web analytics
The Standard

The wage gap and the productivity lie

Written By: - Date published: 11:42 am, March 28th, 2013 - 23 comments
Categories: class war, economy, International, national, wages - Tags: , ,

National was elected on the promise to close the wage gap with Australia. It’s getting bigger – which probably has something to do with why record numbers of Kiwis are crossing the ditch. New figures yesterday continue the trend:

Income gap growing wide as the Ditch

Despite rising salaries, Kiwis’ pay packets are still well behind those of their Australian counterparts – and the gap is getting bigger.

At the end of last year the average New Zealander earned 26.3 per cent – or $12,800 – less than the average Australian, the latest Roy Morgan state of the nation report reveals. Kiwi salaries have risen from $35,000 to $48,600 since 2001, but across the Tasman incomes have increased from $38,800 to $61,400.

Evidence of the widening gap is even more pronounced among fulltime workers, with Australians earning 24.1 per cent more than fulltime workers in New Zealand – a difference that 10 years ago was only 6.6 per cent.

The number of Kiwis chasing the Australian dollar has been increasing in the same decade, a record 53,763 people leaving in the 12 months to June last year.

Great work National. Thank you John Key. Your policies, such as they are, are not the solution, they are part of the problem. And when it comes to the “captains of industry” what we get is the old productivity lie again:

Employers and Manufacturing Association spokesman Gilbert Peterson called the latest figures a “sobering reality check”. “We could do considerably more I’m sure and we need to keep working at it but we have had the global financial crisis to contend with and the earthquake in Christchurch which has been a big challenge, and of course we can do more to lift the productivity of New Zealanders …

This line is just an endless treadmill for workers – the promised higher wages are forever out of reach. Productivity has gone up and up and up – wages have not followed. There’s a long CTU report about it here, but the short version is that:

Between 1980 and 2008 (the latest data available) labour productivity grew by no less than 82 percent – while the average ordinary time real wage grew by just 18 percent.

(See also various Standard posts here, here, here.)

The way to raise wages is to have a healthy economy, a living minimum wage, and a strong union sector. The Nats have held back the first, will never deliver the second, and always work to undermine the third. Nor do we need another rerun of the productivity lie. What we need is a change of government.

23 comments on “The wage gap and the productivity lie”

  1. Enough is Enough 1

    New Zealand sucks at the moment and I hold nothing against those economic refugees who are packing their bags and few possession they have and heading to where they will be able to make a livfe for themselves and their children.

    When will New Zealand wake up and demand more from their governments. This trend has been getting worse for decades yet we continue to elect governments that have policies which force our kids overseas.

  2. Draco T Bastard 2

    This video, (yes, it’s the same one I posted in Open Mike), covers the productivity gains of the last thirty years and how almost all of it the went to the rich and that the rich then went on asset bubble crusades. This resulted in increased inequality, an unstable economy and the GFC but not the improved conditions that the business sector and the political parties said would happen (I was going to just say National but Labour said the same bloody thing).

  3. Poission 3

    Productivity always decrease following banking crises,and almost obvious problem.

    Why? it is the reallocation of financial resources from the productive sectors( read parts of the economy that add value ) to the unproductive sectors such as property ,land and duboius infrastructure that is in essence a financial sink ie they lock in finance into illiquid assets.

    In each of the 61 Banking crises since 1980 (yep) productivity has decreased in every domain it has occured.There is a good discussion of this in Broadbent 2012

    http://www.bankofengland.co.uk/publications/Documents/speeches/2012/speech599.pdf

    The underlying regurgitating of the productivity fallacy by these lobby groups suggest that they (and their echo chambers) are a bit thick!

    • muzza 3.1

      Someone send that to spokeman Gilbert Peterson, maybe with the instruction that he reads it, and if he can’t understand it, to consult with someone who can walk him through the basics!

  4. infused 4

    Productivity != profit. Cheers.

    • Draco T Bastard 4.1

      The owners profits have been going up in line with productivity – the wages haven’t.

      • infused 4.1.1

        Where? My wage hasn’t increase in 3 years. My staff have.

        • McFlock 4.1.1.1

          Has the Value of your business changed in that time ?

        • Draco T Bastard 4.1.1.2

          Well, you’re obviously not the people this government is governing for then even though you probably think that you are.

          BTW, a single person whinging that their profits haven’t gone up while banks and several others have doesn’t pass the evidence test.

          • infused 4.1.1.2.1

            What’s the percentage of small business in New Zealand Draco? Banks and a few other very large businesses are the only exception.

            • Colonial Viper 4.1.1.2.1.1

              Those large corporations are the ones making super-profits, draining your local community and your customers of cash. To the tune of several billion dollars a year. And then exporting that cash, typically to Australia.

            • Draco T Bastard 4.1.1.2.1.2

              You’re still only one person and not all small businesses.

  5. UpandComer 5

    The meaningful measure is after tax wages, which have increased by 3% more then oz since 2009.

    The gap is being closed.

    Also I agree with Draco’s comment re wages not keeping track with productivity. I think employer’s in NZ do need to recognise productivity increases and incentivise productivity. Giving employees an option to buy shares in the company they work for at a reduced rate or the likes is a great idea.

    • Draco T Bastard 5.1

      The meaningful measure is after tax wages, which have increased by 3% more then oz since 2009.

      Mr and Mrs Middle New Zealand: Median NZ household income falls

      I think employer’s in NZ do need to recognise productivity increases and incentivise productivity.

      There’s a couple of reasons for that:
      1.) NZ employers are stupid (there’s research around proving that but I can’t be bothered going to find it again)
      2.) Why would they pay the workers more when they can pay themselves more instead? Greed is Good don’t ya know.

      Giving employees an option to buy shares in the company they work for at a reduced rate or the likes is a great idea.

      Ah, yes, having people buy into capitalism will magically make them better off.

      • Colonial Viper 5.1.1

        Not magically, but owner-employees are the way of the future.

        • Draco T Bastard 5.1.1.1

          Cooperatives are but do you really think that an owner is going to sell voting shares to the workers? For some of them part of the reason for being in business is the power rush they get when they tell people what to do.

    • The meaningful measure is after tax wages

      No it isn’t.

      The best measure is of pre-tax wages (gross income). Taxation legitimately takes a share of the return to labour in order to benefit the overall society (that’s the only legitimacy for taxation).

      The meaningful measure has to be the gross return to labour for a couple of reasons:

      First, closing the gap by reducing tax rates would not be possible. As Bill English pointed out, most New Zealanders are paying around 17.5% in tax. Even removing all income tax for this majority would not close the gap. Further, reducing the top tax rate alone would simply ‘duke the stats’ when it comes to ‘average take home pay’. That is, bigger paypackets would get disproportionately more dollars in their pocket, increase the average disproportionately and leave everyone else potentially just as far behind Australia as ever.

      Second, for the majority of income tax payers, the amount of income tax they pay is less than the benefit they receive from overall taxation. Hence, reducing the tax take (especially at the upper ends) would simply make their after tax wages worth less because of the services that would need to be cut to afford the tax cuts, services which they would then have to pay for one way or the other. Put simply, they would be worse off materially (isn’t this what the right so often complains about? – that the higher income people are paying most tax?). This is especially so if the kinds of cuts introduced were those favoured by right wing governments (e.g., benefits, education, health).

      I know Key and English like to run this line about after tax wages being relevant to closing the gap with Australia, but that’s meaningless given that the benefits of a progressive tax system fall disproportionately on the majority of (low and middle income) people – as is, of course, the intention of a redistributive tax system.

      In addition, cutting the top tax rate (as Treasury and IRD seem keen to do) would increase inequality within New Zealand.

  6. UpandComer 6

    “Real after tax wages

  7. Colonial Viper 7

    So Telecom has to fire 1300 workers to “remain competitive”. It’ll save them $80M in wages, annually.

    And they are forecasting a reduced profit of just over $1B for 2013, once redundancy costs are taken into account.

    Labour, please come forward and criticise the idiocy of shareholder EPS driven capitalism and the insecurity it has created for NZ workers. Any time now would be fine, when convenient, maybe when your members come back from enjoying a long weekend away.

    • fender 7.1

      +1

      The greed is rampant, and taxpayers are paying for their future revenue stream infrastructure as well ffs.

    • infused 7.2

      Dude you have no idea. People at Gen-I are sitting around with fingers up their ass. They have lost so much work recently.

      So easy being an armchair warrior eh?

      • Tim 7.2.1

        “Dude you have no idea. People at Gen-I are sitting around with fingers up their ass. They have lost so much work recently.”

        Which is rather strange is it not considering DIA is a bugger’s muddle, the primitive ACC and EQC systems, and IRD?

        The funny thing is that things seemed to work when we had a GCS, a Vogel Computing Centre and a banking system that was more integrated.
        I suspect ‘corporate prestige’ and big egos have been part of the problem over the past 20-30 years.

Recent Comments

Recent Posts

1 2 3 7

  • John Key now admits no broad support for RMA changes
    John Key has now been forced to admit that he never had the broad political support to gut the Resource Management Act, says Labour’s Environment spokesperson Megan Woods. “Cornerstone legislation such as the RMA should never be changed without genuine… ...
    14 hours ago
  • National’s changes leave student bodies in chaos
    The chaos created by National’s scrapping of compulsory student association membership may force the 86-year old Union of Students Association to fold, Labour’s Tertiary Education spokesperson David Cunliffe says. “National’s 2011 Voluntary Student Membership Act has left student associations with… ...
    15 hours ago
  • Tragedy must be impetus for better training
    The Police Minister needs to explain why unsworn and inadequately trained custody officers were put in a situation of caring for a medically unwell prisoner on a busy Saturday night, Labour’s Police spokesperson Kelvin Davis says. Commenting on an IPCA… ...
    4 days ago
  • Government must be more transparent on investor state clauses
    The Government must be more transparent around the draft investor state dispute settlements in the TPPA, says David Parker, Labour’s Export Growth and Trade spokesperson. “Labour is pro trade, and is proud of the FTA we negotiated with China, which… ...
    4 days ago
  • Protect university staff and student voices
    The Green Party believes ensuring student and staff representation on university councils is important. National recently passed a law reducing the size of university governance councils while increasing the proportion of the members nominated by, guess who… Steven Joyce. The… ...
    GreensBy Gareth Hughes MP
    5 days ago
  • C’mon Nick what’s the truth on the RMA
     “Nick Smith has got to fess up and tell us what is happening to his much vaunted RMA reform, Labour’s Environment spokesperson Megan Woods says.  “With just a day and a half to go before the polls open in Northland,… ...
    5 days ago
  • SSC salaries sink National’s spending spin
    Massive pay rises at the State Services Commission prove National’s claims of clamping down on spending in the public sector are simply fantasy, Labour’s State Services spokesman Kris Faafoi says. “Salaries in this one department are almost $70,000 more than… ...
    5 days ago
  • We can fix Christchurch and keep our assets
    The Christchurch City Council is seeking public feedback on its proposed 10 year plan for Council revenue and spending. This is probably one of the most significant 10 year plans ever to be written by a local council because of… ...
    GreensBy Eugenie Sage MP
    5 days ago
  • Epidemic of serious assaults in our prisons
    Labour wants stab proof vests and pepper spray for all corrections officers to keep them safe from the epidemic of serious prison assaults that are occurring around the country’s jails, says Labour’s Corrections Spokesperson Kelvin Davis.  “There have been five… ...
    5 days ago
  • Listen to the locals Hekia!
    Minister Hekia Parata needs to understand what consultation is, Port Hills MP Ruth Dyson says. “It means you have to listen to what people say in their submissions and then be able to demonstrate you have considered their views when… ...
    5 days ago
  • Thanking our caregivers
    Let’s celebrate and thank our caregivers. This week is caregivers’ week. It’s a chance to acknowledge the thousands of women, and occasional other person, who are caring for the elderly and disabled in our country. They hold people’s lives in… ...
    GreensBy Jan Logie MP
    5 days ago
  • Mana Post shop the best outcome for community
    Labour MP for Mana Kris Faafoi has welcomed the move to place the services from the Mana Post shop to a local small business. “This is the best outcome for the community we could ask for. All the vital services… ...
    6 days ago
  • Labour looks to put the tea back into entitlements
    Labour is moving to restore the rights of Kiwis to take tea and rest breaks, Leader Andrew Little says. “Within months of the Government’s Employment Relations Amendment Bill becoming law we are already seeing some of our largest companies, including… ...
    6 days ago
  • Desperate money grab to keep Ruataniwha afloat
    The Hawke’s Bay Regional Investment Company’s decision to borrow $4 million to keep the Ruataniwha project afloat is a case of throwing ratepayer’s good money after bad, says Labour’s Water spokesperson Meka Whaitiri and Napier MP Stuart Nash.   “This bridging… ...
    6 days ago
  • Roundup: UN finds it “probably” causes cancer
    At last the UN has spoken out against the widely-used weedkiller Roundup. The UN’s International Agency for Research on Cancer has identified glyphosate, the principle ingredient in Roundup, as a probable carcinogen. They also include as probable carcinogens the insecticides… ...
    GreensBy Steffan Browning MP
    7 days ago
  • Invermay petition delivered to Parliament
    Labour’s Economic Development spokesperson David Clark handed over a 12,450 signature Save Invermay petition to Dunedin South MP Clare Curran on the steps of Parliament today.  “The level of support that the petition has received across New Zealand is overwhelming,”… ...
    7 days ago
  • Redcliffs School closure plan wrong
    The Government’s proposal to consult on the closure of Redcliffs School not only goes against the best geotechnical advice, but more importantly goes against the best educational outcomes for Redcliffs children and the health of our community, Port Hills MP… ...
    7 days ago
  • Cotton On first to test the tea breaks law
    Australian corporate Cotton On, the first major business operating in New Zealand to exploit the new tea breaks law, could walk away from negotiations if it doesn’t get its own way, says Labour Party Labour Relations spokesperson Iain Lees-Galloway.  “Cotton… ...
    1 week ago
  • World water day: eight rivers in one day
    Our photo journey started by the Waioweka (also known as Waioeka) River which flows from Te Urewera to Opotiki, and is surrounded by beautiful forest. The water looked great! Kopeopeo Canal It contrasted greatly with the Kopeopeo Canal near Whakatane,… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Council can stop Port’s encroachment on harbour
    As owner of the Port of Auckland, Council can stop the wharf extension and reclamation if it wants to, says Labour’s Auckland Issues spokesperson Phil Goff. ‘As owner the council is custodian of the port and harbour on behalf of… ...
    1 week ago
  • We all benefit when education meets everyone’s needs
    As Dyslexia week comes to a close,  Dyslexia NZ have reminded us that around 10% of our citizens are dyslexic and are entitled to better support. One of their strongest arguments is that failure to provide identification and support for… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Big change starts small
    Today marks Race Relations Day in New Zealand. Race Relations Day coincides with the International Day for the Elimination of Racial Discrimination.  The United Nations General Assembly chose this day as it marks the day in 1960 when 69 peaceful… ...
    GreensBy Denise Roche MP
    1 week ago
  • Israel, Palestine and the question of statehood
    The knife-edge election in Israel complicates the Middle East situation, even more than usual. The Prime Minister-elect, Binyamin Netanyahu, is moving to form a government. Netanyahu has indicated that, during his term, a Palestinian state would not be established. That… ...
    GreensBy Kennedy Graham MP
    1 week ago
  • Christchurch transport goes backwards
    The Green Party has a vision of a liveable, accessible Christchurch with a sense of identity and strong connected communities. Instead, 2013 census figures released by Statistics New Zealand reveal a fractured community, and tell a story of frustrated Christchurch commuters… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • Super Fund should divest $140 million in high risk coal
    The Green Party is calling on the New Zealand Super Fund to divest their $140 million investment in coal companies that are vulnerable to becoming financially stranded according to a damning new report from Oxford University. The Smith School of… ...
    GreensBy Russel Norman MP
    2 weeks ago
  • Learn to count with Mark Osborne: 0 + 1 = ?
    The adage about the first casualty of war being truth is one that might often be applied to the political battle for hearts and minds, and of course votes. A rather unfortunate example of this has been arriving in the… ...
    GreensBy David Clendon MP
    2 weeks ago
  • Is it still a safety net when the holes are this big?
    Over the last few weeks I’ve been wondering how safe our income support system is for people, especially those with cognitive or learning disabilities. I’ve been trying to support a young man who was severely injured in a workplace accident… ...
    GreensBy Jan Logie MP
    2 weeks ago
  • Pasifika – protecting the Pacific needed now more than ever.
    Over the weekend thousands of Aucklanders flocked to celebrate our city’s diverse Pacific communities and cultures at the annual Pasifika festival and the Greens were there to join them. The Pasifika festival has been held every year for 23… ...
    GreensBy Denise Roche MP
    2 weeks ago
  • Sounds Stakeholders Seek a Sustainable Future
    It was heartening to see a large number of people who care about the Marlborough Sounds come together at the Marlborough Marine Futures’ forum in Picton on March 8. Fellow Green MP Steffan Browning, who lives in Marlborough, and I… ...
    GreensBy Eugenie Sage MP
    3 weeks ago
  • Solid Energy, who will clean up the mess?
    What can you say? This state-owned coal miner is facing some very serious problems. They haven’t run a profit in years, have required two Government bailouts, laid-off more than 700 staff and look like they need a third injection of… ...
    GreensBy Gareth Hughes MP
    3 weeks ago

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

Current CO2 level in the atmosphere