Written By: - Date published: 3:27 pm, August 4th, 2008 - 42 comments
Categories: economy, wages, workers' rights -
Tags: minimum wage
Despite the economic slowdown, the labour market is holding up well and wages are up at the record rate.
The average hourly wage is now $24, up from $21.90 an hour 2 years ago. That’s a 9.6% increase. Take away 6.1% inflation and the average Kiwi worker is still 3.5% better off than two years ago. Considering the long-term average has been a 1% annual increase in wages above inflation and that in the 1990s wages went backwards for most, 3.5% in two years is impressive. despite the economy getting tougher this year, the average wage still grew 1.4% in both the March and June quarters.
The number of jobs bounced back in the June quarter, after falling in the March quarter. The number of jobs increased 2.1% in the last year, faster than the increase in the working age population (1%). It will be interesting to see how the unemployment numbers look when they come out later this week. Seeing as the number of people claiming the unemployment benefit continues to fall and the number of jobs continues to grow, we might see unemployment drop back lower, after it rose from 3.4% to 3.6% in the March quarter. Fears of unemployment blowing out beyond 5% may be exaggerated.
With the combination of increasing wages and more jobs means that, in total, Kiwis are taking in 8.8% more in work income than they were two years ago. That is helping to buffer our economy from the huge pressure of record oil prices and the international credit crunch.
Don’t forget that strong wages and employment are a result of government policy as well as economic factors. The minimum wage has been increased 17% in the last two years ($10.25 to $12), which is estimated to directly increase the wages of 300,000 workers and promote pay rises for another 300,000 who earn slightly above minimum wage. Good work rights have continued to help workers unionise, which helps them negotiate higher wage increases. If we choose to weaken those laws and let the minimum wage stagnate, Kiwi workers’ incomes will suffer.
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Scoopit!
SP this is interesting analysis. I don’t believe you can discount the effect of increasing household debt servicing costs from your equation on whether kiwis are better off now than two years ago. Household debt servicing has jumped from about 10% of disposable income two years ago, to about 14% now. That wipes out the benefit of any wage rises.
Household debt has been rising because wreckless government expenditure has been out of control, pushing up inflation and interest rates, making it much more expensive for New Zealand households to pay off their mortgages. It is an irony that Michael Cullen crows about National wanting to increase debt, when his policies have put New Zealand households deeper and deeper in debt because of irresponsible spending.
Tim Ellis
Dr Cullen told me that govt spending isn’t inflationary. So piss off!
I think you’ll find burt that if you read the whole article Einstein at this time at least was clearly a socialist.
The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules…
Quoth the Raven
Funny, even highly intelligent people can be partisan as hell.
I feel a bit strange calling out Einstein but really
Describes more or less the general state of production and trade across centuries and continents. The human desire to get the best deal driving down margins combined with the unfairness of how the rewards of labour are distributed. You must have quoted very narrowly out of context or Einstein as well as not well educated is not a well socialised.
I too suspect that is a selective quote, taken out of context.
The very foundations of physics are chaotic and random. That someone who dedicated their life to understanding the structure of the universe at that level, would not see a comparable model in the market economy, is quite suprising.
Here’s the entire article.
Einstein spent a lot of his later years trying to disprove quantum theory but I’m still sure he had a better understanding of an energy system, which is what an economy is, than pretty much anyone else.
Matthew, I’m surprised the SMS or the opposition have never asked Cullen to prove that this actually is the largest roading construction project in our history. It is even stranger that whenever this topic is raised the only monetray figure quoted is the total NLTP funding event though only one third of that amount is for roading construction, the remainder being for policing, road maintenance, public transport, policy and admin.
I doubt if Cullen has even checked whether his claim is correct, either in terms of spending or physical works since someone would have to go through all the annual reports from the MoW and Transit to compile a time series. When I asked for them (ten years ago) I was told they were only available in those annual reports. Not trusting a Nat/NZ First coalition or RAG to tell the truth I did the job myself on rainy Sunday afternoons. The end results are on my website although I wouldn’t expect the MSM to understand them. Act and the Nats wouldn’t dare use them, Piggy and Douglas are the biggest villians.
If lane/km of new or improved roads and bridges is the yard stick then the years before and after the great depression and the first couple of decades were far more productive.
If construction spending is the yardstick then the results are not as impressive as all the talk about billions suggests. It all depends where you live, or more precisely, where you drive.
In million 2006 dollars:
PM NZ AK/WN Rural NI SI
1928-30 80 20 40 20
Savage 160 35 75 50
Nash 300 70 150 100
Holyoak 325 120 130 75
Kirk 350 150 100 75
Lange 100 40 50 30
Shipley 330 150 110 70
Clark 1 350 150 150 70
Clark 2 410 230 140 65
Clark 3 650 420 170 50
Eighty years ago the South Island has roughly one-third of the population, vehicles and petrol sales. Todays it’s about one-quarter. Curiously it is only the two Canterbury PM’s and Clark that have funded the South Island unfairly for road improvements, maintenance funding seems about right taking into account geological differences as well as traffic and road length.
If spending on land transport as percent of GDP is the yard stick then the years before and after the great depression and the first couple of decades were possibly bigger spendups. Ditto for the Seddon era. The Vogel years make Cullen look positively spendthrift.