web analytics
The Standard
Advertising

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.

Important links

Recent Comments

Recent Posts

  • Inaction on mandatory social worker registration unacceptable
    Labour believes the Government is putting the most vulnerable members of our society at risk by not acting on the advice of officials to urgently make the registration of social workers mandatory, says Labour’s spokesperson for Social Development, Carmel Sepuloni. … ...
    3 hours ago
  • Government’s housing failure puts pressure on Reserve Bank
    The Government’s failure to take action on the housing crisis has put pressure on the Reserve Bank Governor who has to deal with a rampaging housing market and low inflation at the same time, says Labour’s Finance spokesperson Grant Robertson.… ...
    3 days ago
  • Labour wishes Russel Norman well
    The Labour Party wishes Russel Norman well in the future as he stands down as Green Party co-leader, Labour Leader Andrew Little said today. “Russel has made a significant contribution to New Zealand politics in his nine years as co-leader… ...
    3 days ago
  • Russel Norman to stand down as Green Party Co-leader in May
    Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party's Annual General Meeting in May.Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM."After… ...
    GreensBy Russel Norman MP
    3 days ago
  • Russel Norman to stand down as Green Party Co-leader in May
    Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party's Annual General Meeting in May.Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM."After… ...
    GreensBy Russel Norman MP
    3 days ago
  • UE bar hike denies access to thousands
    A Government rule change denying access to thousands of young Kiwis access to tertiary education is doing nothing to build a smart, fair future, Labour’s Tertiary Education spokesperson David Cunliffe said today.  “NZQA rules changed by the Government have reduced… ...
    3 days ago
  • Progressive Rainbow rights? Yeah, nah….
    Legally, New Zealand is perhaps one of the more progressive countries when it comes to lesbian, gay, bisexual, transgender and intersex (LGBTI) rights even though we have further to go on the last two. However, the latest Westpac’s Rainbow Acceptance… ...
    GreensBy Jan Logie MP
    4 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    4 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    4 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    4 days ago
  • Waihopai – years on, still the same
    On 24 January, I attended the Waihopai Base protest in my electorate.  It was attended by a great range of people who are all concerned about the direction our country is heading in.  Thank you to all of those who… ...
    GreensBy Steffan Browning MP
    5 days ago
  • Greens call for ring-fencing of state home proceeds
    The Government must ring-fence the proceeds of any state home sales and spend every dollar raised on more Government-built homes in order to address the housing crisis, the Green Party says.Prime Minister John Key has indicated that his first major… ...
    GreensBy Kevin Hague MP
    6 days ago
  • English breaks his $6000 wages promise
    Just one month into the new year Bill English has already rowed back on his election promise of real wage rises for New Zealanders, says Labour’s Finance spokesperson Grant Robertson. “During the election campaign National promised Kiwis that the average… ...
    2 weeks ago
  • National fails to produce evidence justifying attack on RMA
    The National Government is misusing evidence provided in the Motu report on planning rules to justify gutting the environmental protections secured by the Resource Management Act (RMA), says the Green Party today. The Motu group's research into the impacts of… ...
    GreensBy Julie Anne Genter MP
    2 weeks ago
  • RMA changes won’t knock a dollar off the cost of a new home
    The Government’s proposed changes to the RMA won’t increase the number of affordable homes or knock a dollar off the cost of building a new house, Labour Leader Andrew Little says.  “Tinkering with the RMA will not solve National’s housing… ...
    2 weeks ago
  • What is the real ‘price of the club’?
    What price is too high to join a club?  According to the current the New Zealand Prime Minister, the lives of young Kiwi men and women are a part of the package. In his latest BBC interview, John Key fails… ...
    GreensBy Kennedy Graham MP
    2 weeks ago
  • Palestine – NZ talks loudly in New York, does little at home
    Even though New Zealand has been gently slumbering over the last few weeks, world affairs have been progressing at its usual break-neck speed. There have been a number of significant steps since we all disbanded from the last parliamentary year.… ...
    GreensBy Kennedy Graham MP
    2 weeks ago
  • Palestine – NZ talks loudly in New York, does little at home
    Even though New Zealand has been gently slumbering over the last few weeks, world affairs have been progressing at its usual break-neck speed. There have been a number of significant steps since we all disbanded from the last parliamentary year.… ...
    GreensBy Kennedy Graham MP
    2 weeks ago
  • DOC debacle means hundreds may have missed out on fishing licences
    Hundreds of families and recreational fishers may have had their holidays spoiled by missing out on their fishing licences, with Conservation Minister Maggie Barry preferring instead to focus on more high profile portfolio priorities over the summer break, Labour’s Conservation… ...
    2 weeks ago
  • Effective action needed against pirate fishing boats
    New Zealand’s failure to detain pirate shipping vessels poaching endangered species in our region is simply not good enough, Labour’s Defence spokesperson Phil Goff says. “We send New Zealand naval vessels to the Arabian Gulf to board pirate ships there… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere