Written By: - Date published: 2:01 pm, December 20th, 2007 - 118 comments
Categories: same old national, workers' rights -
Tags: same old national, workers' rights
National’s comments on the minimum wage show a party that has no answers on how to close the wage gap with Australia.
Just a day after the Government announced plans to increase the minimum wage to $12 next year – an increase of more than 70% since 1999 – John Key’s industrial relations spokesperson Kate Wilkinson has made it clear increases to the minimum wage will not be a priority under National:
National Party labour and industrial relations spokeswoman Kate Wilkinson said National did not oppose the minimum wage but preferred tax cuts.
“Our policy will be on a broader scale and looking at the bigger picture rather than just relying on this artificial solution of having an arbitrary level of what some people think is a fair wage and some people think is not.”
So there you have it: National sees a fair wage not as a right but as an “artificial” restraint on the free market of labour. Their plan is to remove instruments the Government can use to lift pay and instead use the tax system to subsidise employers who pay low wages.
This is the same old line we heard in the 90s, and it led to a real decrease in wages for the New Zealanders who could least afford it:
National are right when they say wages are far too low in New Zealand, but they don’t have any answers on how to fix it – just the same market-driven ideology that put us here in the first place.
[Hat tip to Kiwiblogblog for the graph data]
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Increasing minimum wage to lift average wages is a no brainer, but without productivity increases profitability and tax take diminish if inflationery price increases are not effected. NZ productivity has decreased as the employment rate falls which reflects that the unemployed at these levels are either poorly skilled or workshy or both – management has responsibilty to as they do the employing. Government should do more to encourage productivity increases – fiscal drag is a disincentive for employees & employers alike and trade unions should consider investing their members funds in those industries they reckon their ideas would work better than the existing managements. Failure to do any of these things is the lasting hallmark of the last 8 years.
Kentp – proving causality is a logical impossibility for a subjective conscience without perfect information. When we talk of proving causality we are just saying ‘this is the most likely explanation’: and what all these figures and graph shows is a clear tendency for discrete and unrelated indicators to improve under Labour where they got worse or stagnated under National – what’s the most likely explanation?
“I could say that cutting business tax rates has kept employers in NZ, thus increasing employment…”
Yes! SAY IT! Finally someone starts to answer the question!
“but it is just as easy to say that employers have stayed here for any number of other factors.”
And then counter THAT argument with further evidence of what Labour has done!
That is what was needed from the start, BE SPECIFIC! The answer doesnt need to be good, it doesnt need to be a doctoral thesis, it just needs to make sense! If you had answered the fucking question properly in the first place I wouldnt have had to keep asking for you to do it!
“Of course increased LFPR places downward pressure on wages,” – Nome
That was ALL I was saying.
As I said, I thought Tane meant labour force participation, so when I responded I was refering to an increase in LFPR.
I have no problem with a reduction in unemployment leading to upward pressure on wages. That makes sense. I never said it didnt. All the brain cells you guys have wasted in apoplexy trying to explain this concept to me, died in vain.
On a differnet point, in simply saying that Labour had reduced unemployment which leads to higher wages, Tane failed to answer the question. Sure unemployment had dropped at the same time as Labour was in government. But what had Labour DONE to reduce unemployment and HOW had it done so?
It really isnt a difficult question. Labour reduced the business tax rate which encourages companies to stay in NZ and attract companies from overseas, increasing demand for labour. BOOM! It is wrong, but it is still an answer!
“How you can think that this has had no effect on wage growth is inconceivable.”
I dont think I said, that, I was asking for someone to state their case.
Look, the question was asked. It wasnt even asked by me orignally. I was simply asking for an answer. It is inconceivable that it would have taken this long to get one!
It was a simple fucking question. Why have we had 50 comments containing a total of only one and a half answers? It really looks as if you guys KNOW you cant win the debate so you dont want to participate.
As for closing the gap with Aaustralia, well, we dont have a hope in hell now that Aussie has a Labor government.
Workchoices would have helped Australian industry survive the inevitable hard economic times to come by allowing wage growth to slow, with the economy. With a Union-backed Labor government, wage rises are going to continue regardless of productivity or the health of the economy.
(After having dwindling power for the past decade, do you really think the unions will blow their one chance to show that they really are the best option for the working man?)
We may get closer on an after tax basis (tax increases in Australia within Labor first two terms [yes - two terms]) but not on a nominal basis. Not now.
One thing that I like about Australia is that there is no tax on the first 6k of income. It’s a bloody good idea, and disproportionately benefits the poor. Labour would be well advised to cut taxes from the bottom, and keep everybody happy. Incidentally, no tax on the first 5k has been Green Party policy for years.
I agree George – that is a good policy.
With the working for familes package of Labour though, tax free first $x,000 sits better as a National party policy.
Tane, I quoted the following peer review study (freely downloadable) to you at Not PC sometime ago to comment on, but you never did. How about you try to debunk the study first (or at least try to refute its finding), before we can debate if minimum wage is a good or bad thing?
MINIMUM WAGES, LABOR MARKET INSTITUTIONS, AND YOUTH EMPLOYMENT: A CROSS-NATIONAL ANALYSIS
FF, is that the study that has been going on for decades and actually traces peoples transition between income groups?
Sigh! The very idea that the State can set wage rates without the market facts and varibles is moronic…Wages should be set by the law of supply and demand….meaning how valuable is your skill set to an employer and therefore to his customers?
Minimum wage laws keep the unskilled and the young out of work by making them less attractive to employ as opposed to older’ skilled workers….simple self interest as an employer see’s it and quite right too.
I suspect that if you look at NZ’s measures of salary and wage growth (Statistics New Zealand’s “Labour Cost Index”) you’ll find that increases in the wage rates of occupations more likely to be at or near the minimum wage (service and sales workers, plant/machinery operators, elementary occupations, etc) actually PREDATE the comparable rise in minimum wage.
The logical conclusion, therefore, has to be that minimum wage increases are perfectly logical and yet, paradoxically, totally unncessary
Captcha: “The undisputed”
Bow down before me, ye of little faith in numbers!
So wage rates go up before minimum wage rises? That would make sense if you view things from a political stand point.
The government can get the good publicity of increasing the minimum wage, which will satisfy their lap-dogs. But the actual impact will end up being negligible, so they dont actually have to worry about the negative impacts.
It’s a political free-roll.
Kind of like signing up to the Kyoto Protocol but never having any intention of meeting its targets. Of course, it would backfire if the figures which showed that the cost in carbon credits could be completely offset turn out to be wrong. Ooops.
There is also a serious reason for raising minimum wage rates. It is an effective way of performing natural selection on rat shit employers.
There are always a certain number of employers at the bottom end who for one reason or another are unable to improve the productivity of their organisation. They fall victim to what I refer to as slave-holder economics. Rather than improving the efficiency of their organisation using capital expenditure or improved systems, they simply use more employees while trying to drive wage rates down.
K- If you dig back into economic history you’ll find a lot of economic theory about this economic system, both on slave labour and various forms of indentured service (effectively the same). Adam Smith, for instance, wrote some interesting material on it. There is a lot of evidence that shows when this type of economic system gets entrenched, it eventually spirals down as close to zero wages as the legal system will allow.
Of course it isn’t good for the society harboring a slave culture on many levels. The biggest one is the debilitating effect of poverty on the poll of talent and skills in later generations. But even in the short term it prevents people with potential skills being used in more productive enterprises because of constraining techniques by slaveholder employers.
Slave holder employers use a number of interesting devices to hold their workers – typically debt mechanisms. Thats why there is quite a lot of law in every modern economies about valid uses of debt. It was how those societies crawled out of slave holder systems.
Of course, any competent employer doesn’t get affected by setting of minimum wages (as pointed out in some of the replies above) – they’re already paying more. The employers who bleat about minimum wage rates are exactly the employers you’d expect – slaveholders who are too damn lazy to work out more efficient ways of running their businesses. The government setting minimum wages is simply correcting a known historical economic trap to drive out bad or criminal employers.
K- You have an interesting set of delusions about the effectiveness of market economics. I’d suggest you look closer at the history of economic systems. In particular look at the early 20th century history of the Ford Motor Company – the start of ‘modern’ industrial systems. It was as much about how to drive wage rates up so people could afford to buy the gadgets that ford was selling.
“K- You have an interesting set of delusions about the effectiveness of market economics.”
No, you just assume I do. Unless you are anti-market-everything on this site, people will think that you put all you faith in the “holy market” and are some sort of free-market acolyte.
Note, I haven’t said the minimum wage is an inherently bad thing. Not once.
Yeah – I figured that might be the case. So I made mine as didactic.
Actually here is a classic example from the Economist of what I call slave labour tactics… Karoshi – death by overwork.
There is nothing quite like a 3G and a laptop during a boring car trip.