Written By: - Date published: 6:22 am, January 26th, 2009 - 44 comments
Categories: national/act government, wages, workers' rights -
Tags: minimum wage
In the Bay Report in December 2007, John Key was quoted as saying “we would love to see wages drop“. Inexplicably, the media at the time refused to accept the report of their small town colleague. Instead, they accepted Key’s various, contradictory excuses – ‘I was misquoted’, ‘I was joking’, ‘I was talking about Australian wages (as if that’s somehow OK)’. One political editor went so far as to say that Key couldn’t have said that he wanted to see wages drop because “obviously he has no control over wages” .
Well, Colin, watch closely and you’ll see the control he has.
Usually, the Government recieves submissions on the minimum wage at the end of each year and announces its decision on any increase before Christmas, with the increase coming into force on April 1 the next year. (for those of you who enjoy feeling your stomach churn, you can read all of Business New Zealand’s submissions on minimum wage over the years here – rich men dancing on the head of a pin so they won’t have to pay their poorest workers more). Both in 1984 and 1999, the new Labour Governments brought in the increases immediately as one of their first acts in government to set about redressing National’s policy of letting the minimum wage be eroded by inflation.
National/ACT has just got around to looking at the minimum wage now. A source tells me that the Labour Department recommended an increase from the current $12 an hour to $12.50 – that would maintain the purchasing power of the minimum wage but not increase it – but National’s Labour Minister, Kate Wilinson, has decided to ignore that advice and, this week or next, will be submitting a paper to Cabinet with no increase in the minimum wage. Cabinet, doubtless, will endorse that proposal. No minimum wage rise, means lower standards of living for all those who earn it (and all those who earn slightly above it) and their families.
Now, come April1, I don’t expect to see headlines saying ‘Key makes wages drop for 500,000 lowest paid workers’. After all, news is about action – a minister striding in to break up a fight , a PM breaking his arm – not failure to act, even if the omission affects hundreds of thousands of families (let’s face it, they’re not the ones buying papers anyway). But, for those with eyes to see, we’ll have yet more proof that Key was completely serious when he said he would love to see wages drop.
And, no, he wasn’t talking about Australian wages. He was talking about yours.
Facebook
Twitter
Scoopit!
Pat – greater than the CPI for last year would be a good starting point.
Roger:
Subnormals huh?????
Boy this site becomes more tabloid each day.
So how much does John Key have to increase the minimum wage by, before it is NOT considered a “wage cut’
40c.
Or 50c, if we’re going to make it a round figure.
Unfortunately, unlike employees, companies can’t demand higher earnings simply because they need more.
I think that you will find companies DO, in fact, raise their prices to account for inflation – not necessarily every year, but consistently. They also raise their prices when their inputs increase in price.
: “TS, In my long experience with New Zealand businesses I’ve notice a strong inclination to sacrifice the medium to long term for short term gain.
You are wrong to think I am making the point about maintaining wages and workforce from a “lofty’ moral position as I am merely advocating a business fundamental that is all too often ignored or simply not thought of by many NZ managers. Often to the detriment of their business.”
I would agree with you with respect to large corporates who often have substantial resources that allow them to ride through financial downturns. However, I am coming from the perspective of small business where the existence tends to be a lot more hand-to-mouth. I often feel a lot of the comments about business on this site tend to assume large corporates when there are a lot of people employed in small business.
Irishbill: “Your point about taking a lower salary than your staff is interesting. I assume you did so because you expected to make greater gains once your business grew? If so you might want to explain to vto the concept of assessing business viability over a period longer than a year and against more than the current bank interest rate.”
Well, I guess that is the long-term goal. It is often the case, though, that the profit in a small business can’t be realised back to the owner until it is sold. For instance, in our case, we have approx $500k in stock on the shelf that is paid for by a mortgages against the houses of co-owners. As the business grows, the need for base stock, and needs for other assets tends to grow with it, requiring further funding which is met by the owners. So, while we are building a substantial asset, I would scarcely call ourselves “greedy”.
Can anyone name one business which would lay off workers, if the minimum wage was increased from $12 to $12.50 an hour?
These are not wages paid to those competing in the international market place but in the local economy.
The workers perform necessary work as carers and cleaners or in basic retail/food outlets. The demand for the most of the workers labour is not going down – this is about a small decline in turnover (food outlets) or in clients (a few businesses might look for cheaper cleaning rates when there own revenues are under pressure) reducing bottom line profits and workers pay levels being the traditional Enzed way to constrain their own costs.
But there are no jobs to be saved by holding down the minimum wage – but if National does this – while increasing benefits by the CPI they will be reducing the incentive to work (more so if they fail to increase WFF by the inflation adjustment as well) as unemployment rises – the de-motivation for those looking for work (when finding a job will be harder) is not a constructive move.
Its ideological knee jerk – suppress wage levels and boost bottom line profits style of thinking that creates a low wage economy with low productivity despite long hours. And to consider such an approach during a major global recession after the lesson of the failed cost cutting policy of the Depression years – break a leg John.
PS One hopes this is just politics – National resisting a campaign to restore the minimum wage back to the real level it was in 1991 (it would need to be $15 now), relenting on freezing the minimum wage and increasing it along with benefits by the CPI (keep an eye on whether the WFF payments increase by the CPI and or the other child support payments) to appear generous (as compared to freezing the wage level).
Its a good test of whether this government is centrist or anti-worker and anti-family.
SPC said: Its a good test of whether this government is centrist or anti-worker and anti-family.
I think the government has already had that test with the fire-at-will Bill, and it failed.
And right on cue, Business New Zealand chimes in this morning with a call for a freeze on the minimum wage.
Despite John Key’s talk about reducing the wage gap between Australia and New Zealand, it seems the programme is emerging for yet another stumble towards a low wage economy. I’ve blogged about this here.
Not only is it fair to low income families to increase the minimum wage it makes good economic sense. Quick flow to retail, improves incentive to work, minor tax revenue for government, small working for families savings but more importantly lifting real wages incentivises employers to upskill workers and make capital investments both of which are vital to the productivity lift NZ needs to compete internationally. $13 would be good.