web analytics
The Standard
Advertising

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.

Important links

Recent Comments

Recent Posts

1 2 3 7

  • Justice for Teina Pora long overdue
    The Privy Council’s decision to quash Teina Pora’s convictions for the rape and murder of Susan Burdett could be the final chapter in a case that should have been closed years ago, Labour’s Justice Spokesperson Jacinda Ardern says. “Teina Pora… ...
    5 hours ago
  • Ministers must answer questions on IRD blowout
    The current and previous Revenue Ministers must front up and explain how the child support system had a budget blowout from $30 million to $210 million in just four years, says Labour’s Revenue spokesperson Clayton Cosgrove. “Peter Dunne was Revenue… ...
    1 day ago
  • Curb stratospheric public CEO salaries
    A review of the way MPs’ pay is set should also look at ways to curb excessive rises in the salaries of public service chief executives, Labour Leader Andrew Little says. “Some of these CEOs have had stratospheric pay increases… ...
    1 day ago
  • 50 cents? Makes no sense.
    The minimum wage rose by 50 cents this month from 14.25 to 14.75. While it’s a small step towards ensuring minimum workers get a fair share, it’s important to remember that real wages only rose 1.5% while productivity rose by… ...
    GreensBy Denise Roche MP
    2 days ago
  • The Serco corrections circus
    It should seem obvious to employers, private or public, that it’s important to do what you can to retain your best, most experienced staff. They make life easier for you because they’re effective, attentive and often respected by those around… ...
    GreensBy David Clendon MP
    2 days ago
  • Time for NZ to prohibit the killing of great apes
    That ban was widely hailed, and spurred efforts in other countries to get similar bans. However, apes are still being exploited, abused and killed, both in captivity and in the wild. Examples of cruelty, neglect and abuse abound. Apes are… ...
    GreensBy Mojo Mathers MP
    5 days ago
  • Auckland building consents: Tragic
    The only word to describe the latest building consent figures for Auckland is ‘tragic’, Labour’s Housing spokesperson Phil Twyford says. “Whatever the Government is doing to address the Auckland housing crisis, it is clearly not working. ...
    5 days ago
  • A whiff of a new biosecurity scandal?
    A pest which could create havoc for New Zealand’s horticulture and agriculture sector must be as much a focus for the Government as hunting out fruit flies, Labour’s Biosecurity spokesperson Damien O’Connor says. “While the Ministry for Primary Industries is… ...
    5 days ago
  • Government shrugs off health sector crisis
    Despite new evidence showing that cuts to health spending are costing lives the Government continues to deny the sector is struggling, Labour’s Health spokesperson Annette King says. “Health services in New Zealand are in crisis. ...
    6 days ago
  • Parata lowered the bar for failing charter school
    When Hekia Parata became aware that the Whangaruru charter school was experiencing major problems her first action was to drop standards by reducing the number of qualified teachers they had to employ, Labour’s Education spokesperson Chris Hipkins has revealed. “Hekia… ...
    6 days ago
  • National not being straight about the economy
    John Key and Bill English need to be straight with New Zealanders about the damage their failure to diversify the economy is doing, after new figures show export growth plunged due to a collapse in dairy exports, says Grant Robertson.… ...
    6 days ago
  • Mind the Gap
    This week the International Monetary Fund released a report on the wider economic value in closing the gender pay gap. When even the bastions of free-market economics start to raise concerns about gender pay gaps, we have to realise how… ...
    GreensBy Jan Logie MP
    6 days ago
  • Labour will hold National to parental leave promise
    Labour will hold National to its promise to increase the support given to new parents of premature, multiple birth and babies born with disabilities, Labour’s paid parental leave campaigner Sue Moroney says. "I am naturally disappointed that after battling for… ...
    7 days ago
  • It was all just pillar talk
    Steven Joyce’s confession that he can no longer guarantee a pillar-free design for the New Zealand International Convention Centre shows the Government has abandoned its dream of creating an ‘iconic’ ‘world-class’ structure, says Labour Economic Development spokesperson David Clark. “Steven… ...
    7 days ago
  • Australians move on offshore speculators
    John Key might want to have a quiet word with Australian Prime Minister Tony Abbott about Canberra's just-announced crack down on offshore speculators when he visits New Zealand this week, Labour's Housing spokesperson Phil Twyford says."Tony Abbott's centre right government… ...
    7 days ago
  • Government at odds on overseas driver crashes
    National backbencher Jacqui Dean has spoken out about overseas driver crashes, putting herself at odds with Prime Minister John Key who is on record as saying it’s not a big issue, Labour’s Transport spokesperson Phil Twyford says. “I’m not surprised… ...
    1 week ago
  • Human Rights and the Palestine Crisis
    Last week I heard two Palestinians speak at Wellington events about the ongoing crisis in their country. Samar Sabawi spoke to a full house about the history of Palestine and gave us a lucid and disturbing account of the situation… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Time to take real care of our kids
    An Amnesty International report has once again criticised New Zealand’s track record on looking after our kids, Labour’s Children’s spokesperson Jacinda Ardern says. The annual report, which looks at global human rights abuses highlights not only the fact that high… ...
    1 week ago
  • John Key wrong about Labour’s war vote
    John Key’s desperate claims that the former Labour Government didn’t put combat troop deployment to a Parliamentary vote are simply wrong, Labour’s Defence spokesperson Phil Goff says. “It was disgraceful that the Prime Minister ran rough shod over democracy and… ...
    1 week ago
  • Māori language bill needs work
     It is clear that the first draft of the Māori Language Bill was about structures and funding rather than the survival of te reo Māori, Labour’s Māori Development Spokesperson Nanaia Mahuta says.  “Labour is pleased that the Minister of Māori… ...
    1 week ago
  • Manus Island and the New Zealand Government
    This week the Greens have participated in awareness activity about Manus Island, the refugee camp on an island in Papua New Guinea where Australia dumps asylum seekers. John Key says that he has every confidence in the Australian Government’s claim… ...
    GreensBy Catherine Delahunty MP
    2 weeks ago
  • Election Inquiry – Getting accessible voting on the agenda
    James Shaw has been doing a series of blogs on the Election Inquiry into last year’s general election.  I thought this was a great opportunity to raise an issue very dear to me – accessible voting. Last year’s general election… ...
    GreensBy Mojo Mathers MP
    2 weeks ago
  • RMA changes no solution to Christchurch housing
    Housing will continue to be a big issue in 2015. The latest Consumer Price Index, released last month, shows both good news and bad news on the housing front. After years of being the most expensive place to build a… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • Saving kokako in South Auckland’s Hunua Ranges
    It is amazing that you can hear the song of the endangered North Island kokako in South Auckland’s Hunua Ranges, less than 50 kms from the central city. A heavy schedule of policy workshops at the Green Party’s Policy… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • Let’s not turn a blind eye to human rights
    The Cricket World Cup has just opened in New Zealand, and it’s an opportunity for us to shine on the world stage. International sport can be a chance for us to build relationships with other countries, and examine what it… ...
    GreensBy Catherine Delahunty MP
    2 weeks ago
  • Its Just Not Cricket
    This week it was my privilege to work with Sri Lankan Tamil communities in this country and host Australian journalist and human rights advocate Trevor Grant. I knew a bit about Trevor from his biography but I didn’t know just… ...
    GreensBy Catherine Delahunty MP
    3 weeks ago
  • Time for NZ to #BeCrueltyFree
    The Government is about to progress the final stages of the Animal Welfare Amendment bill. This will be our last opportunity to get changes made to improve the bill to ensure a better outcome for animals. I have put forwards… ...
    GreensBy Mojo Mathers MP
    3 weeks ago
  • We want access!
    Access to buildings is a big issue for many New Zealanders. It looks like that, due to the hard work and persistence of people in the disability community, the Government may finally be starting to take access to buildings seriously.… ...
    GreensBy Mojo Mathers MP
    3 weeks ago
  • Greens call on Super Fund to divest from fossil fuels
    The Green Party today called on the New Zealand Superannuation Fund (the Fund) to divest from fossil fuels, starting immediately with coal. The call was accompanied with a new report, Making money from a climate catastrophe: The case for divesting… ...
    GreensBy Russel Norman MP
    3 weeks ago

Removed at the request of The Daily Blog.
Public service advertisements by The Standard

Current CO2 level in the atmosphere