlement impact on contract negotiations with relevant NGOs?
10. You state that “The $2.048 billion settlement over five years will be funded through an increase of $1.856 billion to Vote Health and $192 million to ACC. ACC levies are set for the coming years, but may possibly increase over the next decade to support this”. If ACC levies rise, will workers who qualify for the settlement be compensated for having to pay an increased ACC levy?
Call me a cynic, but I sense fish-hooks in the detail. When National cut taxes in 2010, they gave with one hand;
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– and took with the other;
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When it comes to fish-hooks, National has prior ‘form’. Even when National announces an ‘increase’ in social spending, it often takes that funding from other areas. Even special-needs children are not exempt from National’s shell-scam, as reported in The Daily Blog in August last year;
Education Minister, Hekia Parata, revealed that primary and secondary schools’ funding for special needs students would be slashed, and the money re-directed to under-fives. As Radio NZ explained;
The [Cabinet] documents also indicated the government would reduce the amount of special education funding spent in the school sector, and dramatically increase the amount spent on those under the age of five.
“Analysis of the spend by the age range of the recipient indicates that a disproportionate amount of the funds are for school-age children. This is despite clear evidence in some areas that early support can have greater benefits in terms of educational outcomes.”
As implications of Parata’s scheme began to percolate through the education sector, reaction was scathing.
I won’t be celebrating until I read the fine print and get some answers.
Watch out for…
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References
Infonews: Government’s 2010 tax cuts costing $2 billion and counting
Dominion Post: Resthome spy hails saint-like workers
TVNZ News: Cabinet agrees to $2 billion pay equity package for ‘dedicated’ low-paid care workers
Beehive: $2 billion pay equity settlement for 55,000 health care workers
NZCTU: Historic day as caregivers offered equal pay settlement
Beehive: Government to enter negotiations over pay for care and support workers
NZ Herald: Budget 2010 – Experts praise tax cuts for all
NZ Herald: GST rise will hurt poor the most
Fairfax media: Young workers out of pocket
Fairfax media: Prescription price rise hits vulnerable
Scoop media: Vulnerable children at risk from Family Court fees increase
Radio NZ: Govt to phase out ‘special needs’
Additional
Radio NZ: Settlement could help rest homes attract workers
Employment New Zealand: Previous minimum wage rates
NZ Herald: MPs’ pay rise officially confirmed
Radio NZ: MPs given 2.5 percent pay rise
Other Blogs
No Right Turn: A victory for women
The Daily Blog: Courts finally give the poorest workers what the Government wouldn’t and the Unions couldn’t
The Standard: Thank you health care workers
Werewolf: Gordon Campbell on the aged-care settlement
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)
Aged Care: The Price of Compassion (16 November 2012)
That was Then, This is Now #22 – Lowest wages vs Highest wages (31 January 2014)
The consequences of tax-cuts – worker exploitation? (31 October 2015)
Special Education Funding – Robbing Peter, Paul, and Mary to pay Tom, Dick, and Harriet (27 August 2016)
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This blogpost was first published on The Daily Blog on 23 April 2017.
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Foot in Mouth award – Former ACT MP exposes flaw in free-market system
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Meet Ken Shirley;
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Most folk won’t remember who Ken Shirley was, prior to his current ‘gig’ as CEO of the Road Transport Forum (RTF), representing road transport interests since July 2010.
From 1984 to 1990, Shirley was nominally a Labour Party MP. He was closely aligned with the likes of Roger Douglas, Richard Prebble, and other right-wingers who had seized control of the party during the 1980s.
From 1996 to 2005, Shirley was an ACT Party MP. As such, he was an acolyte of the neo-liberal school of economics and a strong adherent of free market forces. Part of ACT’s policies is to scrap the minimum wage.
Indeed, to under-score ACT’s abhorrence of the minimum wage, ACT’s current leader (and sole MP), David Seymour, condemned a recent rise in minimum wage levels. On 26 February this year, Seymour was scathing;
“The new $15.25 minimum wage will hit regional employers especially hard… In Auckland, $15.25 might not sound like much, but small businesses in the regions who generally charge less will struggle to bear the cost. Hikes to the minimum wage will discourage new employment, and lead to more lay-offs and business failures.
The first employees to suffer will be young, low-skilled workers who won’t be offered a chance to prove their worth. Pulling up the jobs ladder will only add to poverty in low-income areas.
This is a wage set for the distorted Auckland economy. Why should the rest of the country have to bear the same costs?”
[Fun Fact: As a Parliamentary Under-Secretary, Seymour is currently a taxpayer-funded beneficiary on a salary of $185,098 p.a. – which equates to nearly $89 per hour. One wonders if “small businesses in the regions who generally charge less will struggle to bear the cost” of Seymour’s salary?]
But returning to Ken Shirley; as an ex-ACT member of Parliament he is still most likely an advocate for the abolition of the minimum wage.
On 5 May, Shirley was invited to be a commentator on Radio NZ’s afternoon Panel, hosted by Jim Mora;
“Ken Shirley of the Road Transport Forum discusses what’s behind logging truck crashes and what needs to be done.”
At one point in the discussion, a suggestion was made that low wages in the trucking industry is not attracting the most highly-skilled and experienced workers;
@ 7.50
Jim Mora: “How bad do you think, Ken, is this situation with truck driving?”
Ken Shirley: “Oh, the spate we’ve had in Northland is just unacceptable. There’s no excuse for roll-over[s]. We know we have some difficult roads in New Zealand with topography, Northland’s is particularly difficult.
But there’s an obligation on the drivers and the forestry companies who hire the drivers to make sure they drive to the conditions. That’s the obligation on all drivers, and the spate we’ve had is just unacceptable, and I think inevitably it seems it’s not mechanical failure, it is driver error.
Whether it’s speed, inattention, or fatigue.”
Jim Mora: “So, it’s a…what, is it a hiring of drivers problem, hiring the wrong drivers, or is it a keeping-costs down problem, Ken? What do you think?”
Ken Shirley: “Well, the two are related of course. We have a chronic shortage of H5 drivers in New Zealand. That’s the heavy combination driver, the truck and trailer. It’s a global problem, but it’s particularly severe in New Zealand at this time. We’ve had it for many years, but with the activity in the economy now, that we are currently having, there is a chronic shortage of drivers.
Many of our members throughout the country are just saying they simply cannot get drivers. And I guess inevitably, you can, in that situation, such a tight situation, out of desperation, you can perhaps hire someone who’s not as skilled as you would like or need, out of sheer necessity. But at the end of the day, there’s no excuse. This should not be happening. We’re taking it very seriously.
We’ve actually instigated a series of roll-over prevention seminars in conjunction with NZTA around the country. They started some six weeks back. And these are actually very good seminars. But we have to educate the drivers, the loaders, the dispatchers, the transport operators themselves, but we must not have this level of roll-over.”
Jim Mora: “Ken, is it the… what is it deep down? Is it the meager wages paid, as some people are saying? You’re just not attracting the skills to the industry?”
Ken Shirley: “Ah, no, you do, it’s, you know, you can have a driver error. But it’s, it’s… you have to have better training, better awareness, that has to be the answer.”
Jim Mora: “So, there was this work-force development strategy, wasn’t there, ah, put into place a wee while back to try and try to entice more people to become truck drivers because of that shortage. But what is the point of a work-force development strategy if we know what the problem basically is, which I’m interpreting as maybe a lack of training and a lack of procedures put in place in the industry – [garbled].”
After a further exchange between Jim More, Peter Elliot (one of the panelists), and Ken Shirley, the host returned the discussion to the matter of wage rates;
Jim Mora: “It does seem though, with the wage rates that we see talked about, that you might not be getting the optimum recruits for the job? Is that a fair criticism, or not?”
Ken Shirley: “Well we know that the skilled labour market across the economy, whether it’s a diesel mechanic, a skilled driver, all of of those industries are, are, reporting severe chronic shortages. And because they are so highly skilled, reliant on a high level of, of, of, experience, when there is a chronic shortage, there is a temptation to often, out of desperation [to] take what you can get. And, and, that’s, that’s when you start to get into issues that like we are seeing and that’s when you start introducing potential road safety problems.”
Jim Mora: “I understand, but would you solve your chronic shortage if you paid higher wage rates?”
Ken Shirley: “Well, indeed, and all the members I speak to want to, but there’s been a race to the bottom, it’s –
[panelist scoffing (?) noise]
… such a fiercely competive industry…”
Shirley’s admissions are astounding.
His comments appear to be a frank admission that the free market has experienced a spectacular failure on a key point in the Northland logging industry; that if there is a shortage of skilled labour, the price of that labour (heavy-truck drivers in this case) should rise – not fall – to attract skilled labour. That is a basic tenet of supply and demand in the free market system.
As the guru of free market economics, Milton Friedman put it;
“But when workers get higher wages and better working conditions through the free market, when they get raises by firm[s] competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody’s expense. “
And Investopedia described a free labour market thusly;
Assuming there are a large number of employers in a region, or that workers are highly mobile geographically, the wages that a company will pay workers is dependent on the competitive market wage for a given skill set. This means that any company is a wage taker, which is simply another way of saying companies must pay competitive wages in order to obtain workers.
None of which seems to be happening in Northland at present.
To the contrary, logging companies – according to their own spokesperson, Ken Shirley – are engaged in a “a race to the bottom” with drivers’ wages.
To compound the problem, in April of this year, Shirley specifically opposed and condemned outright any attempt to increase the wages of drivers;
“The link between remuneration and road safety is highly questionable and as a recent PWC report highlights, the system will result in a net cost to the Australian economy of more than A$2 billion over 15 years.
It is therefore very concerning that the Labour Party here advocated for the same policy and campaigned on it during the last election.”
National awards and government-imposed orders are not the way to lift industry wage rates or make the industry safer. All they do is saddle the industry with inflexible and time-consuming obligations and additional costs.
Let’s not repeat Australia’s mistake in New Zealand. It has been proven that national awards burden the economy and cost jobs and I hope that Labour and other political parties here will accept that reality and ditch the concept once and for all.”
Shirley’s comments last month are in stark contrast to his public lamentations on Radio NZ.
Not only has the free market failed in one of it’s key tenets – but Shirley is actively opposed to raising wages by any means necessary, to attract skilled, experienced truck drivers.
This should serve as a clear lesson that the innate contradictions of the free market ideology – many of which are little more than articles of faith – will eventually become more and more apparent.
Shirley has inadvertently helped with the slow dismantling of the neo-liberal fantasy.
Appendix1
Unfortunately, knowing how the system operates in this country, it will takes catastrophic events with several tragic deaths, before the government acts on this growing problem.
That’s how we roll in New Zealand.
Over bodies.
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References
Wikipedia: Ken Shirley
ACT NZ: Welfare and family
ACT NZ: Minimum wage hike whacks regional employers
Parliament: Current MPs – David Seymour
Parliament: Salaries payable under section 8 of Members of Parliament
Radio NZ: The Panel with Peter Elliott and Susan Guthrie
Good Reads: Milton Friedman
Investopedia: Breaking down ‘Demand For Labor’
Scoop media: Government imposed remuneration orders have no place in NZ
NZ Herald: Tourist dies in logging truck crash near Matamata
Additional
Road Safety Remuneration Tribunal: About road safety remuneration orders
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This blogpost was first published on The Daily Blog on 10 May 2016.
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Report: Increasing the minimum wage v.s. job losses
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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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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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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.
[…]
…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] $11.00 1 April 2014 $14.25 $11.40 $11.40 Notes:
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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.
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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.
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The training minimum wage was introduced in June 2003.
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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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5 March 2001 – Increased from $7.55 to to $7.70 p/h
(Labour)
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18 March 2002 – Increased from $7.70 to $ 8.00 p/h
(Labour)
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24 March 2003 – Increased from $ 8.00 to $8.50 p/h
(Labour)
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1 April 2004 – Increased from $8.50 to $9.00 p/h
(Labour)
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21 March 2005 – Increased from $9.00 to $9.50 p/h
(Labour)
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27 March 2006 – Increased from $9.50 to 10.25 p/h
(Labour)
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1 April 2007 – Increased from 10.25 to $11.25 p/h
(Labour)
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1 April 2008 – Increased from $11.25 to $12.00 p/h
(Labour)
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1 April 2009 – Increased from $12.00 to $12.50 p/h
(National)
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1 April 2010 – Increased from $12.50 to $12.75 p/h
(National)
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1 April 2011 – Increased from $12.75 to $13.00 p/h
(National)
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1 April 2012 – Increased from $13.00 to $13.50 p/h
(National)
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1 April 2013 – Increased from $13.50 to $13.75 p/h
(National)
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The above graphs reveal the following;
- In eleven out of fourteen years, numbers of employed rose after a minimum wage increase.
- Nearly all the years which show a fall in employment numbers are post-Global Financial Crisis; 2009, 2010, and 2012.
- 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.
- One of those three years – 2010 – showed a drop in employment for only one Quarter before rising again.
- 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.
- 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;
- More often than not, employment numbers rise after an increase in the minimum wage.
- Unemployment is affected by factors other than minimum wage increases (eg; Global Financial Crisis, drought, etc).
- Labour increased the minimum wage $5 per hour (2000 to 2008), and unemployment dropped to 3.4% by December 2007.
- 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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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
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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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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
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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
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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
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When you read media stories like this, you know that Alice has company in Wonderland,
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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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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
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
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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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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 “.
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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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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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
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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,
- 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.
- 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.
- The training minimum wage was introduced in June 2003.
See: Dept of Labour – Previous minimum wage rates
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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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John Key’s track record on raising wages – 5. The Minimum Wage
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Continued from: John Key’s track record on raising wages – 4. Rest Home Workers
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5. The Minimum Wage
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From 2004 to 2008, the minimum wage rose from $9 to $12 – an increase of $3 in four years.
From 2009 to 2012, the minimum wage rose from $12 to $13.50 – an increase of $1.50 over three years.
See: Dept of Labour – Previous minimum wage rates
Last year, Labour, the Greens, NZ First, and Mana campaigned to raise the minimum wage to $15 ($16 for Mana).
When a worker at a fast-food outlet asked John Key to raise the minimum wage to $15 an hour, he rejected the proposal, saying,
“It will go up, but it won’t go up straight away.”
See: Raising minimum wage won’t cost jobs – Treasury
Yet it took only a couple of years to implement two massive taxcuts that gave hundreds, thousands, of dollars a week, to the top income earners.
Priorities, eh?
The real insult is that Key and English both admit that the minimum wage is difficult to live on.
Key said,
“Look, I think it would be very difficult for anyone to do that.”
See: Ibid
“ GUYON: Okay, can we move backwards in people’s working lives from retirement to work and to wages? Mr English, is $13 an hour enough to live on?
BILL ENGLISH: People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity. It’s like being on a benefit.
GUYON: What do you mean for a short time?
BILL ENGLISH: Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position. “
See: TVNZ’s Q+A: Transcript of Bill English, David Cunliffe interview
The Department of Labour claimed a rise in the minimum wage would cost 6,000 jobs.
But Treasury disagreed, saying,
“This has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs.”
Raising the minimum wage would certainly benefit SMEs (Small-Medium Enterprises), as low-income earners spend their entire wages on goods and services. Any rise in paying wages should be offset by increasing till-takings with customers spending more.
So it appears blatantly obvious that no good reason exists not to raise the minimum wage.
After all, in 2009 and 2010, National gave away far more in tax cuts for the rich.
And precisely how does this raise wages, as per Dear Leader’s promises?
Next chapter: 6. Youth Rates
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John Key’s track record on raising wages – 4. Rest Home Workers
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Continued from: John Key’s track record on raising wages – 3. Ports of Auckland Dispute
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4. Rest Home Workers
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Amongst the lowest paid workers in this country, Rest Home caregivers earn around $13.61 an hour – just barely above the minimum wage of $13.50.
Human Rights Commissioner, Dr Judy McGregor, found out first-hand what the job entailed,
” Spending hours on her feet, lifting, hoisting, feeding, bathing, dressing and toileting her charges took its toll – and for just $14 an hour, the Human Rights Commission’s equal opportunities commissioner compares it to a form of modern-day slavery.
“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,” she said.
“Saint-like women do it every day so that older New Zealanders can have a quality of life”.”
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When this was point out to John Key, the following exchange took place on morning TV,
” Key acknowledged there were problems with rural rest homes workers paying for their own travel, effectively reducing their wage below the minimum wage of $13.50 an hour.
“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”.”
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But there seemed plenty of cash – taxpayer’s money – to give politicians some fairly generous salary increases,
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And a “lack of money” certainly didn’t stop the country from spending over $200 million of public money on a sporting tournament,
” Budget blowouts have pushed public spending on the Rugby World Cup well above $200 million – without counting $555 million in stadium upgrades and $39 million in direct losses from hosting the tournament. “
See: Blowouts push public Rugby World Cup spending well over $200m
If Key was serious about raising wages, he should clearly have made the lowest paid his Number One Priority. The 2009 and 2010 tax cuts would have made an excellent opportunity to give the biggest tax cuts to the lowest paid workers.
Instead, those tax cuts went to the very top. On top of that, the rise in GST from 12.5% to 15% would have impacted the hardest on those on minimum wage.
Double whammy.
So precisely how does this raise wages, as per Dear Leader’s promises? (Or could it be that when Key promised to raise wages – he was referring to his own?)
Next chapter: 5. The Minimum Wage
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John Key’s track record on raising wages – 3. Ports of Auckland Dispute
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Continued from: John Key’s track record on raising wages – 2. The 90 Day Employment Trial Period
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3. Ports of Auckland Dispute
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“The average income has been about $90,000, so it hasn’t been a badly-paid place. But the problem is flexibility when ships arrive and when staff get called out, how they can cope with that.” – John Key, 12 March 2012
See: Jackson pulls back from port comments
Putting aside from the myth of POAL maritime workers earning $90,000 – so what?
Even if it were true (which is doubtful) – POAL has never released the workings of how they arrived at that sum, despite requests), isn’t such a good wage precisely what Dear Leader was advocating in his quotes above?
POAL management sought to reduce costs; casualise their workforce; and compete with Ports of Tauranga for shipping business. Unfortunately, competing on costs would, by necessity, involve driving down wages.
There is also a high degree of price-fixing by shipping cartels, as was pointed out by the Productivity Commision in April,
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Rather than supporting the workers, Dear Leader bought into a situation where international shipping companies were playing New Zealand ports off against each other, to gain the lowest possible port-charges. Even local company, Fonterra, was playing the game.
Here we have a situation where New Zealand workers were enjoying high wages – something John Key insists he supports – and yet he was effectively allowing international corporations to create circumstances where those wages could eventually be cut and driven down.
As with the “Hobbit Law”, our Dear Leader appears to pay more heed to the demands of international corporate interests than to fulfilling his pledges to raise wages.
Precisely how does this raise wages, as per Dear Leader’s promises?
Next chapter: 4. Rest Home Workers
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John Key’s track record on raising wages – 2. The 90 Day Employment Trial Period
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Continued from: John Key’s track record on raising wages – 1. The “Hobbit Law”
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2. The 90 Day Employment Trial Period
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An amendment to the Employment Relations Act 2000, Section 67A, allows for employers to sack – without just cause or a chance for an employee to improve performance – within a 90 day period.
It gives unbalanced power to employers who can blackmail an employee or get rid of them at the slightest whim.
It also makes workers less willing to be mobile in the workplace. Why change jobs at the risk of being fired within 90 days of taking up a new position?
When the 90 Day Trial period was first introduced in April 2009, it applied only to companies employing 19 staff or less.
See: Will the 90 Day trial period make a difference?
By April 2011, this was extended to all companies regardless of staff numbers.
Has it helped generate more jobs as National claimed it would?
Evidence suggests it played very little part in creating employment, and indeed unemployment went up after both legislative changes,
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So aside from empowering employers and disempowering workers, what exactly was the point of enacting this piece of legislation?
And precisely how does this raise wages, as per Dear Leader’s promises?
Next Chapter: 3. Ports of Auckland Dispute
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John Key’s track record on raising wages – 1. The “Hobbit Law”
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Continued from: John Key’s track record on raising wages – preface
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1. The “Hobbit Law”
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On 20 October 2010, Peter Jackson released this statement to the media,
“Next week Warners are coming down to New Zealand to make arrangements to move the production offshore. It appears we cannot make films in our own country even when substantial financing is available.”
See: Warner preparing to take Hobbit offshore – Sir Peter
It was the opening shot of a public war-of-words between Jackson and his camp, and Actor’s Equity. An industrial dispute had been elevated to DefCon One, and things were about to ‘go nuclear‘.
Almost overnight, a mood of hysteria gripped the country; we were about to lose ‘Our Precious‘ movies to Eastern Europe, Mongolia, or Timbuktu.
Public panic reached levels unseen since the 1981 Springbok Tour, or the satanic child abuse-ritual stories of the early 199os. There were patriotic street marches (flaming torches were considered but rejected because of OSH concerns.) Union officials were harassed in public; vilified; and threatened with death. A well-known actress – popular up till this point – considered leaving for Australia after receiving death threats, because of her pro-Union stance.
See: And everybody take a deep breath – please
It was the nastier side of New Zealand’s collective psyche which we’ve come to be familiar with. We do ‘mob hysteria‘ very well.
John Key and National would have none of it, of course. Dear Leader acted with authoritarian style not seen outside ex-Soviet republics, African, and Middle East dictatorships.
As the Dominion Post reported,
“ The Hobbit dispute was resolved after Warner Bros executives jetted into New Zealand for a meeting with Government ministers at Mr Key’s official Wellington residence, Premier House.
After two days of tense days of talks with Warner Bros bosses, who were chauffeured around Wellington in Crown limousines, the Government agreed to a raft of measures including a $20 million tax break to keep the two Hobbit movies in New Zealand.
An agreement to change New Zealand’s employment laws clinched the deal after studio bosses and Jackson threatened to move production off-shore over a stoush with the actors union. Labour lawswere were [subsequently amended]. “
See: PM’s ‘special’ movie studio meeting
The labour law that the Dompost piece referred to was the Employment Relations (Film Production Work) Amendment Bill which made film industry workers independent contractors by default – thereby changing the definition in employment legislation of what constitutes an “employee”.
See: The Hobbit law – what does it mean for workers?
Even if the nature of your employment mirrors that of an employee with a boss who determines your hours of on-site work; supplies all your tools and work materials; dictates your workplace requirements, including meal breaks – your employer can still treat you legally as a “contractor”.
A worker under these conditions has all the obligations of an employee – but none of the rights. That same worker may be deemed a “self employed contractor” – but has none of the usual independence of a contractor.
A worker in this “limbo” has had all his/her security of employment; minimum wages; holidays; and right to collective bargaining stripped away.
In effect, for the first time in our democracy, a government has legislated away a workers right to choose. They no longer have any choice in the matter.
All done at the stroke of a pen. No consultation. It was all decided for you, whether you wanted it or not. Only a totalitarian, One Party, regime could match such dictatorial powers.
The “Hobbit Law” took precisely two days from First Reading to Royal Assent. An Olympic record in law-making.
See: Employment Relations (Film Production Work) Amendment Act 2010 – Legislative history
By 21 December 2010 – two months after Jackson had sent the entire nation into a spin with his first press release – an email dated 18 October, to Economic Development Minister Gerry Brownlee, revealed a startling new picture,
“There is no connection between the blacklist (and it’s eventual retraction) and the choice of production base for The Hobbit”.
“What Warners requires for The Hobbit is the certainty of a stable employment environment and the ability to conduct its business in such as way that it feels its $500 million investment is as secure as possible.”
See: Sir Peter: Actors no threat to Hobbit
Peter Jackson and John Key knew precisely how to pull this country’s strings and make workers and the public dance to their tune. They managed to con workers to demand losing their own rights as employees. Well played, Mr Jackson, Mr Key.
So precisely, how does this raise wages, as per Dear Leader’s promises?
Next chaper: 2. The 90 Day Employment Trial Period
See also previous blogposts:Muppets, Hobbits, and Scab ‘Unions’, Roosting chickens
Additional
Tech Dirt: The Hobbit Took $120M From Kiwi Taxpayers – Maybe They Should Own The Rights (5 Dec 2012)
Fairfax Media: To save regular earth, kill Hobbit subsidies (6 Dec 2012)
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John Key’s track record on raising wages – preface
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Preface
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By now, I think most readers of this blog (and other sources of political information) will recall certain statements made by Dear Leader over the last four years,
“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008
See: National policy – SPEECH: 2008: A Fresh Start for New Zealand
“One of National’s key goals, should we lead the next Government, will be to stem the flow of New Zealanders choosing to live and work overseas. We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere.
To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.” – John Key, 6 September 2008
See: National policy – Speech: Environment Policy Launch
“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
See: Speech: Key – business breakfast
“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
See: National policy – Boosting Science and Innovation
“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
See: Statement to Parliament 2011
“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, 21 December 2011
See: Parliament – Speech from the Throne
“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
Key has repeated the same pledge every year since 2008. It has become a mantra, “raise wages, raise wages, raise…”.
But words are easy. What has been Key’s actual track record? How does Dear Leader’s words reconcile with his actions? What have been the results?
The following chapters give an insight into the rhetoric and reality of the National Party and it’s leader, John Key.
2. The 90 Day Employment Trial Period
8. An End to Collective Agreements
10. A New Government’s Response
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Another bare-faced lie from the ACT Party
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From the ACT Party website,
“When Labour abolished the youth minimum wage in 2008, youth unemployment soared. A study by the former Department of Labour found that abolishing the youth wage resulted in a loss of up to 9000 jobs. Removing the youth minimum wage priced young people out of the market. “
See: Re-establishment of Youth Minimum Wage A Win For ACT
What nonsense. The rise in youth unemployment post-2008 was due to the 2008 Global Financial Crisis.
In February 2009, the DoL (former Department of Labour) website reported,
“Unemployment has risen across the OECD
9. Statistics New Zealand reports that New Zealand’s unemployment rate is the tenth
equal lowest of the 27 OECD nations with comparable data. The Netherlands and
Norway have the lowest unemployment rate at 2.7%, with South Korea,
Switzerland and Austria also below 4%. The OECD average unemployment rate
was 6.5%, up from 6.0% when the September 2008 quarter HLFS was released.10. New Zealand has so far not been affected as much by the global financial crisis as
some other countries. Furthermore, it is in a relatively better position due to a
strong starting point, fiscal stimulus and large decreases in interest rates. In the
United States, the unemployment rate has risen from 4.8% in February 2008 to
7.2% in December 2008, a 15-year high. Unemployment has increased in other
developed nations, particularly Ireland (to 8.2% in December 2008, from 4.7% a
year earlier) and Spain (to 14.4% in December 2008, from 8.7% a year earlier).[abridged]
15. Youth are often the most at risk during a recession and their unemployment rate is
expected to rise further over the next year. This can be attributed to them having
low levels of experience, but also because those aged 15-24 years old are two to
three times more likely to be unemployed in general. In the early 1990s recession,
the unemployment rate for 15-24 year olds rose from 13.3% in early 1990 to
19.5% in early 1992.”
Source: EMPLOYMENT AND UNEMPLOYMENT – DECEMBER 2008 QUARTER
The DoL website also stated that “Maori and Pacific workers are also expected to be affected by the downturn. These groups have a greater proportion of youth relative to Europeans and also tend to be disproportionally employed in low-skilled and semi-skilled occupations, which are often more affected in a recession“.
Does ACT have a policy advocating a lower wage rate for Maori and Pacific islanders, based on their ethnicity?
After all, if one can discrimiminate on age – why not race?
It is dishonest to lay fault with a previous government’s policy when facts point to a completely different cause and effect scenario.
ACT should learn to be a bit bit honest with the facts rather than re-writing history, Orwellian-style, to suit some confused ideology.
But then again, this is John Banks’ Party. ’nuff said.
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The betrayal of our young people
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In 2007…
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“Today, in the suburb where I grew up, I want to talk about what I consider to be an important part of The Kiwi Way. I want to talk about opportunity, and hope, and how we can bring these to some of the most struggling families and communities in New Zealand.
Part of The Kiwi Way is a belief in opportunity and in giving people a fair go.
As New Zealanders, we have grown up to believe in and cherish an egalitarian society. We like to think that our children’s futures will be determined by their abilities, their motivation and their hard work. They will not be dictated by the size of their parent’s bank balance or the suburb they were born in.
We want all kids to have a genuine opportunity to use their talents and to get rewarded for their efforts. That’s The Kiwi Way, and I believe in it. After all, I was one of the many kids who benefited from it…
… You might ask “where will the money come from?”
The fact is we are already spending millions of dollars for Wellington bureaucrats to write strategies and to dream up and run their own schemes. I want more of those dollars spent on programmes that work, regardless of who thinks them up and who runs them.”
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Unemployment rate December 2007:
77,000 (3.4%)
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In 2008…
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“The National Party has an economic plan that will build the foundations for a better future.
- We will focus on lifting medium-term economic performance and managing taxpayers’ money effectively.
- We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.
- We will cut taxes, not just in election year, but in a regular programme of ongoing tax cuts.
- We will invest in the infrastructure this country needs for productivity growth.
- We will be more careful with how we spend the cash in the public purse, monitoring not just the quantity but also the quality of government spending.
- We will concentrate on equipping young New Zealanders with the education they need for a 21st century global economy.
- We will reduce the burden of compliance and bureaucracy, and we will say goodbye to the blind ideology that locks the private sector out of too many parts of our economy.
- And we will do all of this while improving the public services that Kiwis have a right to expect. “
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In 2010…
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“90-Day Trial Period extended to all employers
The 90-day trial period is to be extended to enable all employers and new employees to have the chance to benefit from it, says Minister of Labour Kate Wilkinson.
The extension is among planned changes to the Employment Relations Act 2000 that Prime Minister John Key announced today in a speech to the National Party Conference.
“The Government is focused on growing a stronger economy and creating more jobs for New Zealand families.”
“There are a lot of people looking for work and the changes announced today will help boost employer confidence and encourage them to take on more staff….”
… “Trial periods were introduced to encourage employers to take on new staff and I’m pleased to see this is occurring”.”
– Kate Wilkinson, Minister of Labour, 18 July, 2010
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In 2012…
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Household Labour Force Survey: June 2012 quarter
Unemployment: 162,000 (6.8%)
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“New youth pay rates kicking in
The Government will re-introduce a a youth pay rate which will see 16-to-19-year-olds making a minimum $10.80 per hour.
The new pay rate, to be called the ‘starting-out wage’, will not be compulsory but 40,000 teens will be eligible.
It will kicks in on April 1 next year and the Government estimates it will create up to 2000 youth jobs in the first two years.
The starting-out wage will be set at 80 per cent of the adult minimum wage, which is currently $13.50 per hour.
It will apply for six months after starting with a new employer. The move was National Party policy ahead of the election last November.”
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The above facts and stats tell a grim story.
The prologue to this story are the high expectations which John Key presented to the people of New Zealand in 2007 and 2008.
In 2007, Key spoke of “opportunity, and hope, and how we can bring these to some of the most struggling families and communities in New Zealand “.
In 2008, Key pledged that “we will be unrelenting in our quest to lift our economic growth rate and raise wage rates.”
Four years later;
- unemployment is on the rise again,
- the 90 Trial Employment Period has failed to generate new jobs,
- National’s promise of 170,000 new jobs – made at the election last year – has failed to kick-start,
- the exodus to Australia is increasing, with a net loss of almost 40,000 people over the past year,
- thousands of redundancies have added to our unemployment
National’s latest ‘offering’? To cut the minimum wage for 16 to 19 year olds.
The logic of this policy – planned to start on 1 April 2013 – defies comprehension. In fact, the only way it can be understood is that National is utterly desperate.
New employment figures are due out on 4 November from Statistics NZ, and this blogger predicts that unemployment will rise from 6.8% (currently) to 6.9% or even 7%.
Quite simply, none of National’s policies have worked.
Even Key’s promise to raise wages has been an abject failure, sending thousands of kiwis to Australia and further afield, in search of jobs.
National’s plan to cut the wages of young New Zealanders is similar to their cynical ploy to depict welfare beneficiaries as lazy, drug-users, criminals, etc.
Instead, they are targetting 16 and 17 year olds – who have no vote – and have no voice in Parliament.
And they are targetting 18 and 19 year olds – who are adult enough to drink, get married, and go to fight in wars overseas – but will not be paid an adult’s wage.
National claims that the new youth rates will create 2,000 new jobs. Aside from mocking this figure as a gigantic step down from the 170,000 “new jobs” promised last year – it is more likely that those 2,000 jobs will simply displace older workers.
In doing so, the employment of young people on lower pay will simply mean,
- Less money spent by young people on services and consumer goods,
- Young people unable to support themselves fully
- A new motivation to send more New Zealanders overseas
- New Zealand becoming a low wage economy of the South Pacific
How can a young New Zealander survive on $432 a week – less tax?!
It wasn’t too long ago that Bill English admitted on TVNZ’s Q+A, on 6 November 2011, that it was almost impossible to live on the full minimum wage ($13.50/hr),
“GUYON: Okay, can we move backwards in people’s working lives from retirement to work and to wages? Mr English, is $13 an hour enough to live on?
BILL: People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity. It’s like being on a benefit.
GUYON: What do you mean for a short time?
BILL: Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.” Source
If it’s “ pretty damn tough ” to live on $13 or $13.50 an hour – what on Earth must it be like to try to survive on $10.80 per hour?
And how does our smile & wave (and forgetful) Dear Leader reconcile slashing the minimum wage by his promises to raise wages?
Specifically, these promises,
“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008
“We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere. To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.” – John Key, 6 September 2008
“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
“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, 21 December 2011
By now, more and more New Zealanders are waking up to one simple reality; National cannot lead this country to prosperity or anything remotely resembling it. Their policies for growth seem predicated on,
- cutting wages
- asset sales
- bullying and demonising beneficiaries
- planning dangerous and unsound deep-sea drilling of the East Coast of the Nth Island
- mining in conservation lands
It is the height of desperation and bloody-mindedness that National’s major policy of job-creation relies on cutting wages as some kind of “bribe” for employers.
It is the depth of stupidity that will see young people on $10.80 displacing older workers, as employers cut costs in order to maximise their profits – especially as consumer spending is dropping. (See: Electronic card spending drops in September)
It is this sense of sheer miserly selfishness that resulted in,
- tax cuts in 2009 and 2010 which benefitted the richest in this country
- abolishing tax credits for children, so they were now taxed on their megre earnings from jobs such as paper-delivery
Is this, then, an act of desperation from John Key and his inept “government”?
You better believe it is. And things are about to get a whole lot worse as National turns this country into a low-wage economy, making us the ‘Mexico’ of the South Pacific.
My message to New Zealand is two-fold;
1.
Voters: if you want more of this incompetant government that takes money from our young people, whilst cutting taxes for the richest – vote National.
For those foolish people who vote National: enjoy your life here in New Zealand. Do not follow us to Australia.
2.
Labour Party: pull your finger out. It is high time you started firing on all cylinders and presented this country with an alternative vision and road.
Now’s good.
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Additional
Radio NZ: Listen to report on Checkpoint
Radio NZ: Listen to Checkpoint interview with Phil O’Reilly (Business NZ)
Radio NZ: Listen to Peter Conway on Checkpoint (CTU)
Radio NZ: New teenage workers’ pay rate set
Fairfax media: New youth pay rates kicking in
Fairfax media: Division over ‘starter’ wage
Other Blogs
The Jackal: National determined to increase exodus
No Right Turn: The return of youth rates
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Dollars and common sense – raising the minimum wage.
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Well reasoned – David Clark has reasoned the issue very nicely.
Of course, those who argue that raising the minimum wage would harm our economy should consider two things;
1. Our best and brightest will leave NZ for where wages are higher. THAT will harm our economy.
2. If raising the minimum wage is a “bad thing”, consider the converse; dropping the minimum wage to $1 an hour. What would that do to our economy? Wreck it for sure.
Raising the minimum wage means people can share in the “economic pie” and buy the services and products that businesses have to offer. Keeping wages low may mean that ‘Acme XYZ Ltd’ has a lower wages-bill to pay it’s staff – but it also means that other low-paid workers can’t buy ‘Acme XYZ Ltd’s’ products and services.
Meanwhile,
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Interestingly, if those on minimum wage ($13.50) had a 20% wage increase, as did the Top 150 Rich Listers – that would raise their hourly wage to $16.20 an hour.
Question: why is it ok for the Top 150 Rich Listers to increase their wealth by a staggering 20% (during a global recession, no less!) – but not ok for the lowest paid to have a better wage?
Can any National Party supporter explain this anomaly in New Right dogma?
In 2008 and again in 2011, Dear Leader John Key promised to raise wages to match Australia,
“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, Prime Minister, 29 January 2008
See: 2008: A Fresh Start for New Zealand – John Key
“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, Prime Minister, 21 December 2011
Instead, the converse has proven to be the reality,
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And it’s a funny old world, really.
Voters abandoned the government that gave them this…
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… for this,
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Never let it be said that some New Zealanders don’t enjoy a bit of masochism every so often, and vote National for a sound bout of self-whipping.
Unfortunately, it’s the rest of us that end up paying for that self-indulgent choice at the ballot box.
Here’s a clever idea – all those people who vote National should have a wage/salary freeze during the term of that government. After all, as some National supporters keep insisting, raising the minimum wage “harms the economy”. (I assume the same holds for all wages and salaries?)
The rest of us, who vote for Labour, Greens, Mana, et al, can have our wages/salaries linked to Australia’s pay rates.
Now I ask you – what could be fairer than that?
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Previous related blogposts
Bill English: Minimum Wage Not Sufficient to live on!
Treasury’s verdict on raising the Minimum Wage?
Treasury’s verdict on raising the Minimum Wage? – Part II
Fifty cents an hour? I’m under-whelmed by Dear Leader’s Generosity
“It’s one of those things we’d love to do if we had the cash”
Jobs, jobs, everywhere – but not a one for me?
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Roads, grandma, and John Key
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“However, the Government could not afford to give DHBs the $140 million required to enable rest homes to pay their staff more,”
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“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.” – John Key, 28 May 2012
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In March of this year, rest home care workers went on strike throughout New Zealand, demanding an increase in their pay rate of $13.61 an hour.
That paltry sum is only 11 cents an hour above the minimum wage, which as Finance Minister said on TVNZ’s “Q+A“, on 6 November last year, was not liveable for any long period of time,
“GUYON: Okay, can we move backwards in people’s working lives from retirement to work and to wages? Mr English, is $13 an hour enough to live on?
BILL: People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity. It’s like being on a benefit.
GUYON: What do you mean for a short time?
BILL: Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.” Source
If $13 an hour is ‘ pretty damn tough’ and ‘people can live on that for [only] a short time’ – then how much better is $13.61 an hour? Not by much, one would think.
But, as Dear Leader told the nation on 28 May,
“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
“On balance”, I think National is about as incompetant as it was in the 1990s, and as it was under Rob Muldoon.
To make sure that the peasantry (ie, us) got the message, he shifted blame on to Labour by insisting, that the former Labour government “had a lot more cash floating around and didn’t meet the bill“.
I wonder how many times he’s going to blame Labour?
I thought National was BIG on people taking responsibility?
But just when the public get used to the idea that paying hundreds of heroic careworkers in resthomes – who look after our grandmas, grandpas, the sick, and the infirm – a measely $13.61 is the best we can afford, we discover that National does have access to pots of cash (our cash, by the way).
And boy, do they know how to spend it like it’s going out of fashion by 2014,
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A total of $336 million spent on consultants, and various “fees” for selling our own state assets to “mums and dads” (aka, corporate investors). Of that, $216 million has already been spent on “consultants” – and that’s without one metre of tarseal being laid.
And yet, our smiling and waving Dear Leader has the cheek to say that we can’t pay resthome careworkers any more money? He insists that, “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.”
When I found and collated these three media stories, my jaw dropped.
I have long since given up trying to understand John Key’s “moral compass” (if he actually has one).
But I wonder what those 1,058,636 New Zealanders who voted for this wretched Party must be feeling when they read this sort of thing? Does it even register with those 1,058,636, I wonder?!
But there is a delicious irony that will eventually fall upon most of those 1,058,636. For they too, are growing older…
And eventually, they will end up in resthomes, being cared for by low-paid, exploited, careworkers.
I wonder if those careworkers, by then, will still be the conscientious, dedicated, saints that Human Rights Commissioner, Dr Judy McGregor said of them,
“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.”
See: Resthome spy hails saint-like workers
Will Resthome careworkers still be Saint-like in their care for us?
Or will they have had a gutsful by then, and not give a damn? If we continue to pay them $13.61 an hour (or a future-equivalent) – is that the value of service we’ll end up receiving?
If so, I hope those exploited, burnt-out, angry workers will vent their frustrations on a specific group of 1,058,636 New Zealanders. After all, they will have paid for their care. All $13.61 of it.
Karma.
As for the rest of us – those who understand the utter futility of electing John Key into power – I hope that National’s apalling waste of our valuable tax-dollars will motivate you all for the next election.
I know that most readers who visit this blog are fair minded, decent, people. I know you will be voting to get rid of this rotten, morally-corrupt, government in 2014 (if not earlier).
But that’s not enough. Simply voting is insufficient.
If, after reading this (and similar examples of National’s wretched policies) you are angry and want to get rid of John Key – then at the next election, find one other adult who did not vote last year and encourage that person to walk to the nearest polling booth with you to cast his/her vote.
About a million people did not vote last year. We need to find them and explain to them why their vote is crucial. The future of this country lies in their hands.
Our most powerful Weapon of Mass Democracy – our vote.
It is our vote that makes us powerful.
Let’s do it.
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Related Blogposts
“It’s one of those things we’d love to do if we had the cash”
1 March – No Rest for Striking Workers!
Additional
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Fifty cents an hour? I’m under-whelmed by Dear Leader’s Generosity…
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Labour Minister Kate Wilkinson today announced a 50 cents per hour increase in the minimum wage, from $13 an hour, to $13.50 an hour.
Our Dear Leader says,
“Between making sure that people can feed their children and look after their families and themselves and also ensure that they keep their job…
“…We’re on our way to the magical $15 people talk about, but we can’t get there in one step.” – John Key, 8 Feb
Dear Leader is now saying that families “can feed their children and look after their families” on minimum wage?!
That’s not what Bill English said last year. When questioned by Q+A’s Guyon Espiner on this issue, English responded,
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“GUYON: Okay, can we move backwards in people’s working lives from retirement to work and to wages? Mr English, is $13 an hour enough to live on?
BILL: People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity. It’s like being on a benefit.
GUYON: What do you mean for a short time?
BILL: Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.” Source
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In today’s “Dominion Post“, Kate Wilkinson says that, “Government was advised raising the minimum wage would result in up to 6000 job losses“.
Noticeably, she does not disclose what advice, or from whom, she is referring to. It can’t be Treasury advice, because as TV3’s Patrick Gower reported on his blog last year,
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“…research from the United Kingdom suggests minimum wages may have no effect on employment, or that minimum wage effects may still exist, but they may be too difficult to detect and/or very small.” – Source
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NZ Treasury stated that “…the claim a minimum wage rise may cost jobs has not been true in the past“. – Ibid
In other words, Wilkinson and Key are making it up as they go along. And finding it increasingly difficult to keep their ‘stories’ straight, it would seem.
On the other hand, there is little ambiguity in this story from a couple of years ago,
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It beggars belief that New Zealanders – a national once proud of their egalitarian society – can view this situation with anything but angry disdain.
When did it become socially acceptable that the richest 1% increased their wealth by a massive 20%, as well as gaining the greatest benefit from the 2009 and 2010 taxcuts, whilst those on the minimum wage increase their income by a measely 50 cents an hour?
50 cents an hour. Or $20 a week.
By contrast, our elected representatives did very well last year from their pay increases.
Do you want to know what MPs, Ministers, and the P.M. are now paid?
John Key’s words continue to echo throughout New Zealand,
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“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008
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Here’s a thought, Dear Leader; if the top 1% could increase their wealth by 20% – why not increase the Minimum Wage by precisely the same amount?
That would raise the minimum wage to $15.60 an hour.
Still not as high as our Aussie cuzzies enjoy – but getting there.
So what about it, Dear Leader, are you keen to share the wealth around a bit?
Show us how “unrelenting” you really are.
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Previous Blog post
Bill English: Minimum Wage Not Sufficient to live on!
Treasury’s verdict on raising the Minimum Wage? – Part II
Additional
Other Blogs
NZ Govt celebrate Charles Dickens’ 200th birthday with 50 cent increase in minimum wage
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New Year’s Wish List for 2012…
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My New Year’s wish list for 2012. Nothing too extravagant – just a few things that, in my ‘umble opinion, would make New Zealand the egalitarian social democracy we once had – before someone thought that pursuing the Almighty Dollar was more important than building communites.
In no particular order,
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Stop the asset sales process. This government has no mandate to privatise any of our SOEs. There is also no rationale for any privatisation, as dividends exceed the cost of borrowing by the State.
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Halt the Charter Schools programme. There is little evidence that Chart Schools achieve better results than non-Charter Schools, and at least one major research project on this issue indicates that Charter Schools are a waste of time.
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Introduce “civics” into our classroom curriculum. I’ve never considered this a necessity – up until now – but our recent low voter turnout – coupled with peoples’ apalling knowledge of how how political system works – is disturbingly. A modern democracy can only flourish if the public participate; contribute; and take ownership of the system. Apathy breeds cynicism, frustration, and ultimately disengagement, disempowerment, and a violent response.
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Implement programmes to assist those in poverty – especially families with children. Meals in schools (breakfasts and/or lunch) would be a great start. Build more state housing. Support programmes that help get young people into training, upskilling, and other constructive activities.
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Stop bene-bashing and tinkering with the welfare system. Our high unemployment is a symptom of the current economic recession – not the cause of it. Instead, government must focus on job creation policies; training and upskilling of unemployed; and spending on infrastructure that maximises new jobs – not reduces them.
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It’s time to wind back our liberalisation of liquor laws in this country. That particular experiment has been a colossal failure. Split the drinking age to 18/20; ban ALL alcohol advertising; put in place minimum pricing; reduce hours of retailers and bars; give communities greater voice and control of liquor outlets; make public drunkeness an offence; and implement the other recommendations of the Law Commission’s report, ‘Alcohol In Our Lives: Curbing the Harm‘.
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Increase funding for Pharmac so that sufferers of rare diseases, such as Pompe’s, can have hope for their future, instead of mortgaging it merely to postpone death for another day. We can do this – we must do this.
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Release and make public all relevant information regarding the Trans-Pacific Partnership Agreement (TPPA). Making such deals in secret is hardly the transparency-in-government that John Key says he supports.
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Maintain and keep funding TVNZ7. The planned closure of this station – and replacement with a shopping channel – would be a blow to decent public television in this country. We can, and must do better, than simply a channel devoted to more mindless consumerism.
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Cease from further cuts to the civil service. Sacking loyal, conscientious, workers is not the “capping” – it is adding to the unemployment dole queues. It is gutting the system that makes a modern society function and we are losing decades of collective skills and experience for no discernible purpose. We went through this in the late ’80s; early ’90s; and late ’90s – and our services suffered as a result.
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Raise the minimum wage to $15 an hour. Stat!
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The Ministerial committee on poverty is set to end homelessness by 2020. This is simply not good enough!!! Bill English was interviewed on Radio NZ on 16 December, and his responses to Kathryn Ryan’s questions were not reassuring. This excerpt from the interview was most telling,
RYAN: “It’s to report every six months, the committee. What measures will it use?”
ENGLISH: “Well, look, we won’t spend a lot of time arguing over measures, there’s any number of measures out there ranging from gini co-efficients to kind of upper quartile [and] lower quartile incomes. Lot of of that is already reported in the MSD social report that it puts out each year…” – Bill English and the new ministerial committee on poverty
If the Committee doesn’t monitor itself, how will it be able to measure it’s success (or fail) rate?
Poverty and unemployment have to be the top priorities of this government. Nothing else is as important.
Like the way in which the Jobs Summit, in early 2009, sank beneath the waves, I do not hold out for much success though.
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Less spent on roads – more on rail and other public transport. Our continuing reliance on imported fossil fuels will not help our economy or environment one iota.
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No mining on the Denniston Plateau (or any other Conservation lands). This ecologically-sensitive wilderness area needs to be preserved for future generations. If we want to make money our of our environment – tourism is the way to go, contributing to approximately 10% of this country’s GDP. John Key. Minister of Tourism (NZ – not Hawaii), take note.
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No deep-sea oil drilling. The stranding of the ‘Rena’ and subsequent loss of of 350 tonnes (out of around 1,700 tonnes) of oil into the sea is the clearest lesson we’ve been taught that NZ is simply not prepared to cope with a massive deep-sea oil spill. An event such as the Deepwater Horizon oil disaster in the Gulf of Mexico, last year in April, by comparison lost 780,000 cubic metres of oil. An event of that magnitude would be catastrophic to our countrry.
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Free healthcare for all young people up to 18. And children to have first priority when it comes to our resources and funding. The future of our nation depends on healthy, well-educated, balanced children growing up as productive members of our society. Who knows – if we look after our children properly, they might feel more connected to our country and more motivated to live here instead of leaving for Australia. If we want our children to have committment to New Zealand – we need to be committed to them.
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Those are a few of my New Year’s wish list. There are probably others that I may add at a later date – but they’ll do for now.
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Treasury’s verdict on raising the Minimum Wage? – Part II
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Throughout this election, John Key has been criticising Labour’s policy to increase the minimum wage from $13 to $15 an hour, citing a Department of Labour (DoL) report that such a move would cost the country 6,000 jobs. Key even referred to this in his Leader’s Debates with Phil Goff.
Except… that Treasury has dismissed the DoL’s “claim” by stating that raising the minimum wage “has not been true in the past“.
John Key has been well aware of Treasury’s debunking of DoL’s “claims”, according to a Official Information Act request made by TV3,
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Unless Treasury has become a satrap of Socialist International, it seems pretty hard to dismiss their conclusions. The DoL’s case is not helped by their own contradictions,
“…research from the United Kingdom suggests minimum wages may have no effect on employment, or that minimum wage effects may still exist, but they may be too difficult to detect and/or very small.” Ibid
I believe that the so-called DoL “report” can be safely dismissed as not very intellectually rigorous. And not even half clever.
The government claims that recent taxcuts, last year and in 2009, were “fiscally neutral”. But even this is not true.
National’s first round of tax-cuts, which took effect in April 2009, benefitted high income earners the most. Low income earners recieved very little,
“The cuts are proportional to wages. Those earning $100,000 or more a year will get at least an extra $24 dollars a week. Anyone on the average income of $48,000 a year will get an extra $18 a week, and low income earners will get a $10 a week tax credit.
On a monthly basis, both tax cuts together will see those earning $100,000 pocketing an extra $225, and low income earners an extra $95 a month.” Source
The October 2010 round of tax cuts were just as bad for low income earners, and generous for high earners,
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Those on minimum wage recieved an extra $6.36. Meanwhile someone earning $120,000 benefitted from between $46.08 to $89.04.
With growing inflation reaching a 21 year high, to 5.3%; increasing ACC charges and rates; any gains made by low income earners and those on social welfare and superannuation were quickly eroded.
Little wonder that the end result was a transfer (“trickle up”) of wealth from the poor and middle classes, to the wealthy.
“The report’s 2004 data – the latest available – reveals the richest 10 per cent collectively possess $128 billion in wealth, with median individual wealth of $255,000. In contrast, the poorest 10 per cent collectively possess $17.2b, with median individual wealth of $3200. While the richest 1 per cent held 16.4 per cent of the country’s net wealth, the poorest 50 per cent owned just 5.2 per cent. ” Source
Which, unsurpringly, means we are seeing more headlines like these in our media,
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The Dominion Post article goes on to state,
“Data from the Organisation for Economic Co-operation and Development shows New Zealand’s income inequality climbed dramatically in the 1980s and 1990s after sweeping economic reforms and deregulation of labour markets.
Disparities have plateaued since 2000, largely thanks to Working for Families tax credits, bigger pay packets for middle and low-income earners and declining investment returns for the rich.
But the gap between rich and poor still ranked ninth worst in the developed world in 2008.” Ibid
How well have the top richest done in New Zealand?
About this well,
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The top 150 Rich Listers’ wealth grew by 20%.
That’s quite an achievement during one of the worst recessions in recent history. But even that increase in wealth isn’t sufficient for the Rich Listers. They wanted more,
“Jeweller Sir Michael Hill, worth $245 million, told NBR: “Could not the Government give us a little freedom to be able to make common sense decisions for ourselves?”
John McVicar, managing director of a forestry group that puts his family’s worth at $70 million, said economic policy should be based on reducing costs for business and increasing productivity and revenue.
Construction company head Sir Patrick Higgins, worth $100 million, said: “The country needs to address excessive regulation if it is to improve wealth creation.”” Ibid
Although at least one United States think-tank and the “Wall Street Journal” “rank New Zealand as already having the highest level of freedoms for business in the world. The Heritage Foundation’s “index of economic freedom” puts New Zealand fourth overall, with a score of 99.9 for business freedom.”
Clearly, tax cuts and increases in profits have shifted wealth upwards – not shared it around. Certainly the “trickle down” theory now applies only to meteorological services predicting upcoming rain falls.
This “gushing up” of wealth has been written about in the US “New York Times”. A very simple illustration showed where wealth has been accumulating – and who has been missing out,
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Interestingly, the great divergence of wealth, productivity, and incomes started around the late 1970s, early 1980s. It was also about the time that Ronald Reagan and Margaret Thatcher were elected into office, and began neo-liberal, “free market” policies commonly referred to as “Reaganomics” and “Thatcherism“.
The New Right were ascendent, and implemented their policies with ruthless efficiciency. Those policies benefitted the rich – to the detriment of the unemployed, low-paid, and middle classes (who were too busy fighting each other to notice what was happening to them them).
New Zealand’s turn for a dose of New Right came only a few years later, when Rogernomics took effect in 1984.
As wealth is accumulated upward (as the NBR so vividly illustrated), the real reason for denying low-paid workers an increase in the minimum wage becomes more apparent; the rich would be forced to share some of that wealth. Their profits would be a little less.
Of course, this doesn’t stop some from gaining some very substantial wage increases,
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How They’re Paid
PRIME MINISTER New salary (backdated to July 1): $411,510. Was: $400,500.
DEPUTY PRIME MINISTER New salary: $291,800. Was: $282,500.
CABINET MINISTER New salary: $257,800. Was: $249,100.
MINISTER OUTSIDE CABINET New salary: $217,200. Was: $209,100.
SPEAKER AND OPPOSITION LEADER New salary: $257,800. Was: $249,100.
BACKBENCHERS New salary: $141,800. Was: $134,800.
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So remind me again, why we can’t increase the minimum wage? I’ve heard all the nonsensical, reactionary reasons – but they seem more predicated on a pathological disdain for the poor, from uninformed middle class aspirationists, rather than any clear logic.
If New Zealanders want to continue down the road of increasing wealth for the rich; growing disparity in incomes; worsening poverty – this is the correct way to go about it. Our current policies and inequalities will achieve a society where the 1% Haves control most of the wealth; the vast majority remain in poverty or near-poverty; and the middle classes stagnate, blaming those on social welfare (the worst victims of these wretched policies) for their lack of upward mobility.
But the middle classes are looking the wrong way.
This may all sound like extremist left-wing politics. Maybe it is. But I don’t think so. The information I’ve gathered is freely available and easy to gather. The realities are all around us and the media – despite it’s glaring faults and preoccupations with trivia and crime stories – does present us with a view of what’s happening around us.
Many of us just choose not to look.
It’s easier to blame the poor; the unemployed; those of welfare. And yet, if the current economic situation was not as distorted as it currently is – we wouldn’t have so many poor, unemployed, or on welfare.
An increase of $2 an hour would be a step in the right direction. Just ask the Prime Minister – taxpayers are paying him an extra $11,000 a year.
I wonder if paying all our MPs those wage increases will result in any job losses?
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Treasury’s verdict on raising the Minimum Wage?
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It appears that even Treasury does not buy into the neo-liberal argument that raising the minimum wage will “destroy jobs”,
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National politicians, employers, right-wing reactionaries, and some low-information voters have the strange notion that raising the minimum wage will “destroy jobs”. In the second Key-Goff debate, held in Christchurch and hosted by “The Press”, Key outlined how raising wages would affect a cafe selling coffee and muffins, and would result in either prices going up – or the employer sacking staff.
What people forget is this,
- ALL workers on minimum wage would have their rate increased to $15 an hour. That means ALL cafes would be on an equal, level, playing field when it comes to employing staff. So one cafe owner couldn’t pay, say, $12 an houtr and try to cut costs that way.
- Workers on low wages tend to spend ALL their disposable income. Remember how the Nats gave empoyees the option to reduce their contributions for Kiwisaver from 4% to 2%? That was done because the government considered those earning low incomes were contributing too much to Kiwisaver, thereby reducing the amount of their disposable incomes.
- So, Let’s say that “Mary” currently works 40 hours a week and currently earns the minimum wage, $13 an hour, making a gross weekly income of $520. After tax, she is left with $447.85. She spends over half of that on rent, power, insurance, transport, and phone, – perhaps leaving her with $50 to spend on herself. That’s $50 a week on entertainment, clothing, saving for a weekend away, sporting/club/leisure activity or some other way to enjoy herself. That’s $50 that various retailers and service providers will get out of her.
- Now let’s calculate Mary earning $15 an hour. Her outgoings remain relatively the same. But she is now earning $600 a week, or $513.85 net. She now has $66 a week left over for discretionary spending. That’s an extra $16 a week she can spend on entertainment, clothing, saving for a weekend away, sporting/club/leisure activity or some other way to enjoy herself.
- Mary now has a few dollars extra. And she shouts herself a coffee and a muffin at her local cafe, once a week.
- The cafe owner’s turnover increases by the extra $5 week. Actually more than that – because Mark, Mathew, Melissa, Madison, and a whole heap of other workers on minimum wage are also frequenting that coffee shop, each spending around $5 a week.
- The coffee shop owner finds that his income has actually exceeded the slight rise in wages he has had to pay his staff. By increasing the minimum wage, people have more cash in their pockets, and some of that is flowing into his cash register.
That is how raising wages works.
Increasing turnover at the coffee shop does not necessarily work by cutting taxes. Those on higher salaries will not buy any more coffee or muffins than they are already consuming. They are already consuming as much as they want.
To increase his market share, the coffee shop owner has to “grow” his customer-base. And the best way to do that is to increase wages so people can buy his products.
That is how a consumer society works.
If anyone doubts the scenario I’ve just outlined – consider working it in reverse. Cut wages in half. Then figure out how much spare cash Mary will have to spend on consumer goods and services.
The clever chaps and chapesses at Treasury know all this, of course. That is why Treasury has stated,
“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.” Source
Andy Martin agrees,
“Andy Martin runs a pub, employing 26 people in Oamaru. He says put the wage up and people just spend more money – everyone wins.” – Ibid
Andy Martin is a shrewed businessman and understands this better than most National politicians, employers, right-wing reactionaries, and some low-information voters who don’t understand the economics of increasing the minimum wage. Raising the minimum wage from $13 to $15 is not just being fair to workers.
It makes damn good business sense.
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Additional Reading
Key’s figures dodgy on minimum wage – blog
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+++ Updates +++
MPs get pay rise package of $7000
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Bill English: Minimum Wage Not Sufficient to live on!
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On TVNZ’s Q+A yesterday (6 November) , National Minister of Finance, Bill English admitted what many of us already knew – that the Minimum Wage of $13 an hour is woefully inadequate for someone to live on.
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Labour's David Cunliffe and National's Bill English - Source: Q+A
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When questioned by Q+A’s Guyon Espiner on this issue, Bill English responded,
“GUYON: Okay, can we move backwards in people’s working lives from retirement to work and to wages? Mr English, is $13 an hour enough to live on?
BILL: People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity. It’s like being on a benefit.
GUYON: What do you mean for a short time?
BILL: Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.” Source
Whether or not “families are in a reasonable position” is questionable. It is doubtful that a family can live on simply $520 a week – not when rent/mortgage, food, power, etc, are taken out. $13 an hour, in such a situation, is barely survival-level of existence.
A single person would not even be eligible for WFF.
For English to suggest that a $13 an hour wage gives people “a sense of opportunity” shows a contemptuous attitude toward hard working men and women in this country. “Let them eat cake” would be another phrase that shows National’s attitude toward workers.
Despite John Key’s pre-election pledge in 2008 to raise wages, worker’s pay has not kept pace with rising prices. In fact, the reality is that the 5.3% rise in costs was more than double the 2.4% rise in wages.
And some workers are going backwards, with wage cuts,
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But then again, Bill English did state that lower wages were an “economic advantage”, when it came to competing with neighbouring Australia,
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National’s determination to keep wages low and competitive with Australia is at stark contrast with the previous government’s success at raising workers’ pay,
“Wage growth at a record high
Annual wage growth in the adjusted LCI (which measures changes in pay rates for a fixed set of jobs and excludes performance related pay increases) remained steady at 3.4% in the March 2008 quarter. This is the equal highest rate recorded since the LCI began in 1992 matching the annual increase for the December 2007 year.
The unadjusted LCI (which includes performance related pay increases) shows annual wage growth of 5.4% in the March 2008 quarter, up from 5.0% at December 2007.” – Dept of Labour
It seems that voters have yet another clear distinction to consider between the two main parties, when casting their votes: a higher-wage Labour-led coalition, or a status-quo National-led coalition.
The choice, quite literally, is in our hands.
As the wages gap continues to grow with Australia, for many New Zealanders this image becomes more and more ironic,
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National Party leader John Key stands in front of National's new billboard campaign in Auckland.
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Additional reading
Rich Listers enjoy 20pc increase in wealth
The Great Prosperity/The Great Regression
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