Times are going to get harder for workers in the next few years. Unemployment is set to rise to 4.5-6% (still well under 1990s levels). The wages of those who keep their jobs won’t rise as fast. At the same time, prices are rising faster, particularly petrol. What can be done?
Tax cuts aren’t the answer. You can’t make big tax cuts year on year, and any big cuts will come by cuts in the social wage. Cutting public spending would be disastrous, adding to unemployment, further suppressing wages, and having a negative knock-on of further job losses in the rest of the country (watch In a Land of Plenty to see how that happened in the 1990s).
More public transport is a partial solution; it combats petrol prices by giving workers a cheaper (and greener) alternative to driving but better public transport can’t relieve other raising costs or lower wages.
We also need to keep workers’ incomes up. First, by raising benefits and creating grace periods for the In Work Tax credit portion of Working for Families, so workers who lose their jobs don’t face huge income cuts. Secondly, by putting up the minimum wage to $13 an hour on October 1 (giving a pay rise to over 300,000) and ensuring it keeps going up by locking increases into legislation. These changes would put money to the communities in New Zealand that are set to suffer the most the lower income areas where job losses will be concentrated – stimulating local economies.
Both those changes could be in place, helping workers, by October 1. Labour and the Greens should act now to protect workers in the present and the future. Because if National gets in, those workers will once again see their incomes stagnate and eaten up by inflation.