A plan to fix the pay problem?

Written By: - Date published: 2:09 pm, October 16th, 2011 - 90 comments
Categories: Economy, wages, workers' rights - Tags:

Word around the traps is that Labour is working on a significant new wages policy. Good. Kiwis’ pay has been falling away from Australians’ for two decades thanks mainly to the deregulation of the labour market in 1991.

Of course that’s not completely true for unionised Kiwis – teachers, wharfies, oil workers, miners and other Kiwis in highly unionised industries have seen their pay trend upwards year on year despite the deregulation. To the point where labouring in a strongly unionised industry can now make you more money than many people make in unregulated, non-guild professions.

But unions only represent a handful of Kiwi workers and that number isn’t growing. In itself, this wouldn’t be a huge barrier to raising everyone’s wages (in Aussie about the same percentage of the workforce is unionised as here) if it wasn’t for the lack of rules around the labour market.

The big difference between us and our mates across the ditch is that they retained an award system while we gave ours away. For those of you too young to remember, an award system involved employer and union reps from a particular industry meeting and negotiating minimum standards for that industry that applied to every worker in that industry. Which meant sustainable year on year wage growth and businesses competing on how well they did business rather than how much they could cut their wage bill. About 60% of kiwi workers were covered by these awards – enough of the population to ensure everyone’s pay was pulled up.

It’s no coincidence that the wage gap start to grow significantly in 1987. That’s the same year the award system was weakened by the first Act fourth Labour government.

Of course it got worse from 1991 with the introduction of the Employment Contracts Act which abolished the award system altogether and left wage-fixing to a deregulated market – a situation that saw a massive power imbalance open up between kiwi workers’ bargaining power and that of their employers (there’s a brief explanation of asymmetrical bargaining outcomes here).

Sadly, the last Labour government’s Employment Relations Act didn’t really readdress this bargaining imbalance. Instead their response to Kiwis’ lousy pay was Working for Families – a system that has never been anything other than a taxpayer subsidy to employers.

It doesn’t have to be this way and in most OECD counties it’s not. There are many different ways of providing some balance to a labour market. Unlike comrade Trotter I don’t think compulsory unionism is the answer. Instead I think that an awards system could work with the current system of voluntary unionism as long as there was some kind of bargaining fee applied to anyone that wanted to access an award without joining their relevant union.

However I don’t expect Labour will be introducing an award system, rather I think they’ll extend industry agreements in some way. It may be by strengthening unions’ ability to negotiate industry agreements (like the Greens’ policy) or it could be by providing a system for non-union workers to access negotiated minimum standards. Or it could be something I haven’t thought of.

Regardless of what they’re planning it has to be better than the current free market fiasco that is seeing Kiwis struggling away year after year after year.

Update: looks like we’ll find out what the plan is this Tuesday.

90 comments on “A plan to fix the pay problem?”

  1. toad 1

    Word around the traps is that Labour is working on a significant new wages policy.

    Or are they just going to “borrow” the Greens’ one? As they have done already re the minimum wage.

    • KJT 1.1

      Good on Labour if they do. At least it shows they have the sense to advocate good policy. Wherever it comes from.

      • fmacskasy 1.1.1

        Ditto. At the end of the day, the worker wants a decent wage. How or where the idea comes from is as relevant as how many moons orbit Neptune…

        • fender 1.1.1.1

          I agree…. thats the problem with National, if it isn’t a National idea they are not interested, dictatorship is their game.

  2. Jasper 2

    I hope they make employer contributions compulsory, unless the employer applies for a contributions holiday. It’s ridiculous how if the employee gets a contributions holiday, the employer automatically gets one. Why is that, when theoretically employer contributions are costed as part of the employees package in the first place?

    If the company can’t afford to pay contributions when the employee can’t, then thats fine, they should also need to apply, not just piggyback on the employees holiday. If they don’t qualify, then they should continue to pay KS.

    Then we might start addressing the long term savings issues – savings comes from work after all and without a decent savings plan as part of an industrial relations policy, then it’s probably not as good as it should be.

    • Draco T Bastard 2.1

      Then we might start addressing the long term savings issues – savings comes from work after all…

      No, savings come from not using up resources we don’t have to. Of course, the capitalist profit drive requires that all resources be used up ASAP so that a few can have lot of nothing money.

      • Jasper 2.1.1

        You’re looking at the wrong thing there DTB/

        I’m talking about monetary savings for employees to have, savings of resources is another thing entirely.

        • Draco T Bastard 2.1.1.1

          But if there’s no resources then what are the employees going to spend their money on?

    • Thomas 3.1

      a fair days pay for a fair days work

      Of course, “fair” means a one-size-fits-all rule dictated by some special interest group.

      • felix 3.1.1

        Of course “special interest group” means the people who do the actual work.

        • Thomas 3.1.1.1

          Haha, no. It means the union bosses with the right connections needed to influence the govt. Everyone else gets f***ed.

          • Eddie 3.1.1.1.1

            like the union members, whose wages have consistently risen faster than those of non-union workers? Yeah, they really get fucked.

            Hey, what do you have against people using their freedom of association to agree that they will only work in exchange for agreed pay and conditions? And what do you have against those free people in free association creating a democratic system to elect employees to represent their interests?

            And do you have the same problem with business owners forming unions to advance their interests?

            • Danielle Pattenden 3.1.1.1.1.1

              like the union members, whose wages have consistently risen faster than those of non-union workers? –> Not true due to the employee relations act actually awards whatever gains union members get to all employees within that organisation even those that are non-union members. That was one of the major benefits of this act. That is why it says “To the point where labouring in a strongly unionised industry can now make you more money than many people make in unregulated, non-guild professions” within the article. So there is not a simple divide between union and non-union workers but between industries which are highly unionised and those that aren’t. And while this article names “teachers, wharfies, oil workers, miners and other Kiwis” It leaves out a lot of professional groups such as accountants, lawyers, doctors … so I mean when you factor in these professions and the increasingly de-skilled labour force (since the 1980s) due the proliferation of roles in retails and sales work (which are most of the time under payed in comparison with other work) you can see why there has actually been an increasing gap between particular industries. O don’t think that moving back to a conciliation and arbitration system will actually address this issue… which is the true difference between Aus and here. Also there Unions are way stronger!

              • The Voice of Reason

                “Not true due to the employee relations act actually awards whatever gains union members get to all employees within that organisation even those that are non-union members.”
                 
                Not so. The ERA actually prohibits passing on, but it is notoriously hard to take a case without access to the pay details of the bludging workers.

            • Thomas 3.1.1.1.1.2

              I have no problem with voluntary unions. But I have a very big problem with compulsory unions or unions that otherwise receive government support.

              If unions are so great, why are so few NZers unionised?

              • fmacskasy

                Let me put it this way; if paying taxes was voluntary – how many people do you think would pay it?

              • Colonial Viper

                If unions are so great, why are so few NZers unionised?

                Of course unions are fucking great. Proof:

                The majority of big businesses are unionised ( as members of the Business Roundtable and Chamber of Commerce), as are a very large proportion of farmers (as members of Fed Farmers).

              • mik e

                Bullying by bosses

              • Dan

                Because unions have been dismantled to the extent that a lot of the time they are ineffective. truly strong unions existed in the 1950s and the gov’t absolutly shat on them until they were unable to function effectively… Also NZ’s low rate of unionisation is in large part due to the fact that we have so many small businesses. This makes it incredibly hard for unions to reach people and also for people to become aware of their entitlement to actually join a union. But yes compulsory unionisation did have a lot of problems when it was in place.

              • Eddie

                the nature of the current set up makes it very expensive to negotiate collectives, the union has to bargain with each employer. For a large union in an industry with lots of employers, that means hundreds of bargaining rounds a year.

                The logic of this makes it hard to unionise small workplaces – the unions’ resources are already strained and its hard to cover the costs of negotiation and the costs of organising small workplaces from the dues raised in a small workplace. I guess a businessperson would say they’re not an attractive market, although unions aren’t making profits, of course. More than a third of workers work in workplaces with fewer than 20 workers, where unionisation is tough to achieve.

                And, of course, trying to unionise yourselves in a small workplace can be a lot harder. A lot more personal.

                Then, there’s the hundreds of thousands of workers employed as ‘contractors’ and through triangular employment relationships.

                In short, the law has created a situation where low unionisation is inevitable. Change the law, in particular by lowering the huge bargaining costs unions face by allowing more industry or multi-employer agreements and giving more work rights to contractors, and, even while keeping union membership voluntary, unionisation will rise.

          • mik e 3.1.1.1.2

            Thomas the doubting type the business round table have had their way long enough and it has lead to huge numbers of bad statistics. Child poverty being the worst over 200, 000 of our future tax payers are being left at the bottom of the heap and are costing our economy $ 6 billion a year.Add alcohol and tobacco abuse Anther $10 billion a year when it woul only take $ 400 million a year to solve the child poverty problem. The neoliberal experiment has been a failure.

      • fmacskasy 3.1.2

        As opposed to employers who make that sole determination?

        This is something that folks might be interested in: https://www.nytimes.com/imagepages/2011/09/04/opinion/04reich-graphic.html?ref=sunday

        Thomas, I’m never quite certain why you believe wages should be suppressed. Is it to make us competitive with China? Kazakhstan? Albania?

        Is it because the Great Unwashed Masses are unwortrhy, and only Graeme Hart is worthy pf his $6.5 billion?

        And please don’t give us that cliched crap about the “rich work hard and deserve their wealth”. Most of the rest of the population works just as hard, if not more.

        If you feel that the disparity of wealth is not a pressing problem that will ultimately explode in our faces, let me share this with you. It’s from Andrew Maxwell, an Irish comedian commenting on the riots,

        http://fmacskasy.files.wordpress.com/2011/10/andrew-maxwell-uk-riots.jpg

  3. Thomas 4

    NZ productivity has been falling behind Australia. Fighting each other for more of the shrinking pie is not the way forward. We need to increase our productivity, not just legislate that we should get paid more anyway.

    • felix 4.1

      What nonsense.

      Productivity has increased massively over the past several decades, and profits too.

      Real wages not so.

      • Thomas 4.1.1

        If you look at the data, you will see that our GDP per capita is falling behind. You can’t just legislate that away.

        • fmacskasy 4.1.1.1

          Actually, it shows something far more complex than “falling behind”.

          Our wages used to be on a par with Australia at one stage. Then it wasn’t. What changed?

          Well, we all know the recent histotrical events of the late 1980s. And look at the graph and check around 1986 – Lo and Behold! Our productivity starts to drop away from 1986 onward! And never recovers!

          Thankyou, Thomas, for providing yet more evidence that neo-liberal economics is as effective as marxist-lenism for raising wages. Both system are so flawed that that simply do not meet peoples’ needs.

          Your own evidence shows how we’ve fallen behind since 1986.

        • Colonial Viper 4.1.1.2

          If you look at the data, you will see that our GDP per capita is falling behind. You can’t just legislate that away.

          This is down to poor, short sighted senior management in NZ businesses, as well as major shareholders (many of whom are foreign) who prefer to extract maximum $ from workers and capital employed, instead of reinvesting in people, plant and machinery.

          Frankly, the quality of private sector management and leadership in this country is shite.

          The lower our wages are, the less incentive there is for business owners to employ the latest tech and machinery.

        • mik e 4.1.1.3

          Thomas your data is bullshit we are a small spread out country likes of Australia have concentrated population + volume . time and time again studies have proven our management that is lacking. ours is largely a Commodity based economy.National have cut R&D severely and cut industry training just about altogether . while other countries govts are putting more in those areas you and national are out of touch with what New Zealand needs to succeed.
          Blaming the previous govt aint going to fix anything
          Cullen was and is far better researched on what makes economies grow
          He invested in R&D
          Savings
          industry training
          reduced child poverty
          increased education funding right across the board
          Put money back into regional development [national has cut funding completely]
          the only things National has done is increased our borrowing
          Slowed economic growth to negative figures Owen Glenn is Quite right when he says Key has done virtually nothing except smile and wave and “Slick” spin and PR are the only areas he has succeeded in making suckers out of idiots like you Doubting Thomas!

      • Lanthanide 4.1.2

        Yeah, and this is really the crux. As much as people might go on about productivity in Australia, or any other country, being so much better than here, that’s why they get high wages. Well fine, I don’t know if that’s true or not.

        But it’s irrelevant to the facts in NZ: productivity has increased hugely in the last 20 years, but wage rates have not risen anywhere near as fast.

        If higher productivity = higher wages, then it’s clearly broken in NZ and simply repeating “we need to be more productive!” is not actually fixing the problem.

        • Thomas 4.1.2.1

          Data please.

          • RedLogix 4.1.2.1.1

            Do your own homework.

            You might want to think about the ratio called “Total Employee Compensation as a share of GDP”, or Wage Share. Over the last 30 years it’s been trending downwards all over the world, but New Zealand has one of the lowest… last I looked it was a miserable 43% and still trending down.

          • Eddie 4.1.2.1.2

            I’ll give you the data if you will first admit that if there is data showing that wages have not kept pass with inflation then there is a problem.

            Deal?

            • IrishBill 4.1.2.1.2.1

              High wages can actually pull productivity along by encouraging more efficient use of labour though training and capital investment.

              • Lanthanide

                I think that’ll be a large part as to why Australia is more productive.

                Righties always like to treat it as if higher productivity will lead to higher wages. But really it’s a chicken and egg problem – both result in each other.

                • RedLogix

                  Sort of Lanth. There are essentially four ways to improve ‘labour productivity’.

                  1. A better educated and more capable workforce that produces more per unit of labour cost

                  2. Better and more efficient capital plant that produces more per unit of labour cost

                  3. Produce goods and services that command higher prices per unit of total cost. (This being contingent on a market able to pay that higher price)

                  4. Reduce wages.

                  Why is it that whenever I hear righties talking about ‘labour productivity’ it really just seems like they are only coding for the last item?

                  • Draco T Bastard

                    Because that’s the only one they understand.

                    • mik e

                      The one they don’t want to admit is the Child Poverty rate that is probably the main reason we are falling behind Australia poor children end up with poor education poorly paid jobs etc > Thomas and co just blame the individual and don;t want to solve the problem they have created.

          • fmacskasy 4.1.2.1.3

            Why do you nreed more data? The data you provided with that OECD graph is pretty damning of neo-liberalist, economic dogma.

            Let me reduce it down to simple terms: neo-liberal economic theory doesn’t work. It’s like the concept of the Perpetual Motion Machine – it doesn’t work because it can’t work. Ditto Friedmanite voodoo economics.

            There. Said it.

            Next question. How do we fix a world economy that is so badly stuffed? (Clue: more neo-liberal BS is not going to help.)

            • Thomas 4.1.2.1.3.1

              All the other countries listed also adopted neo-liberal policies in the 80s and 90s.

              However many times you deny it, liberalisation has been very successful.

              • Colonial Viper

                However many times you deny it, liberalisation has been very successful for the elite 0.1%.

                Fixed it for you.

              • fmacskasy

                Thomas – you’re kidding, right?!

                When did you return to Planet Earth?

                Have the last three years utterly passed you by??? Does the near-collapse of the Eurozone, US economy, and the worldwide banking system mean nothing to you??

                I am truly impressed by your incredible ability to totally ignore what is happening around you. Your faith in the (failed) neo-liberal system is almost… religious.

                • Colonial Viper

                  Your faith in the (failed) neo-liberal system is almost… religious.

                  Not sure why you used the qualifier “almost”.

                  Neoclassical economics is the religion; conventional and banking economists are the priests; the 99% of us are the heathen to be preached to and controlled, by fair means and foul.

                  • mik e

                    NEO liberalism is connected to the right wing christian fundamentalists Palin bush blair etc and all the economic research that has been done since computers have been used to crunch numbers required have proven the Chicago school neo liberal model doesn’t work however the propaganda machine rolls on a cult nothing more nothing less!

                    • Colonial Viper

                      Chicago school economics has been used by the elites as both the theoretical background and academic cover for their extortion and pillaging of society.

                  • fmacskasy

                    A slip on my part, ‘Viper…

          • mik e 4.1.2.1.4

            NUmbers leaving for aus

    • Dan 4.2

      New Zealand’s productivity has always been quite behind Australia’s. Although of course this rate has been slightly increased since de-regulation. In order to address this we need to think about the TYPES of jobs we are promoting. Higher skilled work = better productivity (although it is not exactly that simple). As many others have suggested this means more education and investment in general in multiple. In any case I don’t know why we continually attempt to compare ourselves to Australia. Perhaps it is beneficial on some level, however we are different in many ways from them

  4. Awards became a major problem – strong unions forced awards that were often higher than the work was worth, and created a wage gap between worker groups with the most coercive industrial strength and others.

    I think there will be very few that would want to go back to the old waterfront days.

    • KJT 5.1

      Really. Name one industry that employed strong unions, that was not making a profit.

      • TEA 5.1.1

        Motor Industry

        • Draco T Bastard 5.1.1.1

          We didn’t have a motor industry. We had car assembly plants which is a different kettle of fish. Produce car in Japan, export car to NZ, Assemble car using labour instead of machines. Of course it was losing bloody money.

          Now, if we’d actually had a motor industry it could probably have made a profit – especially if it had had strong unions..

          • Lanthanide 5.1.1.1.1

            Those strong labour unions worked out quite well for the American automotive companies.

            • Colonial Viper 5.1.1.1.1.1

              Those strong labour unions worked out quite well for the American automotive companies.

              Almost as good as the shite management, executive leadership and self serving Boards of Directors in those companies who couldn’t design a decent reliable fuel efficient small or mid size car to save their Grandmas.

              The stupidity and inflexibility of the US car unions was only the small half of the problem.

              The fact that Americans decided to choose the quality and reliability of Jap and Korean cars was the biggest issue.

          • Tiger Mountain 5.1.1.1.2

            The NZ car assembly industry created a community money go round and did make money for the plant owners until pressured by deregulation and globalisation. It operated on import substitution where the basic imported CKD packs (body panels, engines and transmissions) were assembled by NZ workers in Lower Hutt, South Auckland, Nelson and even Thames, using locally manufactured glass, tyres, upholstery, insulation, paint, batteries and wiring looms.

            The industry had basically shut up shop by the end of the 90s, after tarrifs on imported cars were reduced, but its major contribution was employment for thousands of kiwis for decades. Strong unions were prominent in all the car plants and wage rates and benefits achieved in the 80s would still put many kiwi workers to shame these days.

            • Colonial Viper 5.1.1.1.2.1

              Not just wage rates and benefits, but a generation of workers with hands-on skills and work ethic.

              Working in a cafe or a K Mart just does not cut it in terms of skill level, added economic value or pay.

            • mik e 5.1.1.1.2.2

              WE had full employment low crime rates a healthy community cheap housing for families we were in the top 4 of the oecd now we are in the bottom 4.

        • fmacskasy 5.1.1.2

          If you’re referring to our assembly plants, they were reasonably profittable until Uncle Douglas removed tariffs allowing cheap imports to flood the country. So we saved on car prices?

          Nah.

          What we spent on more expensive cars we now spent on welfare for those workers who were omnce employed in such plants.

          False economy.

    • One Anonymous Bloke 5.2

      I think you have less than no clue what other people think, and still less about economics. As an example, you assert that no-one would want to go back to the waterfront days, but the fact is workers are being treated far worse now than they were then, and you RWNJ’s are even more eager to smash things.

      • Pete George 5.2.1

        Do you think wage gaps between workers with militant unions and workers in non-essential industries who had no strike strength was fair on all workers?

        • Colonial Viper 5.2.1.1

          Of course its fair.

          The workers who had the smarts to unite in solidarity, and apply collective pressure to employers should be rewarded more than workers who are too dumb or short sighted do that.

    • IrishBill 5.3

      I think there will be very few that would want to go back to the old waterfront days is one of those stupid things people say when they haven’t got a rational argument. Because the waterfront union isn’t any weaker than it was under the awards system. For instance MUNZ members who work in the oil and gas industry are getting paid Aussie rates due to their union’s hard work.

      In fact I’m sure that there are more than a few people who would love to get paid Aussie rates for their Kiwi job – is that the “old waterfront” you’re talking about Pete?

    • fmacskasy 5.4

      And yet, Pete George, Australia still has a strong unionised workforce, with higher pay than us. And the gap is widening?!

      That doesn’t seem to fit your scenario…

    • KJT 5.5

      No. We do not want to go back to the 1940’s when wharfie’s and seamen’s wages were frozen, while war profiteering shipowners made their fortunes.

      It looks like we have though.

      A lot of the militancy was people, who went through the war years, getting their own back.

  5. Arandar 6

    How do you value the the worth of an aged care worker in a Rest Home please?

    • Vicky32 6.1

      How do you value the the worth of an aged care worker in a Rest Home please?

      What do you mean by your question? Obviously, “productivity” doesn’t enter into it, even though most rest homes are actually corporates! (My daughter in law is an aged care worker, and she is paid in washers.)
      Obviously, aged care workers do an essential job, and ought to be rewarded for it. IMO, they should earn more than business CEOs do…

      • arandar 6.1.1

        Exactly Vicky 32.
        My question is addressed to Pete George at 3.21 who said ‘…strong unions forced wages higher than the job was worth…’ or something like it.
        One of my main concerns are the work conditions and pay of aged care workers in rest homes. They are underpaid, undertrained, understaffed, poorly managed and they’re doing one of the more demanding and difficult jobs around, caring for people (our frail, elderly family members) we should want nothing but the best for.
        I’m sick of hearing that productivity is the measure of job worth; once again, it only proves to me that far too many know the price and cost of everything but the value of nothing at all.

        • RedLogix 6.1.1.1

          People pay people what they value them to do.

          Looked at like this, unemployed, underemployed and underpaid people are the symptom of a poverty of values.

  6. bbfloyd 7

    pete, while i agree as to the situation that came about with award structures…. you cite an example of how extreme labour relations can get when reactionary governments deliberately provoke the kind of unnecessary conflict that led to the watersiders being locked out….

    if the employers had spent more time actually dealing with issues sensibly, rather than engaged in constant “warfare” against”communist agitators” through the propaganda networks of the day, then the extreme reactions would not have arisen….

    i agree that we shouldn’t go back to those days…. extreme action, and counteraction is best left to actual warfare….not when we are supposed to be on the same side, and need each other to succeed as a country…

  7. Oligarkey 8

    PG – the alterations made to the Awards System by the Lange Government brought real wage growth back in line with GDP growth. There was no need for the fascist-styled Employment Relations Act, which saw corporate profits increase at an average of 10% per year from 1990 to 2000, whilst real average wage growth was well under inflation at 1.5% over the same period. You see, National raped NZ workers, whilst screaming “there is no alternative”. This is what National stands for.

  8. Bill 9

    “Instead I think that an awards system could work with the current system of voluntary unionism as long as there was some kind of bargaining fee applied to anyone that wanted to access an award without joining their relevant union.”

    Already happens in parts of the state sector. Union collectives are negotiated with the relevent designated authority and those mimimum term agreements then apply to all workers within the particular sector, whether union members or not.

    The bargaining fee is substituted by a delay in the time of the new minimum terms becoming applicable to non-union workers (typically 3 -6 months lag time).

    In an award system, as long there was a designated authority within each industry acting for the employers and any IEA that varied to the union agreements had to be agreed to by that designated authority, then the existing scenario within sections of the state sector could be replicated across all industries and with very little change to the ERA.

  9. Oligarkey 10

    Looks like i got the Employment Relations Act 2000 mixed up with National’s Employment Contracts Act 1991. Actually there wasn’t a great deal of difference between the two save for a much fairer mediation system which made redress for workers’ grievances possible.

  10. Kleefer 11

    “Award rates” encourage cartel-like behaviour, by allowing the big boys to destroy their smaller competitors (who generally pay lower wages) by forcing labour costs up to the point where they are no longer profitable.

    In the past this would have allowed these privileged companies to charge consumers exorbitant prices for their products, because the companies that would usually undercut them (those small-to-medium businesses we love so much in New Zealand) weren’t allowed to exist.

    However, the advent of (somewhat) free trade and in recent years the rise of internet shopping, effectively pulled the rug out from under these sorts of bloated, inefficient businesses because consumers could flip them the e-bird and buy something cheaper from overseas.

    Therefore if the award rate cartel were to work as intended by its proponents like this author, free trade would also have to be disallowed and overseas internet shopping heavily taxed, causing the price of everyday goods to increase dramatically.

    To make matters worse, unemployment would increase because the new ‘price floor’ would cause demand for labour to drop (as a thought exercise, imagine what would happen to your milk consumption if the government introduced a minimum milk price of $6 a litre).

    A higher unemployment rate would require increased welfare spending, not to mention the other costs associated with long-term welfare dependency.

    And the increase in unemployment wouldn’t affect all groups equally – past experience shows young people, Maori and Pacific Islanders would likely be hit particularly hard, due to being lower skilled on average than older, Pakeha workers.

    However, one positive about award rates (as mentioned by this author) is that they wouldn’t affect all industries, meaning there would still be some parts of our economy where free enterprise and competition were encouraged, and unskilled workers had a chance to find jobs.

    And unless we completely reverted to “Fortress New Zealand” and got rid of free trade (which both major parties are committed to), the ability of award rate industries to hike up wages would be severely limited by economic reality.

    But there is a policy that already achieves most of the effects desired by award rate supporters – the minimum wage, which Labour plans to hike to $15 if it wins the election.

    Instead of encouraging businesses to form cartels to rip consumers off, the minimum wage simply bans low-skilled people from working altogether. It’s hard to see evidence in either policy of the so-called “compassion” the left have for the poor.

    • Campbell Larsen 11.1

      Kleefer – I think I can sum up your position in far fewer words:
      Wage protections are bad because if people are getting fair pay then the consumer must be getting ripped off. However we can thank the lord Jesus Christ for the miracle of free trade and the Internet shopping that saved us from this peril.
      The only way to compete with shining example of the wage slave economies of the third world is to pay even less than they do and demand more from our workers – it is inevitable that all bar a lucky few will eventually be slaves, so why fight it – let’s embrace it instead.
      These slave citizens will be eternally grateful that they have been saved from the – gasp – HORROR of long term welfare dependency and will happily don their shackles and chains while singing ‘by the rivers of Babylon’ as a tribute to their neo liberal saviors.
      Thank goodness you have shown us the way.

      • Kleefer 11.1.1

        Do you have any actual response to my arguments or do you just prefer making bizarre rants and personal attacks? And can I take it from your response that you would prefer it if businesses were able to form cartels and rip you off?
        I have no idea what you are on about but your claim that the only way to compete with third world countries is to have lower wages than them is not true. Think for a moment about why a plumber in New Zealand would get paid so much more than a plumber in Vietnam, and why the Vietnamese plumber would be able to earn a lot more doing essentially the same job if he simply hopped on the plane to New Zealand (hint – it’s not because of our rigid labour laws and minimum wage).
        Your “slavery” claim is nonsense – many of these third world countries you deride have rapidly rising incomes, due to the free market you seem to find so objectionable. Would you prefer the people in these countries to remain destitute so you can feel morally superior about living in a country where the state bans thousands of people from working while claiming to care about the poor?

        • Campbell Larsen 11.1.1.1

          Kleefer – you don’t present arguments, you present ideology and spin.

          Statements like ‘the state bans thousands of people from working’ are so ludicrous that I am left wondering why I even bothered replying to you in the first place – I must have been feeling indulgent or bored.

          If you think that my gentle mock was a personal attack then you should consider commenting elsewhere because it gets much rougher than that here.

          Anyhow I will let you get back to preaching to your slave choir from your free market/ free trade bible – it’s no wonder you favor slavery, you audience has to be in chains or else they would simply walk away.

    • RedLogix 11.2

      Kleefer may in fact work for these people.

      New Zealand’s fishing industry needs more cheap Asian labour not less, the Seafood Industry Council (SeaFIC) told a ministerial inquiry into the use of foreign charter vessels.

      FCVs, flagged in mainly Asian states, operate New Zealand’s deep sea fishery with around 2000 low wage crews from Third World countries.

      SeaFIC says New Zealand-flagged fishing boats cannot get local crews and they now want to import low wage labour as well.

      Well all very fine and dandy; but I’m quite certain there would be wholly different political response if this was a demand to import ‘cheap Asian lawyers’, or ‘cheap Asian bankers’.

    • fmacskasy 11.3

      “Instead of encouraging businesses to form cartels to rip consumers off, the minimum wage simply bans low-skilled people from working altogether.”

      Ridiculous interpretation. You might as well say that paying workers ANYTHING at all “bans workers from working”. So with NO pay (just food and shelter only) we should get 100% employment? (There’s a word for that.)

      It’s a nonsensical ideology that, taken to it’s final conclusion, creates a ludicrous scenario.

      Funny thing though; Australia still has strong Union and their pay is considerably higher than ours.

      So; NZ workforce: de-unionised = low pay.

      Australian workforce: unionised – higher pay.

      Am I missing something here? Nope. It’s fairly straight forward: neo-liberal economics works for those at the top – and fails miserably for everyone else.

      You’re welcome. Come again.

  11. Oligarkey 12

    Kleefer

    “Award rates” encourage cartel-like behavior”

    Nonsense. It wasn’t until the late 80s and early 1990s, 50 years after the Awards system was introduced, that the whole corporate chain monopolisation of retail took place. That was facilitated by deregulation of the Labour Market under the Lange Government, and further under National 1991. This also facilitated a “Mcdonaldisation” of employment relations, through job casualisation and relaxation of trading hour restrictions.

    Workers in a McDonaldized system operate in an efficient manner by following the steps in a pre-designed process similar to that of Taylorism. For the attainment of increasing efficiency, this pre-designed process has tended increasingly towards greater work intensification.

    Work intensification involves the reduction of tasks assigned to each employee, so as to increase the efficiency of work. Jobs are broken down into smaller and smaller operations performed repetitively and more quickly by a smaller number of workers (Bunkle 1990:14). This process is aided by the replacement of human labour with automated technologies, which limit the possibility for independent decision making and “irrational” movements through increasing the number of prescribed movements. Or rather, the range of movement is reduced as human activity centres ever more around the unwavering efficiency of machinery. In the fast-food restaurant this has been achieved by developing technologies such as the sensor that automatically shuts off the soft drink dispenser when the cup is full, or machines that buzz when the fries are cooked (ibid: 105)

    This intensification of work that has been achieved through the mechanisation of the labour process has lead to, or enabled, a ‘deskilling’ of jobs. For instance, through this process McDonalds has been able to replace trained cooks with low-skilled workers, who can step straight into the automated job with little or no training (Ritzer 2000: 36). This has enabled the cutting of labour costs in a myriad of ways; which in turn has impacted on the working conditions of staff.

    Firstly deskilling enables a minimalising of job training. This saves on management labour costs. Secondly, deskilling allows employers to seek employees at a lower end of the labour market for management and general positions. This facilitates juvenalisation and justifies lower wages.

    Thirdly, deskilling makes employees easier to replace, thus exposing existing wage levels to greater market pressure, which serves the dual purpose of placing downward pressure on wages whilst facilitating de-unionisation. Finally, and perhaps most importantly, deskilling enhances the scope for the utilisation of part-time and casual staff. This allows greater flexibility to increase and decrease numbers of staff to concord with periods of high and low consumer demand, in effect passing part of the financial risk of business on to the employee (Ritzer 1998: 66). So, the outcome of the de-skilling process has been a ‘casualisation’ of labour , and the proliferation of “McJobs”. These jobs are synonymous secondary labour market employment in that they are generally short-term, low pay, part-time, casual, and are usually filled by young people, women and people of non-white ethnic minorities.

    • Kleefer 12.1

      So you think these “young people, women and people of non-white ethnic minorities” would be better off on the dole? Because if you increase the minimum wage to $15 that is where most of them will be. And some workers actually prefer “casual” jobs for lifestyle reasons.

      I remember a while back there was a big story about 3000 people applying for jobs at a new supermarket. What the media didn’t tell you was two-thirds of them already had other jobs, and either preferred to work at the supermarket or wanted night work so they could earn some extra bucks.

      My point is that people choose where they want to work and they choose the best work available. If the economy is going well McDonalds struggles to hire. But if the economy is tanking, as it is at the moment, McDonalds might be the best option many people have got.

      • fmacskasy 12.1.1

        “So you think these “young people, women and people of non-white ethnic minorities” would be better off on the dole? Because if you increase the minimum wage to $15 that is where most of them will be. “

        Rubbish. Even trained economists disagree on that claim. That is nothing more than wishful thinking on the part of free marketeers.

        And some workers actually prefer “casual” jobs for lifestyle reasons.

        So what? Red herring.

        In making that statement, you’re attempting to deflect from those who want full time jobs – 160,000 people – but can’t find them.

        “I remember a while back there was a big story about 3000 people applying for jobs at a new supermarket. What the media didn’t tell you was two-thirds of them already had other jobs, and either preferred to work at the supermarket or wanted night work so they could earn some extra bucks.”

        And pray tell – how do you know thios? Did you ask all 3,000 job applicants? (If so, you must have a lot of time on your hands.)

        In which case, was it the same with all threse job applicants as well;

        “Applicants queue for 20 jobs at new KFC store”
        http://www.stuff.co.nz/business/3994651/Applicants-queue-for-20-jobs-at-new-KFC-store

        “2700 applicants for 150 jobs”
        http://www.stuff.co.nz/business/industries/4032012/2700-applicants-for-150-jobs

        “10 applicants for every one shelf-stocking job”
        http://www.nbr.co.nz/article/10-applicants-every-one-shelf-stocking-job-104165

        “…about 1000 people applied for just 90 jobs at a new McDonald’s in Mount Maunganui, which is due to open next month.”
        http://www.bayofplentytimes.co.nz/local/news/300-jobs-created-across-the-bay/3915540/

        “Applications have flooded in from jobseekers hoping to be a part of the new Bunnings Warehouse team in Glenfield. Advertisements were placed one week ago for the 124 jobs in sales, administration, customer-service and trade specialist areas, and over 1500 applications have been received so far. ”
        http://www.scoop.co.nz/stories/BU1105/S00813/demand-strong-for-new-jobs-up-for-grabs-in-glenfield.htm

        “The 20-year-old is among at least 51 people who have been given jobs at Rotorua’s new Wendy’s Old-Fashioned Hamburgers, which opens next month. After reading about the restaurant’s open recruitment day in The Daily Post, Mr Watson joined 349 people who queued to be interviewed by Wendy’s staff on Thursday last week.”
        http://www.rotoruadailypost.co.nz/news/jobs-extra-staff-hired-at-new-fast-food-restaurant/1062578/

        • Dan 12.1.1.1

          “And some workers actually prefer “casual” jobs for lifestyle reasons.

          So what? Red herring.

          In making that statement, you’re attempting to deflect from those who want full time jobs – 160,000 people – but can’t find them.”

          There is some validity to this claim. People do sometimes want to have part-time work in order to create a better work life balance. The problem is however that it must be a CHOICE rather than something they are pushed into. This is the whole problem of flexibility, it is a very complex concept and there are many different ways in which flexibility such as this may exist so you must ask what kind of flexibility actually exists within New Zealand. And it is here that you see it is generally numerical flexibility which places a lot of the burden of a recession upon those in very dis empowered positions. In this case the casual jobs that are available are not exactly what people actually seek.

          Further it is also about the types of jobs that available. Sure there may be some (not enough) casual jobs available. But they are generally in de-skilled sectors of the economy. . So it is not simply a matter of saying “well if there are only jobs available at McDonalds then that’s tough”. That is very short sighted. If we want to actually increase productivity there must be investment into education and also into job creation within skilled sectors This is a long-term solution to a variety of problems we have within this area in New Zealand.

          “I remember a while back there was a big story about 3000 people applying for jobs at a new supermarket. What the media didn’t tell you was two-thirds of them already had other jobs, and either preferred to work at the supermarket or wanted night work so they could earn some extra bucks.”

          Shouldn’t you be looking at widespread macro statistics of unemployment rather than making your own judgement calls of what people are looking for and wanting to participate in. They are out there. For example the fact is that our unemployment is sitting at around 6.5% http://www.dol.govt.nz/lmr/lmr-hlfs.asp that means that there are simply not enough jobs and hours within these jobs for people to actually earn a living wage. This is not simply going to go away something must be done to encourage wage increases and more jobs to make it possible for all New Zealanders to participate in paid work.

  12. So they are working on a wage policy five weeks before an election???

    • Lanthanide 13.1

      Better than ‘never’, as the Nat’s have shown for the last 3 years.

      • Brett Dale 13.1.1

        Or Labour did for nine years in Office.

        • Lanthanide 13.1.1.1

          If you hadn’t noticed, under Labour we had the longest period of growth post world war 2. They also raised the minimum wage significantly in real terms, not just notional terms like National has. Labour also did WFF, which was their wage policy. As the post admits, WFF was really just a subsidy for shitty employers.

          What has National done, exactly? “Fiscally neutral tax cuts” that have now chewed up $1.1B seems about all I could name that might possibly be called a wage policy if you were being extremely generous.

        • mik e 13.1.1.2

          Labour increased the minimum wage by more than 35% when last in office .National have increased minimum wage by less than inflation BD

        • fmacskasy 13.1.1.3

          When holding National to account, refer to Default Response #1: “What about the previous Labour government?”

          Note: This works only for the first 15 years. After that, refer to Default Response #2: “If it weren’t for all those benes/solo-mums/maoris/gays/[insert alt. minority here]”.

          Note2: Default Response #2 not to be used if Minister is solo-mums/maoris/gays/[insert alt. minority here]. Eg; Paula Bennet and solo-mums.

    • Nope they want to see Treasury’s fiscal update which is due soon.  They do not want to release policy and then see that the understandings have been blown out of the water.  By all accounts things are getting worse.
       
      How is that change feeling going?
       

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