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.

I think the government has already had that test with the fire-at-will Bill, and it failed.

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.

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”.

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.

40c.

Or 50c, if we’re going to make it a round figure.

Subnormals huh?????

Boy this site becomes more tabloid each day.

Don’t get it twisted HS – far too much potency in its head for that nick name. (p.s – feel free to moderate that Steve, couldn’t help myself – been reading Freud all day).

I agree that most people reading this headline and the explanatory article by SP would completely understand what he’s getting at. If it was a headline and article in the daily rag I’d have far less faith.