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)
.
.
1 April 2004 – Increased from $8.50 to $9.00 p/h
(Labour)
.
.
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)
.
.
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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