web analytics

High unemployment helps Nats keep wages down

Written By: - Date published: 9:12 am, March 11th, 2010 - 21 comments
Categories: capitalism, education, national, public services, unemployment, wages - Tags: , , ,

There was an article a while back about how Norway was bearing up in the global economic crisis. Pretty damn well. And it wasn’t thanks to the oil, not directly. Oil prices had actually plummeted and yet the Norwegian economy was going strong and unemployment wasn’t a problem.

That wouldn’t have been the case if New Zealand had the kind of oil output Norway does. Our government spends all the oil royalties it gets, Norway salts the money away for a rainy day. The bust in oil prices would have had us stuffed because it would have torn a huge hole in the government’s operating revenue but Norway carried on fine.

But this post isn’t about Norway’s oil, it’s about the other reason it survived the recession so well. It’s public sector.

One in three Norwegians are employed in the public sector (it’s one in nine here). When the recession came the Norwegian government took the attitude that it would not be slashing its workforce at this time of turmoil, instead it used its influence over the economy and the labour market to act as a keel that steadied the ship. These secure public sector jobs kept unemployment from rising and protected consumer confidence, saving private sector jobs.

What has our government done? Slashed 2,000 jobs so far with hundreds more to come. It seems like madness given the multiplying effect these job losses have on an already reeling private sector. Especially when you consider the sums saved are relatively trifling and that the government’s books are in much better shape than expected. Anne Tolley’s cuts to Education will cost hundreds of jobs, put more work on to the ‘front line’, and save just $25 million while at the end of January government debt was $3 billion less than it expected only back in December.

But here’s the thing, this isn’t really about saving money. It’s about unemployment and, through that, unemployment keeping wages down.

National does not believe in full employment, it works counter to their economic aims. In 1999, Bill English called Labour’s promise to get unemployment near 3% a hoax and nowadays he claims that the jobs lost in the recession weren’t real jobs.

A bit of unemployment is a good thing in National’s eyes. Look what happens when you have full employment – wages rise. Now, you wouldn’t be a very good party of the capitalist class if you were in favour of wages rising. Every dollar in wages is one that doesn’t go to profits. In fact, to become the leader of such a party you probably “would love to see wages drop” as John Key once told a businesswoman when he didn’t realise a reporter was present.

If National was serious about getting unemployment down they would say ‘hmm, each unemployed person on the dole costs the government about $18,000 a year in benefits and lost tax, it’s worth spending on the same order to get them into work.’ But they don’t do that. Instead they produce some window-dressing programs and throw more people out of work.

Fire some civil servants and put the wind up the rest of them is the idea. Sure, they’ll lose all the output that those people created (and don’t kind yourselves, there aren’t offices full of people doing nothing, well, not outside the Beehive anyway). But that’s a price the government is willing to pay to constrain wages, and it’s not like they listen to the advice they get from their ministries anyway.

These sackings and their multiplied effects through the public and private sectors put workers where the bosses want them – insecure in their employment, grateful to have a job when so many don’t, and afraid to push for better pay or conditions.

The Key Government has no intention of closing the wage gap with Australia and, to keep wages down, it is happy to keep unemployment up.

21 comments on “High unemployment helps Nats keep wages down”

  1. tc 1

    Yup their masterplan working nicely……Frontline means outsourcing probably and I think Australia has about a 1 in 6 public servant ratio so we’re really catching up eh Clown.

    More of the same from the party who only have a few clubs in their bag…..pro-business, anti union/beneficiary, reward the well off…whatdaya mean there’s more clubs than that ? Social justice/balanced distribution/paying attention to decades of research and proven outcomes….never heard of those ?

  2. blinded by the right 2

    Going back to your first couple of paragraphs about money being salted away for a rainy day. This is what we all thought we had too, until a few months before the last election when it turned out the cupboard was bare.

    • Bright Red 2.1

      we had salted money away for a rainy day. The government had net assets for the first time in a hundred years because it had paid down debt and put money away.

      Labour had also maintained healthy structural surpluses, so when the bad times hit it wasn’t a deficit on top of a deficit (like the US).

      Treasury has a little piece on this – how a healthy fiscal balance going into the recession was key to countries getting through ok. http://treasury.govt.nz/economy/mei/feb10/03.htm

      bit of information always helps, eh blindy?

    • lprent 2.2

      FFS blinded. Labour finally managed to pay down the government debt to the minimum levels only in 2007 fiscal year. You expect surpluses in the following year, with a global recession underway. The forecast first real balance sheet surplus (ie after killing all non-operational debt) for 2008 was spent on frigging tax-cuts. When the recession hit hard, the surplus dissipated with a reduction in expected government revenue.

      You really are a frigging optimist with no understanding of anything outside of your wallet, and unreasonable expectations of everyone else supporting you with infrastructure and services you don’t want to pay for. You think short-term…. Ummm describes the usual right mentality

  3. gitmo 3

    “Norway has a strong budget balance thanks to its revenues from oil and gas. It also has a huge sovereign wealth fund in which some of the receipts from the country’s fossil-fuel exports are kept for the benefit of future generations.

    So when the Government needed to boost the economy this year, it had the means to do so without having to cut public budgets or increase taxes.

    “The fund has allowed Norway to have an expansionary fiscal policy,” says Espen Moen, economics professor at the Norwegian School of Management. “It can stimulate demand by spending, without fear of higher taxes, because it is so big.”

    Moen also points out that Norway is not as dependent on exporting industries: “We export oil and gas, but even though oil prices have fallen since last summer, production is at full capacity.”

    Surely this is why we need to at least consider prospecting for and then utilising our mineral and fossil fuel potential ?

    • RedLogix 3.1

      Surely this is why we need to at least consider prospecting for and then utilising our mineral and fossil fuel potential ?

      By overseas companies who will pocket the profits. Any royalties will just get pissed away in tax cuts … and there’ll nothing to show for it but sodding great holes in the ground.

    • Pascal's bookie 3.2

      Who says we shouldn’t?

      Or do you think that all of our mineral resources are in schedule 4 protected areas? It’s exploring those that people are objecting to.

      • gitmo 3.2.1

        See the comment by RL – this is a typical kneeJERK reaction.

        • Pascal's bookie 3.2.1.1

          Firstly, if you want a Norway type situation then Red is right. We won’t get there by selling the mineral rights to foreign miners.

          Secondly, how does that justify prospecting in schedule 4?

          If you want bullshit knee jerkism, ‘drill baby drill’ takes some beating.

  4. RedLogix 4

    Thoughtful and well argued as usual Marty… but the shorter version goes like this… these Nats represent the interests of the predatory classes who need a nice stock of desperate prey to feed upon.

  5. TightyRighty 5

    you’re really starting to believe your own bullshit aren’t you? the nats know that lower unemploymnt means higher prosperity. do you really think they are just sitting in ivory towers scheming how to keep the general population enslaved?

    • Lanthanide 5.1

      Based on their actions, yes.

    • Bored 5.2

      Hey Tighty, thats a bit of pot calling the kettle black. The concept of lower unemployment being desirable because then everybody gets prosperous is both laudable and laughable. As an employer I will always try and keep as much of the margin as possible, its the way we employers work. You might also have noticed that it is possible (as demonstrated by USA stats) to have extreme wealth alongside very low wages and high unemployment. I dont need to listen any lefty arguments about wages to know how the whole thing works, nor do I need to listen to any spurious right wing apologist nonsense.

    • Daveo 5.3

      It’s basic political economy.

      – Businesses want to keep wages down in order to make larger profits. It’s not about businesses being immoral, it’s about businesses working as they’re designed to in a capitalist system.

      – National, as the party of business and free market capitalism, is obviously hugely influenced by what business wants. They come from business, their funding comes from business, much of their policy is written by business, and their rhetoric is the same as business’.

      – In order to get elected, National needs to say they stand for the interests of working people, including higher wages. Even if it’s not their intention.

      – Hence the disconnect between National’s rhetoric and reality.

  6. Clarke 6

    Unfortunately full employment was a policy goal that was largely abandoned by both National and Labour in the 1980s, despite the evidence that poverty is a direct precursor of the crime that both parties seem obsessed with. As a result, we’re now one of the least equitable societies on earth, and we regularly consign hundreds of thousands of New Zealanders to being less than full members of society.

    If there was a genuine Left in New Zealand politics then it would be advocating for full employment to be one of the core functions of government.

    • Jum 6.1

      Clarke, I will then assume that you voted for Clark and Cullen who were doing just that until the greed for tax cuts got in the way of the New Zealand psyche of a fair go for all. Enter the NActMs, exit the reducing unemployment.

      John, I am fairly relaxed, I am confident, I would love to see wages drop, Key is fulfilling his goal.

      And now the carefully leaked tax cut talk that will have greedy NZers foaming at the mouth.

  7. Or for a more accurate headline:

    High wages help keep unemployment up</b?"

    • Oops. Sorry. Munted the bold tag. :-/

      • felix 7.1.1

        And the humour. And the reasoning. And the reading of the post beyond the headline.

        Oh well, one day Peter…

    • Clarke 7.2

      If high wages kept unemployment up, then ipso facto low wages would result in low unemployment. And like all good linear relationships, the lower wages went then the lower unemployment would become, until it reached zero.

      If your hypothesis was actually true – as distinct from being a right-wing troll – then how come the unemployment and under-employment rate in India is actually higher than NZ< despite their average wage being so much lower? Care to explain?

  8. Quoth the Raven 8

    According to the Norway post:

    Unemployment in Norway is expected to rise further, according to new prognoses from the Norwegian Central Bank, DnB NOR Markets and Statistics Norway (SSB), from 2.8 per cent at present to 5.5 of the total work force in 2011.

    However, compared to other European countries, this is still low: In neighbouring Sweden the unemployment rate is already well above 10 per cent, according to Aftenposten.

Recent Comments

Recent Posts

  • Government must review state sector retirement investment
    The State Sector Retirement Savings Scheme has no business investing in companies which manufacture cluster bombs, anti-personnel mines and nuclear weapons, Labour MP and Parliamentarians for Global Action executive member Su’a William Sio says. “I endorse the call made by the ...
    14 hours ago
  • Councils shouldn’t rush into Easter Trading
    City and district councils must ensure they don’t rush into trading on Easter Sunday ahead of local body elections next month, Labour’s Pacific Islands Affairs spokesperson Su’a William Sio says. “This decision must be taken seriously and only after extensive ...
    14 hours ago
  • Minister can’t wash hands of illegal KiwiSaver investments
    The Minister responsible for appointing default KiwiSaver providers should take responsibility for ensuring they act legally, Labour’s Finance spokesperson Grant Robertson says. “The National Government has now had confirmed what they were told more than a week ago – that ...
    16 hours ago
  • Government railroading Maori Land Bill through
    Maori Development Minister Te Ururoa Flavell seems determined to railroad his Te Ture Whenua Maori Bill through despite the large number of submitters in opposition to the bill, says MP Meka Whaitiri, whose Ikaroa-Rāwhiti electorate contains nearly 30 per cent ...
    2 days ago
  • Government turns a blind eye to struggling sole parents
    Social Development Minister Anne Tolley’s claims that her Government’s work with sole parents is her biggest success are in tatters after a major increase in homelessness amongst that group, says Labour’s Social Development spokesperson Carmel Sepuloni. “Anne Tolley is seriously ...
    2 days ago
  • Time has come for state apology on abuse
    Labour is today calling on the Government to issue an apology for historic abuse in state institutions. Speaking after the launch of Elizabeth Stanley’s book “The Road to Hell; state violence against Children in Post-war New Zealand”, Labour’s Justice spokesperson ...
    2 days ago
  • It’s OK to have a few slaves, just not too many? Minimum wage loophole hasn’t gone away
    New Zealand still needs legislation to ensure adult New Zealanders are not exploited by being taken on as contractors for less than the equivalent of the minimum wage, says Labour list MP David Parker.  “My Minimum Wage (Contractor Remuneration) Amendment ...
    2 days ago
  • Lessons from the Future of Work Commission: Building Wealth from the Ground Up
    Good morning, and thank you for attending today’s Future of Work Seminar here in Wellington. I want to particularly acknowledge Beth Houston who has spent many hours pulling together the programme for today’s event, and to Olivier and the staff ...
    2 days ago
  • Backbencher Matt’s Bill is a Doocey
    The latest National Member’s Bill pulled from the ballot is yet another waste of Parliament’s time and shows the Government’s contempt for the House and the public with much more important issues needing debate, says Labour’s Shadow Leader of the ...
    3 days ago
  • Gun laws creaking under the strain
     Questions have to be asked  after surprising revelations at the Law and Order Select Committee about the police and their ability to manage the gun problem in New Zealand, says Labour’s Police spokesperson Stuart Nash.  “The lack of resources is ...
    3 days ago
  • Most homeless are working poor – Otago Uni
    The finding by Otago University researcher Dr Kate Amore that most homeless people are in work or study is one of the most shocking aspects of the housing crisis, says Labour’s Housing spokesperson Phil Twyford. “Social service agencies report many ...
    3 days ago
  • Māori seats entrenched by Tirikatene Bill
    National and the Māori Party need to support my member’s Bill which is designed to entrench the Māori electorate seats in Parliament, Labour’s Te Tai Tonga MP Rino Tirikatene says. “Under the Electoral Act the provisions establishing the general electorates ...
    3 days ago
  • Trade dumping bill could hurt NZ industries
    The Commerce Select Committee is currently hearing submissions on the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. This bill worries me. I flagged some major concerns during its first reading.   I am now reading submissions from NZ Steel, ...
    GreensBy Mojo Mathers
    3 days ago
  • Just 8 per cent of work visas for skills shortages
    Just 16,000 – or 8 per cent – of the 209,000 work visas issued last year were for occupations for which there is an identified skills shortage, says Labour Immigration spokesperson Iain Lees-Galloway. “The overwhelming majority of the record number ...
    3 days ago
  • Hard won agreement shouldn’t be thrown away
    The Government should ignore talk across the Tasman about doing away with the labelling of GM free products, says Labour’s Health spokesperson Annette King. “Labelling of genetically modified products was a hard won agreement in 2001 by Australian and the ...
    3 days ago
  • National’s privatisation Trojan horse
     The National government is using the need to modernise the school system as a Trojan horse for privatisation and an end to free public education as we know it, Labour’s Education spokesperson Chris Hipkins says.  “There is no doubt that ...
    3 days ago
  • Shameless land-banking ads show need for crackdown
    The fact that more than 300 sections are shamelessly being advertised on Trade Me as land-banking opportunities during a housing crisis shows the need for a crackdown on property speculators, Leader of the Opposition Andrew Little says. “Of the 328 ...
    4 days ago
  • Standard and Poor’s warning of housing crisis impact on banks
    The National Government’s failure to address the housing crisis is leading to dire warnings from ratings agency Standard and Poor’s about the impact on the strength of the economy and New Zealand banks, says Labour’s Finance spokesperson Grant Robertson. “Standard ...
    4 days ago
  • Ihumatao needs action not sympathy
    The Petition of Save Our Unique Landscape (SOUL) calling on Parliament to revoke Special Housing Area 62 in order to protect the Ihumatao Peninsula and Stonefields, has fallen on deaf ears, says the Labour MP for Mangere Su’a William Sio.  ...
    4 days ago
  • Student visa fraud & exploitation must stop
    The Government must act immediately to end fraud and exploitation of international students that threatens to damage New Zealand’s reputation, Leader of the Opposition Andrew Little says. ...
    4 days ago
  • Government needs to show leadership in reviewing monetary policy
    The Reserve Bank’s struggles to meet its inflation target, the rising exchange rate and the continued housing crisis shows current monetary policy needs to be reviewed - with amendments to the policy targets agreement a bare minimum, says Labour’s Finance ...
    5 days ago
  • Slash and burn of special education support
    Slashing the support for school age children with special needs is no way to fund earlier intervention, Labour’s Education Spokesperson Chris Hipkins says.  “National’s latest plan to slash funding for children with special needs over the age of 7 in ...
    6 days ago
  • National’s Pasifika MPs must have free vote
      Pacific people will not take kindly to the Government whipping their Pacific MPs to vote in favour of a  Bill that will allow Sunday trading  at Easter, says Labour’s Pacific Island Affairs spokesperson Su’a William Sio.  “We are seeing ...
    1 week ago
  • Maritime Crimes Bill – balancing security and free speech
    Parliament is currently considering the Maritime Crimes Amendment Bill, which would bring New Zealand up to date with current international rules about maritime security. The debate around the Bill reflects two valid issues: legitimate counter-terrorism measures and the right to ...
    GreensBy Kennedy Graham
    1 week ago
  • Teachers’ low wages at the centre of shortages
      Figures that show teachers’ wages have grown the slowest of all occupations is at the heart of the current teacher shortage, says Labour’s Education Spokesperson Chris Hipkins.  In the latest Labour Cost Index, education professionals saw their wages grow ...
    1 week ago
  • Government’s Tax Law undermines common law principles
    A tax amendment being snuck in under the radar allows changes to tax issues to be driven through by the Government without Parliamentary scrutiny, says Labour’s Revenue spokesman Stuart Nash. “The amendment allows any part of the Tax Administration Act ...
    1 week ago
  • Government slippery about caption funding
      The Government has refused to apologise for taking the credit for funding Olympic Games captioning when the National Foundation for the Deaf  was responsible, says Labour’s spokesperson on Disability Issues Poto Williams.  “This shameful act of grandstanding by Ministers ...
    1 week ago
  • Default KiwiSaver investments should be reviewed
    The investments of the default KiwiSaver providers should be reviewed to make sure they are in line with New Zealanders’ values and expectations, says Labour’s Finance spokesperson Grant Robertson. “Most New Zealanders would be appalled that their KiwiSaver funds are ...
    1 week ago
  • New ministry should look after all children
    The Government has today shunned well founded pleas by experts not to call its new agency the Ministry for Vulnerable Children, Labour’s Spokesperson for Children Jacinda Ardern says.  “Well respected organisations and individuals such as Children's Commissioner Judge Andrew Becroft ...
    1 week ago
  • Ratification okay but we need action
    Today’s decision to ratify the Paris agreement on Climate Change by the end of the year is all well and good but where is the plan, says Labour’s Climate Change spokesperson Megan Woods.  “The Government’s failure to plan is planning ...
    1 week ago
  • Stats changes can’t hide unemployment reality
    Today’s minor drop in unemployment numbers is nothing to celebrate given the changes made to the official numbers that cut thousands of people looking for work out of the jobless rate, says Labour’s Employment spokesperson Grant Robertson. “Making any comparisons ...
    2 weeks ago
  • Stats changes can’t hide unemployment reality
    Today’s minor drop in unemployment numbers is nothing to celebrate given the changes made to the official numbers that cut thousands of people looking for work out of the jobless rate, says Labour’s Employment spokesperson Grant Robertson. “Making any comparisons ...
    2 weeks ago
  • Auckland’s affordable homes plummet 72% under National
    Comprehensive new data from CoreLogic has found the number of homes in Auckland valued at under $600,000 has plummeted by 72 per cent since National took office, Leader of the Opposition Andrew Little says. “This data tracks the changes in ...
    2 weeks ago
  • Govt should face the facts not skew the facts
    National appears to be actively massaging official unemployment statistics by changing the measure for joblessness to exclude those looking online, says Labour’s Employment spokesperson Grant Robertson. “The Household Labour Force Survey, released tomorrow, no longer regards people job hunting on ...
    2 weeks ago
  • More voices call for review of immigration policy
    The Auckland Chamber of Commerce is the latest credible voice to call for a review of immigration and skills policy, leaving John Key increasingly isolated, says Opposition Leader Andrew Little. “The Prime Minister is rapidly becoming a man alone. He ...
    2 weeks ago
  • Better balance needed in Intelligence Bill
    Labour will support the NZ Intelligence and Security Bill to select committee so the issues can be debated nationwide and important amendments can be made, says Opposition Leader Andrew Little. ...
    2 weeks ago
  • Serco circus has no place in NZ
    A High Court judgment proves National’s private prison agenda has failed and the Serco circus has no place in New Zealand correctional facilities, Labour’s Corrections spokesperson Kelvin Davis says. ...
    2 weeks ago
  • State house sell-off a kick in the guts for Tauranga’s homeless
    The Government’s sale of 1124 state houses in Tauranga won’t house a single extra homeless person in the city, says Labour’s Housing spokesperson Phil Twyford. “Tauranga, like the rest of New Zealand, has a crisis of housing affordability and homelessness. ...
    2 weeks ago
  • Axing Auckland’s affordable quota disappointing
    Auckland Council has given away a useful tool for delivering more affordable housing by voting to accept the Independent Hearing Panel’s recommendation to abolish affordable quotas for new developments, says Labour’s Housing spokesperson Phil Twyford. ...
    2 weeks ago
  • Ae Marika! Māori Party Oath Bill fails
    The Māori Party must reconsider its relationship with National after they failed to support Marama Fox’s Treaty of Waitangi Oath bill, Labour’s Maori Development Spokesperson Kelvin Davis says. ...
    2 weeks ago
  • Police Minister all platitudes no detail
    The Police Minister must explain where the budget for new police officers is coming from after continuously obfuscating, Labour’s Police spokesperson Stuart Nash says. ...
    2 weeks ago
  • Lost luggage law shows National’s lost the plot
    The Government has proven it can’t address the big issues facing the tourism industry by allowing a Members Bill on lost luggage to be a priority, Labour’s Tourism spokesman Kris Faafoi said. “Nuk Korako’s Bill drawn from the Members’ Ballot ...
    2 weeks ago
  • Hiding behind the law – but can’t say which law
    National is refusing to come clean on what caused the potential trade dispute with China by hiding behind laws and trade rules they can’t even name, says Labour’s Trade and Export Growth spokesperson David Clark. “National admitted today that an ...
    2 weeks ago
  • Work visas issued for jobs workless Kiwis want
    Thousands of work visas for low-skilled jobs were issued by the Government in the past year despite tens of thousands of unemployed Kiwis looking for work in those exact occupations, Labour’s Immigration spokesperson Iain Lees-Galloway says. “A comparison of the ...
    2 weeks ago
  • Kiwis nationwide now paying for housing crisis
    The Government’s failure to tackle the housing crisis is now affecting the entire country with nationwide house price inflation in the past year hitting 26 per cent, Labour’s Housing spokesperson Phil Twyford says. “None of National’s tinkering or half-baked, piecemeal ...
    2 weeks ago
  • OCR cut piles pressure on Government
    Today’s OCR cut must be backed by Government action on housing and economic growth, says Labour’s Finance spokesperson Grant Robertson. “Reserve Bank Governor Graeme Wheeler’s monetary policy statement underlines the limits of Bill English’s economic management. He says growth is ...
    2 weeks ago
  • Government must explain the McClay delay
    Todd McClay must explain why it took two months for him to properly inform the Prime Minister about China’s potential trade retaliation, says Labour’s Trade and Export Growth spokesperson David Clark. “This may be one of the most serious trade ...
    2 weeks ago
  • OCR cut would be vote of no confidence in economy
    If Reserve Bank Governor Graeme Wheeler cuts the OCR tomorrow it would show that, despite his loudly-voiced concerns about fuelling the housing market, the stuttering economy is now a bigger concern, says Labour’s Finance spokesperson Grant Robertson. “Bill English and ...
    3 weeks ago
  • Leading medical experts back Healthy Homes Bill
    Leading medical experts have today thrown their weight behind my Healthy Homes Guarantee Bill, saying it will improve the health of Kiwi kids, Leader of the Opposition Andrew Little says. “The Bill sets minimum standards for heating, insulation and ventilation ...
    3 weeks ago
  • Minister, it’s time to listen to the Auditor General
    Minister of Health Jonathan Coleman needs to listen to the independent advice of the Auditor General and review the capital charge system imposed on District Health Boards, says Labour’ Health Spokesperson Annette King.  “The capital charge on DHBs has been ...
    3 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere