Another win for union members

54 comments on “Another win for union members ”

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1. mickysavage 1

   26 July 2010 at 7:54 am

   It is interesting that these pro union posts over the past week have attracted huge numbers of comments. What is the bet that Tsmithfield, Gosman, fisi, Neil et al will now argue vociferously but without evidence that it is not actually true and that Unions are not only not good for wage increases but also cause lung cancer?
   • Bored 1.1

     26 July 2010 at 1:09 pm

     How can you raise such a vile and baseless accusation against these upstanding members of blogdom? These people of big hearted generosity and kindness to their fellow citizens, these inclusive fiar minded types. Shame on you MS……..not.
2. sean14 2

   26 July 2010 at 8:23 am

   Good on the EPMU and I’m sure they won’t have any trouble attracting new members with that sort of performance.
3. jcuknz 3

   26 July 2010 at 8:56 am

   Of course Alastair Thompson is correct, it would hurt productivity. But do we need that productivity consuming earth resources and shouldn’t we be working towards a stage of zero increase or decrease.
   Though in my work when we had a day off that just meant the deadline had to be met with less time to do it. So I don’t think that uniform acceptance of the holiday swop would result in uniform loss of output. But AT has to spout this stuff just as the Union leaders have to and we simply ignore it for what it is, unproductive garbage.
4. TightyRighty 4

   26 July 2010 at 9:08 am

   where is the rest of the graph? why does it stop at a 5% increase? is it because non-union workers have the best chance of getting an awesome pay rise for working to best of their abilities and not just to rule?
   • george 4.1

     26 July 2010 at 9:17 am

     Do you mean like the EPMU members in Taranki that got a 26% pay rise TR? I’m a union member and I’ve negotiated above the collective agreement in my office. That’s because a collective agreement sets a floor, not a ceiling. You shouldn’t make comments on things you know nothing about.
     • TightyRighty 4.1.1

       26 July 2010 at 9:40 am

       Precisely like the 26% pay rise. Did i mention anything about collective agreements george? nice name incidentally. I didn’t, so I wasn’t commenting on it, even if I do know something about it. Being, in addition to a trained economist, a trained performance and renumeration specialist with a side offering in industrial relations.

       An example of working to rule is the old habit of dropping tools at 5pm, no matter what is on the table. A famous old habit of union workers, that I’m fairly certain has died out.

       All I said was that non-union workers have the best chance of getting an awesome pay rise for working to the best of their abilities, not the only chance. So why get so upset about it?
       • felix 4.1.1.1

         26 July 2010 at 9:53 am

         Being, in addition to a trained economist, a trained performance and renumeration specialist with a side offering in industrial relations.

         Of course you are, dear. Of course you are.
       • toad 4.1.1.2

         26 July 2010 at 9:55 am

         TR, your “dropping tools at 5pm” reference harks back to the 60s – times have moved on, and unions have moved with them. FYI, the union movement strongly supported the Employment Relations (Flexible Working Arrangements) Amendment Act. Do try to keep up.
         • TightyRighty 4.1.1.2.1

           26 July 2010 at 10:08 am

           Why only read half the paragraph toad? The original comment was a not-to-subtle dig at unions at times gone by. I know the practise has largely died out. You only really see it in retail these days.

           felix, if lprent can be a know-it-all on climate change because he took earth sciences at least a hundred years ago, I can do a little bit of the same for graduating only 3 years ago.
         • ghostwhowalksnz 4.1.1.2.2

           26 July 2010 at 10:27 am

           At 5PM in Quay St in Auckland youll get run over by high powered SUVs heading out to the Eastern Suburbs.
           And there was the old saying
           ‘burlington bertie arises at 10.30’
       • burt 4.1.1.3

         26 July 2010 at 12:53 pm

         All I said was that non-union workers have the best chance of getting an awesome pay rise for working to the best of their abilities, not the only chance. So why get so upset about it?

         Because the graph shows CPI level increases, an area where one size fits all dominates.
         • TightyRighty 4.1.1.3.1

           26 July 2010 at 4:09 pm

           The graph, on first inspection shows the percentage of workers on the vert, and the percentage pay rise on the horiz. but this stops at 5% along the horiz, which is a bit dubious.

           But what is even more dubious, is your claim burt that the graph shows CPI level increases. Since when did this graph, purporting to show the distribution of pay rises amongst union and non-union members, become explicitly about the consumer price index and the level of it’s rises and falls. While wage changes can have an impact on prices (higher costs mean higher prices or lower profit and vice versa), there are other forces at work as well. you should have stuck to just upset, rather than stupid and upset. upset will just make the stupid worse.
           • Pascal's bookie 4.1.1.3.1.1

             26 July 2010 at 7:53 pm

             There is a ‘plus’ sign after that last 5%. What does that usually mean, oh wise one?
             • Puddleglum …

               26 July 2010 at 9:21 pm

               Beat you to it! But only by seven hours… : )

               (see below)

               Still waiting for TR to catch up though..
   • Puddleglum 4.2

     26 July 2010 at 12:55 pm

     I think you’ll find on closer inspection, TR, that the category on the right hand side of the graph is “5%+” – i.e., all increases of 5% or more. (Either that or there’s a speck on my screen – the font size IS very small).
   • Alwyn 4.3

     26 July 2010 at 4:02 pm

     Does anyone have a graph which compares the wage rises in the public sector with those in the private sector, rather than lumping all union members together against the non-union sector.
     It is my understanding that the great concentration of union members is in the public sector and that they have been under a great deal less pressure than in the private sector.
     Thus the increases for union members may only reflect the area where they work rather the actual work done by the union itself.
     This is likely to change with the current government but was probably the case for the period that this graph covers.
5. Julie 5

   26 July 2010 at 9:36 am

   Well done EPMU members and staff, that’s a great result.
6. vto 6

   26 July 2010 at 10:08 am

   Oh that looks good. Do you need to be an engineer, printer or manufacturer to join? And what about an employer – suppose one of them is needed too… dang. Oh well, let them negative rises continue.
7. tsmithfield 7

   26 July 2010 at 10:12 am

   More motivation for unionised businesses to transfer their manufacturing to China then?
   • ghostwhowalksnz 7.1

     26 July 2010 at 10:29 am

     Ask Honda , who have a lot of parts manufacture, about Chinese workers. seems they have rights too. TS has run out of low paid countries for his sweatshops.
     • tsmithfield 7.1.1

       26 July 2010 at 10:32 am

       Just talking about the sad reality that I see here very often. There has been a lot of manufacturing lost to the likes of China over recent years. F&P were a recent high-profile example but there have been a lot more.

       Anything that increases costs for businesses locally will give them motivation to seek cheaper options elsewhere. Do you seriously disagree with this proposition?
       • Roger 7.1.1.1

         26 July 2010 at 2:34 pm

         This is not caused by unions. There is also minimum wage laws, regional free trade agreements, advances in technology etc. The only way to really ensure that this does not continue would be to push New Zealand’s manufacturing wages down to parity with developing nations like China and remove environmental legislation and resource management processes to create the same conditions. Is that the path you suggest to improve our economy and manufacturing capability?
8. george 8

   26 July 2010 at 10:49 am

   You are taking a low-wage, low-skill approach there smithfield. That’s the one that ends up with NZ being a third world nation. Ambitious much?
   • tsmithfield 8.1

     26 July 2010 at 10:53 am

     Not an outcome I want. Its just the reality we face. It will be interesting to see the proportion of those unionised to compared to non-unionised businesses that end up relocating overseas. Increasing local costs are a common reason for relocating. Therefore, there should be more motivation for unionised workplaces that have just incurred these increased costs to shift.
     • george 8.1.1

       26 July 2010 at 11:36 am

       That’ll be why Germany and Scandinavia have no manufacturing.
9. Draco T Bastard 9

   26 July 2010 at 11:48 am

   That’s because business and NACT thinks productivity is about Kiwis working harder for less than it costs to live and participate in the community and under the government’s new laws they’ll be able to push that vision even further.

   FIFY
   • Bored 9.1

     26 July 2010 at 1:05 pm

     That is the key to he whole thing Draco….the reality is as TS so nicely puts it capital will go where wages are least. Productivity as percieved by NACT in effect means maximising profit by cutting wages. Some heartless deluded misanthropes see this as a good thing, pain will they reckon be replaced with gain. Myself I always regard somebody talking about “necessary” pain with some degree of doubt. Its easy to make “hard” decisions if you are not personally recipiant of the associated “pain”.
10. tsmithfield 10

    26 July 2010 at 11:48 am

    George “That’ll be why Germany and Scandinavia have no manufacturing.”

    So you haven’t been keeping up with trends in the Euro lately then?
    • george 10.1

      26 July 2010 at 12:01 pm

      Yes because the crash has driven European living standards much lower than South East Asia’s and Mexico’s.
      • tsmithfield 10.1.1

        26 July 2010 at 12:11 pm

        So, with the low exchange rate, many Europeans will be paying a lot more for petrol and other imported items. Therefore, their actual internal wage rates might not be as good as they look. Correct?
        • Lanthanide 10.1.1.1

          26 July 2010 at 12:24 pm

          Petrol is not anywhere near as big an expense on european countries with proper public transportation systems, compared to NZ. Many europeans don’t own cars or even have drivers licenses.
11. tsmithfield 11

    26 July 2010 at 12:36 pm

    Whatever. The fact remains that imported goods will be costing Europeans a lot more.

    The other point, in response to Georges original comment, is that Europe is a substantially larger and closer market for countries in that region. So for Germany, for instance, they have local cred, few barriers in Europe due to a common currency etc, a large common market, and are highly competitive with exports at the moment due to the low Euro.

    Contrast this with NZ that has to add more substantial freight costs on to the things we produce and has a relatively high exchange rate. Therefore, we are behind the eight-ball to start with. So if our costs (including wages) for manufacturing keep going up, then it is natural for companies will seek to relocate where those costs are cheaper, and closer to their markets to boot.
    • george 11.1

      26 July 2010 at 12:50 pm

      Freight costs next to nothing and if it does go up it will aid import substitution as the freight-component of imports increase. The exchange rate is high as the result of policy failure. Your problem is you’d rather see wages pushed down than see basic changes to the reserve bank act that might make our currency price closer to its value and in turn stop you buying imports.

      Your argument makes sense from a finance sector point of view but few others. You’re not a currency speculator or a loan-shark are you?
12. tsmithfield 12

    26 July 2010 at 1:07 pm

    George “Freight costs next to nothing and if it does go up it will aid import substitution as the freight-component of imports increase.”

    But it does cost more. Also longer delivery times etc from NZ due to relative distances from the market. This is only a small aspect of my argument though. The relative size and accessibility of the European market compared to NZ means that manufacturers have a very viable local market regardless of what the exchange rates do. NZ is not so lucky.

    “The exchange rate is high as the result of policy failure”

    Na. It because we are seen as a better risk than those countries that got into major trouble with their banks and still have interest rates at near zero and are still printing money in one way or another. Ever heard of the carry-trade?

    “Your argument makes sense from a finance sector point of view but few others. You’re not a currency speculator or a loan-shark are you?”

    No. Just from the point of view of hedging for stuff we import.
    • george 12.1

      26 July 2010 at 1:19 pm

      No, the exchange rate is high because we use the cash rate to control inflation. But you’re an importer which means you’ll never admit this because manufacturing exporters are effectively subsidising your income.
      • tsmithfield 12.1.1

        26 July 2010 at 1:33 pm

        “No, the exchange rate is high because we use the cash rate to control inflation.”

        Na. At the moment it is the relative differential between the exchange rates. That is more to do with the carry trade. Your argument would only hold true if you could show that we should also have our rates set at virtually zero and should be printing money as well. Its not our reserve bank that is causing the problem. Its the deplorable economic state of other countries.

        “But you’re an importer which means you’ll never admit this because manufacturing exporters are effectively subsidising your income.”

        A lot of our equipment gets fitted to processes used in exporting. I would rather the exchange rate be low because then our export manufacturing customers are busier and need to buy more from us. So I don’t disagree there.
        • george 12.1.1.1

          26 July 2010 at 2:07 pm

          The carry trade relies on a high interest rate. Which is what using the cash rate to control inflation does. You’ve got your cause and effect mixed up smithfield.
          • tsmithfield 12.1.1.1.1

            26 July 2010 at 2:24 pm

            Its relative interest rates. So, care to answer my question. Should we be at near 0% and printing money as they are in the US et al?
            • george 12.1.1.1.1.1

              26 July 2010 at 3:29 pm

              The cash rate should be a lot lower than it is and it would be if we had another way to control inflation. There should also be a tobin tax.
              • tsmithfield …

                26 July 2010 at 4:28 pm

                “The cash rate should be a lot lower than it is”

                Ummm… so what level between 2.75% and 0 would you suggest as a suitable rate and why?

                “There should also be a tobin tax”

                Would have to think about the “tobin tax” concept. However, the problem is always unintended consequences. For instance, could this become a drag on the “good guys” like ourselves who are simply looking to hedge to fix our costs.
                • george …

                  26 July 2010 at 4:36 pm

                  I’d suggest the level needed to control inflation after other measures were taken. That could well be zero.

                  In an economy that was less strictly monetarist you wouldn’t have to spend so much time on the finance side of things. It’s absurd that so many NZ exporters spend so much time currency speculating, fuel hedging and the like.
                  • tsmithfield …

                    26 July 2010 at 4:54 pm

                    “I’d suggest the level needed to control inflation after other measures were taken. That could well be zero.”

                    I would be interested to here what other measures you have in mind. Bear in mind that if these impact directly or indirectly on the money supply then interest rates will be affected.

                    “In an economy that was less strictly monetarist you wouldn’t have to spend so much time on the finance side of things. It’s absurd that so many NZ exporters spend so much time currency speculating, fuel hedging and the like.”

                    So long as we have differential exchange rates between countries there will be a need for hedging.

                    Another point to consider is that very often when someone is speculating on the direction the currency might trend, there is often someone on the other side taking a hedging position on the same transaction. Its not always win-lose. Quite often everyone can be happy. The exporter/importer can fix there costs and the speculator might make some money all on the same transaction. Another unintended consequence of tobin type taxes might mean that speculators are driven away and it becomes harder or more expensive to take hedging positions.
                    • george …

                      26 July 2010 at 6:31 pm

                      Bear in mind that if these impact directly or indirectly on the money supply then interest rates will be affected.

                      Wrong. You’re assuming a fixed demand situation in which reduced supply creates a higher price (i.e. interest rate) debt demand is more elastic than that. Also there are a lot of different inflationary pressure in an economy and they are best dealt with in a targeted manner for instance a housing bubble can be dealt with via an adjustable capital gains tax, a debt bubble can be dealt with via an adjustable compulsory super scheme, a wage bubble can be dealt with through income tax adjustments.

                      So long as we have differential exchange rates between countries there will be a need for hedging.

                      Wrong. You can have a stable differential which does not require hedging. It’s fluctuations in the differential that matter.

                      The exporter/importer can fix there costs and the speculator might make some money all on the same transaction. Another unintended consequence of tobin type taxes might mean that speculators are driven away and it becomes harder or more expensive to take hedging positions.

                      Businesses that trade internationally from New Zealand have to hedge far more than they would if we had a stable, correctly priced currency. A tobin tax, along with sensible fiscal policy, would help flatten the peaks and troughs in the dollar and significantly reduce firms exposure and their need to hedge. If that gets rid of a few currency speculators then all the better.
                    • tsmithfield …

                      26 July 2010 at 7:30 pm

                      “Wrong. You’re assuming a fixed demand situation in which reduced supply creates a higher price (i.e. interest rate) debt demand is more elastic than that”

                      Of course. And what I said was based on the implicit assumption of all things being equal. What you say could also apply to controlling interest rates given that in reality all things are seldom equal.

                      “For instance a housing bubble can be dealt with via an adjustable capital gains tax, a debt bubble can be dealt with via an adjustable compulsory super scheme, a wage bubble can be dealt with through income tax adjustments.”

                      Not necessarily opposed to any of these things. However, what you are proposing involves high levels of complexity in implementation and control. Also probably replete with unintended consequences.

                      “Wrong. You can have a stable differential which does not require hedging. It’s fluctuations in the differential that matter.”

                      For this to work then it would require countries on both sides of any given transaction to have fixed their currencies. It is not enough just for NZ to have done so. But that state of affairs is outside the control of NZ and unlikely to happen any time soon. So, you are really only arguing from a theoretical perspective, not from any conceivable practical reality in the near future.

                      “Businesses that trade internationally from New Zealand have to hedge far more than they would if we had a stable, correctly priced currency.”

                      See my comment above. It takes two to tango.

                      “A tobin tax, along with sensible fiscal policy, would help flatten the peaks and troughs in the dollar and significantly reduce firms exposure and their need to hedge. If that gets rid of a few currency speculators then all the better.”

                      Not necessarily opposed to this idea. How it would work in practical reality would be the key thing. Have any countries you know of actually tried this?
    • loota 12.2

      26 July 2010 at 1:27 pm

      Massive inflows of hot speculative money (the ones John Key used to direct) damage our productive sector by pumping up the value of the NZD and making our goods artificially more expensive on foreign shelves.
      • george 12.2.1

        26 July 2010 at 1:31 pm

        And foreign goods artificially cheap on ours. Which is why we have such a large amount of private debt and such a poor current account balance.
        • loota 12.2.1.1

          26 July 2010 at 4:42 pm

          On the upside, it helps us fill our houses with cheap **** from The Warehouse* even as our standard of living and relative income goes down the toilet.

          * I mean the generic idea of The Warehouse, understanding that the actual The Warehouse tries to source some NZ made stuff these days.
13. george 13

    26 July 2010 at 7:48 pm

    what I said was based on the implicit assumption of all things being equal. What you say could also apply to controlling interest rates given that in reality all things are seldom equal.

    You haven’t made an argument her. Or if you have you’ve not been clear.

    Not necessarily opposed to any of these things. However, what you are proposing involves high levels of complexity in implementation and control. Also probably replete with unintended consequences.

    No what I’ve suggested here involves adding a few more focused tools to deal with inflation. Arguing the law of unintended consequences without specifying any is a cop out. There are plenty of unintended consequences of using the cash rate as your only fiscal tool. Such as debt driven inflation.

    For this to work then it would require countries on both sides of any given transaction to have fixed their currencies. It is not enough just for NZ to have done so. But that state of affairs is outside the control of NZ and unlikely to happen any time soon. So, you are really only arguing from a theoretical perspective, not from any conceivable practical reality in the near future.

    New Zealand has a particularly exposed currency stabilise the NZ dollar a bit and the changes in differentials shrink. Especially in relation to other currencies which are more stable than ours. There are a lot of these.

    Not necessarily opposed to this idea. How it would work in practical reality would be the key thing. Have any countries you know of actually tried this?

    Ever done business with China?
    • tsmithfield 13.1

      26 July 2010 at 10:05 pm

      “No what I’ve suggested here involves adding a few more focused tools to deal with inflation. Arguing the law of unintended consequences without specifying any is a cop out.”

      I was just trying to work out how a landlord could calculate their taxes with a floating capital gains tax.

      “New Zealand has a particularly exposed currency stabilise the NZ dollar a bit and the changes in differentials shrink. Especially in relation to other currencies which are more stable than ours. There are a lot of these.”

      Not that exposed. We do tend to move approximately in step with the Auz. I would have no objection to pegging to the Auz or US. Bear in mind that these are also fiat currencies so the concept of “fixing” a currency doesn’t work. The only way to fix a currency would be to have a single world currency.

      BTW, the concept of a tobin tax does have some fairly major problems.
      • george 13.1.1

        27 July 2010 at 7:20 am

        I was just trying to work out how a landlord could calculate their taxes with a floating capital gains tax.

        I didn’t say floating I said adjustable, like income tax has been over the last three budgets. Housing booms move slowly enough that an annual correction would be likely to be enough.

        Not that exposed. We do tend to move approximately in step with the Auz. I would have no objection to pegging to the Auz or US. Bear in mind that these are also fiat currencies so the concept of “fixing’ a currency doesn’t work. The only way to fix a currency would be to have a single world currency.

        I didn’t say fixing or pegging. That is altogether different from taking measures to stop the dollar from being priced higher then its value. You’ve probably noticed that the dollar has surged over the course of this conversation. Not because of any strong underlying New Zealand economic fundamentals but because overseas equity markets have picked up. From Stuff:

        Against a backdrop of rising equity markets and improved risk appetite, investors had shunned safe haven currencies such as the greenback and yen last week in favour of growth sensitive currencies such as the NZ and Australian dollars, Mr Jones said.

        If we didn’t have a monetarist policy boosting interest rate differentials and we did have a tobin tax adding some drag to the velocity at which our currency traded this “surge”, which just made it that much harder for exporters, would never have happened or would have been moderated.
14. tsmithfield 14

    27 July 2010 at 10:16 am

    “I didn’t say floating I said adjustable, like income tax has been over the last three budgets. Housing booms move slowly enough that an annual correction would be likely to be enough.”

    Fair enough. But the idea that increased house values do nothing productive for the economy is not correct. My business partners and myself, and I suspect a lot of other small businesses, have used increased values in our properties to borrow and invest into our businesses, and as a result employ people. So in these cases the capital gain on property is being used productively to grow the economy. An unintended consequence of a capital gains tax could be to stifle some of this productive investment.

    “That is altogether different from taking measures to stop the dollar from being priced higher then its value.”

    A few years ago the RB used millions to try and reduce the value of the dollar. It had a slight effect. However, it only created a buying opportunity for speculators who have much more available to them than our government does. The rate went up again within days, and I think, even higher than it was before. The problem is we don’t have the muscle to take any effective action in this respect.

    “If we didn’t have a monetarist policy boosting interest rate differentials and we did have a tobin tax adding some drag to the velocity at which our currency traded this “surge’, which just made it that much harder for exporters, would never have happened or would have been moderated.”

    Perhaps. But the article I pointed to demonstrated the opposite problem. Because traders margins can be very thin, the effect of a tax might be to drive them all away and cause a major flight of capital that could be even more problematic.
    • george 14.1

      27 July 2010 at 10:35 am

      A few years ago the RB used millions to try and reduce the value of the dollar. It had a slight effect. However, it only created a buying opportunity for speculators who have much more available to them than our government does. The rate went up again within days, and I think, even higher than it was before. The problem is we don’t have the muscle to take any effective action in this respect.

      You’ve got the wrong end of the stick altogether. I was talking about not using the cash rate to control inflation. I would have thought you’d realize that considering it is what I’ve been saying in all of my previous comments.

      Only an sucker would suggest the RB should try to outbid the speculators and the only reason they did it was because it was the only intervention option they had under their monetarist purview.

      But the article I pointed to demonstrated the opposite problem. Because traders margins can be very thin, the effect of a tax might be to drive them all away and cause a major flight of capital that could be even more problematic.

      The article you cited was the usual capital flight scaremongering. The reason we have capital problems in NZ is our monetarist position undermines saving and investment in NZ by pushing our dollar up.

      If we had a compulsory savings scheme like Australia and Singapore do we would have less of a need for imported capital and the problems, like profit-shipping and the loss of economic sovereignty, that it brings. We would also have the advantage of being to adjust contributions to that scheme to buffer inflation without increasing interest rates.

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