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A proposed Labour-Green-Mana(-NZ First?) agenda – part toru

8 March 2014 3 comments

Continued from:  A proposed Labour-Green-Mana(-NZ First?) agenda – part rua

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new-zealand-national-party_3382 adapted 2014

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An incoming Labour-Green-Mana(-NZ First?*) coalition government will have much work to do – especially in it’s first three years.

In the six years that National has been in power, they have passed many odious and often repressive pieces of legislation. Labour and the Greens have already committed to repealing some of these laws and policies.

As a Labour-led coalition government addresses growing problems of child poverty; income inequality; a shortage of decent, affordable housing; and chronic unemployment, a legislative programme will demand a long list of progressive reforms.

In no particular order;

The 90 Day Employment Trial Period

An amendment to the Employment Relations Act 2000, Section 67A, allows  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.

By April 2011, this was extended to all companies regardless of staff numbers. (A typical National strategy; start small – then encompass an entire sector.)

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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Source

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So aside from empowering employers and disempowering workers, what exactly was the point of enacting this piece of legislation? Because it seems that an awful lot of people lost their jobs through this legislation. As one media report stated,

It is not known how many workers were dismissed during the trial period, but the figures revealed 27 per cent of employers said they had fired at least one new employee during or at the end of their trial.

This means at least 18,000 people lost their jobs in the first three months of employment last year, with the actual figure likely to be much higher.

And precisely how does this raise wages, as per Dear Leader’s past promises (see below)?

This law gives too much power to one party in the Employer-Employee relationship, and it has no place in a fair-bargaining workplace.

On 17 October 2010, Labour promised that this law would be scrapped by an incoming Labour-led government. I hope the current Labour leadership has not resiled from this commitment.

Ports of Auckland Dispute – Shipping Lines Price Fixing

“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

Putting to one side 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 John Key has been advocating?

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.

This appears to have been motivated  by a high degree of price-fixing by shipping cartels, as was pointed out by the Productivity Commission in April 2012,

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Full story

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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  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.

An incoming Labour-led government should immediatly implement the Productivity Commission’s recommendation,

“The commission recommends that New Zealand require shipping companies wishing to collaborate to fix prices or limit capacity to demonstrate to the Commerce Commission that there will be a public benefit which will outweigh the anti-competitive effects.”

This problem must be addressed by an incoming government. It is simply intolerable for foreign corporations to be dictating labour laws; industrial relations; and wages, in a supposedly sovereign nation.

Youth Rates

From 1 May 2013, National  re-introduced a new Youth Rate. The rate would be set at $10.80 an hour [soon to be increased to $11.40 per hour]– compared to the then- minimum rate of $13.50  an hour  [soon to be $14.25 on 1 April this year], and would include 16 to 19 year olds.

John Key stated,

“For a lot of employers, they will go out there and say, ‘I’m going to give somebody a go that’s been in the workforce before’ and so the balance is against that younger person. That’s very disheartening for them – they are good young people, they just want a chance.

So I think it’s got to be seen in perspective – the vast overwhelming bulk of youngsters actually won’t go on a starting out wage.”

Which conflicts with John Key’s other assertions that he wants to see wages rise;

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 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

Youth rates won’t achieve that goal, Mr Prime Minister!

There is no good reason why Youth Rates should 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.”

As Lowe admitted – there is no new job for the  younger worker. S/he is merely displacing an older worker.

As it is, figures from Statistics New Zealand’s  Household Labour Force Survey showed that unemployment for young people had already fallen by the March 2013 Quarter – a full two months before Youth Rates came into effect;

In the year to March 2013, there was a large fall in unemployment for people aged 15–24 years (down 10,500). This fall can be largely attributed to a decrease in unemployed 20–24-year-olds (down 11,200). This was an atypical fall in unemployment, as the number of people unemployed for this age group usually increases during March quarters. The unemployment rate for people aged 20–24 years fell 4.1 percentage points to 10.9 percent – the lowest rate since the September 2009 quarter.

The employment rate for 20–24-year-olds rose over the year to March 2013. There was also an increase in the number of people aged 15–24 years not in the labour force over the year. Behind this was a rise in the number of young people outside the labour force who are studying (up 25,000). The number of both 15–19-year-olds and 20–24-year-olds in study rose –  up 16,200 and 8,800 respectively.
NEET rate declines

In seasonally adjusted terms, the NEET (not in employment, education or training) rate for youth (aged 15–24 years) decreased 1.5 percentage points, to 12.5 percent in the March 2013 quarter. This is the lowest youth NEET rate since the September 2011 quarter. The NEET rate for people aged 20–24 years fell 2.4 percentage points to 15.9 percent.

As the global economy continued to improve; the Christchurch re-build moved into high gear; and demand for our exports increased, unemployment was bound to eventually fall.

In which case, paying young workers a lower wage than their older counterparts was nothing more than a “gift” handed to employers.

As such, it has no place in a modern, civilised society. Youth rates are exploitative and demoralising. They also drag adult wages downward, as employers can opt for cheaper labour, as  David Lowe stated above.

In October 2012, Labour’s then-Leader, David Shearer condemned youth rates,

“It’s not going to create jobs by driving down wages.  These people are going to leave and go to Australia.

We need an economy that provides decent, secure jobs and good incomes and where young people have hope and opportunity, not the low-wage vision promoted by National.”

An incoming Labour-led government must repeal this exploitative legislation.

Continued at:  A proposed Labour-Green-Mana(-NZ First?) agenda – part wha

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(* At this point in time, NZ First’s leader, Winston Peters,  has not indicated which bloc – Labour or National – he intends to coalesce with. As such, any involvement by NZ First in a progressive government cannot be counted upon.)

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Above image acknowledgment: Francis Owen

To be continued at:  A proposed Labour-Green-Mana(-NZ First?) agenda – part wha

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References

Parliament Legislation: Employment Relations Act 2000, Section 67A

NZ Herald: Will the 90 Day trial period make a difference?

Beehive:  90-Day Trial Period extended to all employers

Trading Economics: New Zealand Unemployment Rate

Waikato Times: Thousands sacked under 90-day trial period

Radio NZ:  Labour would scrap 90 day trial – Goff

Fairfax media: Calls to end shipping lines’ price fixing

Fairfax media: Jackson pulls back from port comments

Radio NZ: PM defends lower youth pay rate

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

Statistics NZ: Household Labour Force Survey: March 2013 quarter

TV1 News: Employers back youth ‘starting wage’

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Key’s broken promise on raising wages

 

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https://fmacskasy.files.wordpress.com/2012/11/john-key-says-id-like-to-raise-wages-but-i-cant.png

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Once again, the Prime Minister has shown that he says one thing – whilst doing completely the opposite. The implementation of Youth Rates next month will be another in a series of his broken promises.

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 to five  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

See: Key wants a high-wage NZ

Key has repeated the same pledge every year since 2008.

On 1 May this year, National will be implementing a cut to the wages paid to young New Zealanders. The new youth rates will be  euphemistically known as the “Starting-out wage”.

The cut to wages of young workers will be as follows,

  1. 16 and 17-year-olds in their first six months of work with a new employer
  2. 18 and 19-year-olds who have been paid a benefit for six months or longer, and who have not completed six months of continuous work with any employer since starting on benefit
  3. 16-to-19-year-old workers in a recognised industry training course involving at least 40 credits a year.

Acknowledgement: Scoop – Starting-out wage available from 1 May

On 21 March Labour Minister, Simon Bridges, said,

“…The starting-out wage will provide an incentive for employers to help give young people a foot in the door and start building their skills and experience…

[…]

The starting-out wage will help set young people up for a lifetime of meaningful employment.”

Acknowledgement: Parliament – Hansards – 3. Youth Employment—Starting-out Wage

So will  a reduction in wages for young people, 16 to 19, help create more jobs? Or will it simply increase “job churn”, displacing older worker for younger, cheaper labour?

A previous “job creation” initiative from National was an amendment to the Employment Relations Act 2000, Section 67A – the 90 Day Trial Employment Period.

The 90 Day Trial Employment Period was implemented on April 2009, for workplaces with fewer than 20 employees. Labour Minister Kate Wilkinson enthusiastically predicted that the change to legislation would create more jobs,

“ The 90-day trial period will provide confidence for employers engaging new staff and allow struggling job-seekers to get their foot in the door, rather than languish on a benefit…

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… The 90-day trial will provide real opportunities for people at the margins of the labour market.”

Two years later, by April 2011, National extended the 90 Day Trial Employment Period to cover  all businesses.  Labour Minister Kate Wilkinson stated,

The Government is focused on growing a stronger economy and creating more jobs for New Zealand families,” says Ms Wilkinson.

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.

[…]

The evaluation showed that 40 percent of employers who had hired someone on a trial period said it was unlikely they would have taken on new employees without it.

Acknowledgement: Government statement – 90-Day Trial Period extended to all employers

So. How did the 90 Day Trial Employment Period work out? Did it create more jobs? The stats reveal the results with unambiguous, damning, clarity,

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Source

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As the chart above clearly shows, the answer is clearly no.  After the initial introduction of the 90 Day Trial Employment Period in April 2009, unemployment continued to rise. The same occurred after April 2011.

There is no reason to believe that implementation of Youth Rates will yield any different results.

The evidence suggests that tinkering with labour laws does not – and cannot –  create jobs. High unemployment is caused by other factors; entrenched problems in our economy; the high value of the dollar; a flood of cheap consumer goods; foreign workers being brought in to fill vacancies; poor wages; lack of planning between business-labour-government; and an ad hoc approach to on-going training for young people.

Instead of treating on-going education and training in young people as an investment – successive governments have erected barriers such as training and education fees. The situation that New Zealand finds itself in is sheer lunacy. We have thousands of unemployed New Zealanders – and yet government does little to facilitate them into training or higher education.

Why, for example, are unemployed paid a benefit to do nothing – and yet are forbidden to take up further education or trades-training?

To a half-way sensible person, this is madness.

And speaking of madness… National must know that cutting wages for young workers will not help create new jobs.  It may displace older workers in some areas, but otherwise it may act as further de-moralisation and discouragement for young people who are already facing tough times and an uncertain future.

What this does show is that National has no real job creation policies. For National, their sole reliance is on the “marketplace” to deliver new jobs. Sadly, they are mistaken – their market-based faith is half the problem.

Having faith that rain will come on a given day will not make it so.

Sensibly, the fast food industry has already come to the same conclusion that unions and others on the Left have instinctively understood for ages,

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Thumbs down by fast-food chains to youth rates

Acknowledgement: Fairfax Media – Thumbs down by fast-food chains to youth rates

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The Nats appear to be so wedded to their screwy market-based faith-politics that the failure of the “marketplace”  eludes them.

It’s a shame that National hasn’t caught up with the bleedin’ obvious.  Or… have they? It appears that some people are doing very well from the “marketplace”.

At our expense…

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Increase for SOE bosses 'obscene'

Acknowledgement: Fairfax Media – Increase for SOE bosses ‘obscene’

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Addendum

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?)

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– “Hey, Krystal, let’s freeze our wages, to set an example for everyone else, and for the good of the economy!”
– “Oh, Toby! What an absolutely spiffing idea! Dear Leader WILL be pleased!”

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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 possibly be fairer than that?

This blogpost was first published on The Daily Blog on 12 April 2013.

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Previous related blogposts

John Key’s track record on raising wages: Preface

1. The “Hobbit Law”

2. The 90 Day Employment Trial Period

3. Ports of Auckland Dispute

4. Rest Home Workers

5. The Minimum Wage

6. Youth Rates

7. Part 6A – stripped away

8. An End to Collective Agreements

9. Conclusion

10. A New Government’s Response

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The road to Youth Rates – Wrong way, Prime Minister, Wrong way!

23 March 2013 15 comments

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closing the wage gap with Australia as promised by John Key

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1. Backgrounder

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It was during the 2008 general election that the issue of the growing wage disparity with our Aussie cuzzies became an issue. Curiously, it was the then-Opposition Leader, John Key, capitalist; multi-millionaire; and currency trader, who was making some very odd comments.

Indeed, he was sounding positively socialist – at the time;

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

Acknowledgement: John Key’s website – “National Tough On Crime”

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.  We must cut taxes and grow our economy, and National will have policies to ensure both occur.” – John Key, 6 September 2008

Acknowledgement: National Party – “Environment Policy Launch

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

Acknowledgement: Government statement

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

Acknowledgement: Dominion Post – Key wants a high-wage NZ

Which sounded all well and good…

Until reality set in. And we remembered that John Key was leader of the National Party – not Labour, Greens, Mana, or the Alliance.

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2. Present Day

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As this blogger wrote last year;

On 9 October (2012), Labour Minister Kate Wilkinson announced that National intended to introduce a new Youth Rate, to take effect in April (2013). The rate would be set at $10.80 an hour – compared to the minimum rate of $13.50 [soon to be $13.75]  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.”

Acknowledgement:  Scoop – NZ teens face $10.80 an hour youth wage rate

It is doubtful if National’s Youth Rates 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.”

Acknowledgement:  Scoop – 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.

Note: the above figures relate to the adult Minimum wage at $13.75 an hour. At the time  the above statements were written, the adult minimum wage was $13.50 an hour. National very generously raised it by 25 cents an hour, and will take effect on 1 April this year.  (Low income earners would celebrate by popping the corks on a few bottles of Wairarapa ‘champagne’ – but 25 cents an hour doesn’t quite cover it. Perhaps a bottle of fizzy will suffice.)

So what was the rationale for National to implement what, effectively, is a wage cut for 16-19 year olds?

Minister for [Cheap] Labour, Simon Bridges said on 21 March this year – and I reprint his statement in full;

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Starting out wage - youth rates - simon bridges - national government - minister for labour - cutting wages

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Acknowledgement: Government statement – Starting-out wage available from 1 May

Nowhere in that statement does Bridges state –  or even hint –  that cutting the wages of 16 to 19 year olds will create one single new job.

Contrast that to Kate Wilkinson’s statement on 18 July 2010, when National introduced the 90 Day Trial Employment Period,

“The Government is focused on growing a stronger economy and creating more jobs for New Zealand families,” says Ms Wilkinson.

“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.”

[…]

“The evaluation showed that 40 percent of employers who had hired someone on a trial period said it was unlikely they would have taken on new employees without it.

Acknowledgement: Government statement – 90-Day Trial Period extended to all employers

Wilkinson assured the country that, in return for employees losing job protection for 90 days, that the counter-benefit would result in  “stronger economy and creating more jobs for New Zealand families.

So how did that work out?

Let’s check the stats, shall we? From mid-2010 to the latest data for this year,

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Unemployment Rate - july 2010 - march 2013

Acknowledgement: Trading Economics/Statistics NZ

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From July 2010, unemployment rose to January 2011; dropped to July 2011; and then began an inexorable climb to 7.3%.

Even the drop to 6.9% [highlighted in the red box] in January 2013 is illusory, as Statistics NZ reported on Radio NZ,

The numbers officially out of work eased back from a 13-year high at the end of 2012.

But the fall in the unemployment rate was due to more leaving the workforce than new jobs being created.

The numbers of those deemed officially unable to find a job fell by 10,000 to 163,000 in the final three months, figures released by Statistics New Zealand on Thursday morning show.

As a result, the unemployment rate fell from 7.3% of the workforce to 6.9%.

The Household Labour Force Survey shows that employment fell by 23,000, led by there being more women out of work.

It was the third consecutive quarterly fall, taking those employed as a proportion of the workforce to a 10-year low.

The unemployment rate fell only because even more people gave up looking for work than lost jobs.

In all, 33,000 people dropped out of the workforce in the final three months of 2012 – the highest number to do so on record.

Acknowledgement: Radio NZ – Unemployment rate falls as more give up job hunt

If we add those missing 33,000 people to the number who are unemployed, the figures become  jaw-droppingly ghastly,

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Unemployment persons - july 2010 - march 2013

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Acknowledgement: Trading Economics/Statistics NZ

It’s fairly obvious; the 90 Day Trial Period not only did not create new jobs – but unemployment has skyrocketed.

Quite clearly, there are other factors that create new jobs, and silly, ill-considered, simplistic,  neo-liberal gimmicks do not contribute to the mix.

This blogger predicts that precisely the same will happen when youth rates are implemented on 1 April,

  • No new jobs will be created
  • Employment numbers will remain high
  • Older workers will be displaced in favour of cheaper, younger workers
  • New Zealanders will continue to migrate, en masse, to Australia, where jobs and wages have not  been undermined by an ideologically-blinded government

Is reducing the wages bill for  businesses really the best that Dear Leader can come up with? Because, really, the only thing that a new Youth Rates will do is transfer employment to cheaper workers and drag down wages with it.

This is not a plan for wage growth, it is a plan for a low-wage economy, with those New Zealanders who can, escaping to Australia.

Let’s not forget that on 10 April, 2011, Bill English actually welcomed lower wages, on TVNZ’s Q+A,

GUYON Can I talk about the real economy for people?  They see the cost of living keep going up.  They see wages really not- if not quite keeping pace with that, certainly not outstripping it much.  I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper.  I mean, is that an advantage now?

BILL Well, it’s a way of competing, isn’t it?  I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.

GUYON So it’s part of our strategy to have wages 30% below Australia?
BILL Well, they are, and we need to get on with competing for Australia.  So if you take an area like tourism, we are competing with Australia.  We’re trying to get Australians here instead of spending their tourist dollar in Australia.

GUYON But is it a good thing?

BILL Well, it is a good thing if we can attract the capital, and the fact is Australians- Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.

GUYON So let’s get this straight – it’s a good thing for New Zealand that our wages are 30% below Australia?

BILL No, it’s not a good thing, but it is a fact.  We want to close that gap up, and one way to close that gap up is to compete, just like our sports teams are doing.  This weekend we’ve had rugby league, netball, basketball teams, and rugby teams out there competing with Australia.  That’s lifting the standard.  They’re closing up the gap.

GUYON But you said it was an advantage, Minister.

BILL Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia.  So Australia already has 40 billion of investment in New Zealand.  If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.

Acknowledgement:  TVNZ Q+A – Interview with Bill English

If the Nats think that the Australian government will sit idly by whilst Aussie businesses relocate to this country for cheaper wages, they are fooling themselves.  Australia will retaliate in some way – and it won’t be pleasant for us.

In last year’s May budget, the Nats decided to tax  the meagre wages of paper boys and girls (see: Budget 2012: ‘Paper boy tax’ on small earnings stuns Labour).  Now Key and English are cutting their pay again.

If this is truly the best that the Right can come up with, then they are bankrupt of ideas.

New Zealanders should ponder one, simple question; is this what we really  want for our country and our kids?

Meanwhile, we can add Key’s pledge to raise wages to his growing record of other broken promises. It’s turning into quite a list.

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Previous related blogposts

John Key’s track record on raising wages: 6. Youth Rates (11 Nov 2012)

Johnny’s Report Card – National Standards Assessment – Employment/unemployment (9 Jan 2013)

References

Government statement: 90-Day Trial Period extended to all employers (18 July 2010)

NZ Herald: Budget 2012: ‘Paper boy tax’ on small earnings stuns Labour (25 May 2012)

NZ Herald: Minimum wage to increase by 25c (26 Feb 2013)

Government statement: Starting-out wage available from 1 May (21 March 2013)

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

11 November 2012 6 comments

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

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6. Youth Rates

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

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

See: Dept of Labour – Previous minimum wage rates

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Source

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

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

As Scoop.co.nz reported,

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

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

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

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

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

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

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

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

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

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

She said,

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

Campbell’s remark are offensive on several levels.

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

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

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

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

Yeah, right.

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

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

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

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

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

Next chapter: 7. Part 6A – stripped away

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Addendum

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

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

Source: Govt reintroduces youth wage

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

Is ten months “to early to say“?

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That was Then, This is Now #17

12 October 2012 2 comments

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John Key Youth Rates National

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Previous Blog Post

That was Then, This is Now #16

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Welfare ain’t broke – It’s the Jobs that ain’t there, John-boy!

10 October 2012 9 comments

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Or,

Jobs, Welfare, & the  Joys of a National “Government”

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John Key, being empathetic,

I have said before that I believe in the welfare state and that I will never turn my back on it. We should be proud to be a country that looks after its most vulnerable citizens. We should be proud to be a country that supports people when they can’t find work, are ill, or aren’t able to work.  ” – John Key, 30 January 2007

See:  The Kiwi Way: A Fair Go For All

The promise of National policies on job creation…

This is a budget that actually delivers that.  Treasury say in the Budget, as a result of this platform on what we’ve delivered, 170,000 jobs created and 4% wage growth over the next three to four years.” – John Key, 19 May 2011

See:  Budget 2011: Govt predicts 170,000 new jobs

The economic reality  of National’s “leave it-to-market-forces” policies…

New Zealand’s unemployment rate unexpectedly rose to 6.7pc in the first quarter after the labour force swelled to a three-year high as more people started looking for work in what’s been a tight jobs market. The kiwi dollar fell after the data was released.

The unemployment rate rose 0.3 percentage points to 6.7 per cent in the three months ended March 31, from a revised 6.4 per cent in the prior quarter, according to Statistics New Zealand’s household labour force survey. That’s higher than the 6.3 per cent forecast in a Reuters survey of economists. ” – NZ Herald/Household Labourforce Survey, 3 May 2012

See: Unemployment rate lifts to 6.7pc

A minister forced to admit the bleedin’ obvious,

There’s not a job for everyone that would want one right now, or else we wouldn’t have the unemployment figures that we do.” – Paula Bennett, 29 April 2012

See:  TVNZ  Q+A: Transcript of Paula Bennett interview

How National deals with  a stagnant economy and growing unemployment; blame the beneficiaries,

We will be introducing social obligations, so they will have to enrol their child in early childhood education and get well-checks at the doctor by enrolling with the local PHO. If you have kids, then you will lose 50 per cent of your benefit. That’s the worst case scenario. We hope it doesn’t get to that.” – Paula Bennett, 27 July 2012

See:  Hardline Key to rivals: Bring it on

After all, everyone (who votes National/ACT) knows that welfare beneficiaries – the unemployed, solo-mums, widows, invalids, etc –  really run the country;  hold the reigns of power; and create the policies that generate jobs.

John Key, not-so-empathetic,

But it is also true that anyone on a benefit actually has a lifestyle choice. If one budgets properly, one can pay one’s bills. And that is true because the bulk of New Zealanders on a benefit do actually pay for food, their rent and other things. Now some make poor choices and they don’t have money left.  ” – John Key, 17 February 2011

See:  Food parcel families made poor choices, says Key

National’s view on unemployment,

But as a country, we need to have a hard look at where the welfare system has got to. I don’t think our welfare system today is what its architects had in mind.  That’s why National has a new approach to reduce long-term benefit dependency. ” – John Key, 15 August 2011

See: Building a more effective welfare system

An unemployed person’s view on unemployment,

It’s just so tough out there at the moment. I do have limited experience. I’ve only had one reply from my ads but a few people have rung about my sign on my fence. They think I’m offering work though … there is next to nothing going out there. ” – Jeffrey Rollo, 4 August 2012

See: Rotorua’s jobless at wits’ end

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SEEKING WORK: Jeffrey Rollo has put a sign up on his front fence and placed advertisements in The Daily Post looking for a job after being laid off a month ago.

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Is this a welfare “problem” – or a lack-of-jobs problem? Who do you believe? John Key or Jeffrey Rollo?

Which begs the questions – will National’s welfare “reforms” create jobs? Will it put Jeffrey Rollo into work?

Will youth rates help Jeffrey Rollo into work?

Will an employer hire Jeffrey Rollo at $13.50 an hour – or an 18 year old at $10.80 an hour?

Who get’s a job that 150 other people will also be applying for?

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Full tragic story

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The answers are fairly obvious.

Exporting jobs to places like China will not create jobs. We end up paying our own workers to rot on the unemployment scrapheap.

Welform “reforms” will not create jobs. Welfare is not “broke”, and is operating as it should, saving people from starving to death.

Youth rates will not create jobs. It simply shifts the few remaining deck chairs around ‘S.S. New Zealand’.

It is time to invest in jobs in our own country.  Blindingly obvious, I would’ve thought.

Unfortunately, as events are now unfolding, it appears that we will have to wait for a change of government that will be job-creation-friendly.

Addendum

The Household Labour Force Survey: September 2012 quarter will be released on 8 November.

 

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The betrayal of our young people

10 October 2012 11 comments

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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.”

John Key, 30 January 2007

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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.  “

John Key, 29 January 2008

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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.”

Dominion Post, 9 Oct 2012

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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;

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,

  1. Less money spent by young people on services and consumer goods,
  2. Young people unable to support themselves fully
  3. A new motivation to send more New Zealanders overseas
  4. 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;

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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.

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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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