Bill sez: ‘pay cuts for youse’

Written By: - Date published: 8:20 am, July 3rd, 2009 - 90 comments
Categories: bill english, education, health, john key, national/act government, public services, Unions, wages, workers' rights - Tags:

bill-smilingYesterday in Question Time, Bill English sent a message loud and clear to teachers, police, doctors, nurses, and all other public servants (‘frontline’ or not): under National, you’ll be getting pay-cuts, don’t expect cost of living adjustments, watch as your pay-packet buys less and less.

Hon BILL ENGLISH: The Government has stated a number of times that it would honour those agreements that were entered into in pay rounds before the change of Government. I have seen reports that, for instance, senior doctors received a 4.25 percent pay increase [1.25% after-inflation] on 29 June. Alongside their automatic moves up the scale, this amounts to a total pay rise of $11,000 a year for senior doctors. Nurses received a 4 percent increase [1% after-inflation] in March, alongside automatic progressions. Under his or her contract, the average nurse is receiving a pay increase of around $6,000 a year. In the current climate, most New Zealanders are receiving little or nothing extra. No one should take those pay increases as an indication of settlements in the near future. They are legally binding agreements that the Government will stick to, but we have made it clear that that kind of pay rise is no longer sustainable.

He practically dares doctors, nurses, and teachers to do something about it:

The fact is that turnover rates in the public sector have dropped to historical lows…Nurses and teachers would be regarded by the public as having among the most secure jobs in the economy right now

In other words, ‘why should we pay you more if the supply of your labour is secure?’

National are buying themselves a fight here. Teachers and medical professionals have huge public support, their skills are in international demand, and they are well-organised because they’re well-educated enough to know the union makes them strong. If they can’t even give cost-of-living adjustments, the Nats will face strikes and the flow of professionals to Australia (where they’re actually investing in health and education to help them through the recession, not using the recession as an excuse for running them down).

Once again, we see that Key was serious when he said he “would love to see wages drop“, and we see, as predicted, that he was full of crap when he promised higher incomes for doctors.

90 comments on “Bill sez: ‘pay cuts for youse’”

  1. Relic 1

    Well, we’re getting down to the gritty reality of a National government now. Freezes are not going to do a lot to close the wage gap with Australia, which may I remind everyone ‘got away from us’ during National’s Employment Contracts Act period.

    Shonkey and his hollow men need to be called on this one. Urge your union to take action, join a union, gain community support, do something practical about this.

    • “Urge your union to take action, join a union”

      Union’s ideas for taking action so far have included: endorsing the 9 day fortnight (effectively a pay cut), cake stalls, and showing ‘concern’. I don’t like the chances.

      • Wendall 1.1.1

        The real work that unions do is at the bargaining table and helping members day to day. It might not get on the front-page but it’s the stuff that really makes the difference.

        • indiana 1.1.1.1

          Totally agree with you Wendall, but I am concerned that some Unions do not manage their operating costs. I have yet to see any union come forth and offer a union fee reduction in the current economic climate to help their members. After all they have no election funding donations to make for the next 2 years.

          • Maynard J 1.1.1.1.1

            They would be busier than ever right now, why cut their fees when they are most needed? Cutting their service would not help their members one iota.

            • indiana 1.1.1.1.1.1

              I’m not asking them to cut their services…just manage their costs better. I don’t think making donations to political parties actual translates to better services for their members. If you think otherwise, please tell us how, because I am intrigued. Over the past few years in general have union fees decrease or increased? It could be argued that for all the wages increases won, a portion is lost to union fee increases.

            • Maynard J 1.1.1.1.1.2

              “I don’t think making donations to political parties actual translates to better services for their members. If you think otherwise, please tell us how, because I am intrigued.”

              lol indiana do you think Cunliffe would have made the statement that English made above? No? Maybe supporting other parties is in the interests of unions, since their members would do better with a government that does not actively undermine empolyment negotiations and act in bad faith, and toss about political interference upon a whim.

              Union fees are generally charged at a flat rate per member – so pay increases are not clawed back through pay increases. Mine have gone up very little in the last 7 years – I believe $2.25. Maybe they could look at a proportional pricing structure as a way to help their members out. I am not an expert, perhaps other unions have one already.

            • Swampy 1.1.1.1.1.3

              Some of these unions are wealthy, with assets in the millions. They achieve this primarily through their high fees of several hundred dollars annually, and this indicates that a percentage of that fee is used solely to accumulate the assets, and not for services to their members.

            • Maynard J 1.1.1.1.1.4

              Which unions are these swampy, and what kind of assets? Buildings to work out of, for example? By the way, do you realise $17 a month is “hundreds” annually? That is not so terrible.

              Feel free to add some substance though, if you have a change of heart.

            • Swampy 1.1.1.1.1.5

              Rail and Maritime is an example, here’s their 2007 annual report
              http://www.rmtunion.org.nz/publications/documents/ConferenceMinutes2007.pdf
              Financial statements starting on page 25. Page 31 has the balance sheet (assets)
              From here we can see they have assets of approximately $2.5 million, the majority being investments of about $2 million. The union fees work out to several hundred a year, I believe they charge a flat fee.

              The other big unions the EPMU, SWFU etc would be in the same boat, I can’t be bothered looking them up right now. Coincidentally all three are affiliates of the Labour Party. The logical conclusion is those are fighting funds for political purposes.

              You don’t need all that to run a union, members’ fees should cover the day to day operating costs. Matt McCarten with the Unite union has specifically cited the high costs of belonging to the big Labour affiliates, he keeps his fees very low and runs a tight ship. I don’t like McCarten but he does have a point.

            • Anita 1.1.1.1.1.6

              Given what the government has done to the watersiders in the past I’m not surprised they want to hold significant reserves.

            • Maynard J 1.1.1.1.1.7

              Swampy, essentially you are attacking unions for maintaining sound financial practices. I am not even going to bother.

            • Daveo 1.1.1.1.1.8

              Swampy, you’re a blithering idiot. Most unions don’t have large reserves, some like the SFWU are on the verge of bankruptcy. Those that do have reserves have them in case of extreme employer aggression or for when calamity strikes like it did in 1951 and 1990 when unions came under sustained attack from the state.

              These are organisations that have been around for more than a century and there’s a reason for that. It’s because where possible they plan for the future with reserves, rather than living hand to mouth like you’re suggesting. The claim that reserves are ever accumulated for their own sake, or for any reason other than the long-term benefit of a union’s members, is absurd.

              The idea that financial reserves are “fighting funds for political purposes” has no basis in fact. Most probably it comes from the fact you don’t know what running a union involves, yet you seem to feel able to tell them how to operate as if you’re some kind of expert.

              You further reveal your ignorance when you praise McCarten, the right’s pet unionist, as “running a tight ship”. Matt relies heavily on donations from old Trots and Maoists, dodgy deals with Brash and Banks’ Kiwisaver scheme, a sweetheart deal with McDonalds, and the fee from the Herald for his Sunday column. His organisation is a shambles, organisers aren’t paid properly and the VUWSA fiasco shows he’s got no real control outside of Auckland. His comments attacking Labour affiliation are politically motivated as he’s a sworn enemy of the Labour Party. The cost is a fraction of one percent of each member’s annual fee. Just utter ignorance on your part.

              Again, the question needs to be asked, do of these anti-union critics on the right actually understand how unions work? Or are they just here to parade their own ignorance?

        • Daveo 1.1.1.2

          Indiana’s typically ignorant about how unions work. Like maynard j says, a recession is when unions are at their busiest and they already run on a shoestring (particularly in the private sector).

          Cutting the union fee would only reduce services at a time when union members need a strong and effective union the most.

          If you’ve got bloat to identify then by all means spell it out. Bear in mind too that political donations are only made by a few unions, and make up less than a quarter of a percent of those unions’ spending.

          Another question. Do any of these critics on the right actually understand how unions work?

          • Swampy 1.1.1.2.1

            It’s easy, a few hard core union activists go out soliciting membership, “organising” they call it. Aided by their Labour Party which has granted them monopoly powers and rights through a thing called a MECA. Meaning effectively exclusive coverage of a sector, a kind of cartel. The hard core go around stirring up the workforce in campaigns like this one, apart from that most of the rank and file are more interested in their own lives than getting caught up in obvious political campaigns.

            Now, this is the open transparent public sector we are talking about, where employees have a lot more leverage than some parts of private sector workforce.

            The unions which have signed up their members to a collective contract use that membership and various social methods to get a majority to go out on strike if they choose to do so. At times there has been a lot of name calling, abuse and villification directed at people who see through the political nature of the campaigns.

            In my corner of the public sector the union isn’t very active and I think if a strike was called most of our workplace would refuse to go out.

            • Daveo 1.1.1.2.1.1

              Can you tell me about some of these MECAs Swampy? Are you aware that there are actually very few in place and that the legislation around them is widely viewed to have been a failure for this very reason? Can you tell me what’s wrong with workers being able to bargain on an industry level?

              Are you aware that international studies show we have some of the most “flexible”, ie lax labour laws in the world? No one tell Swampy the Australians have an Awards system or he’ll have himself a brain explosion.

              Are you aware that “exclusive”, “monopoly” rights don’t exist and that anyone who wants to set up an incorporated society with 15 members can call themselves a union and recruit and organise members anywhere?

              Can you tell me how a group of workers bargaining collectively for better wages an “obvious political campaign” for Labour?

              You seem to know of unions and union campaigns, but you clearly have no idea how they actually work in practice. Makes you sound kinda like an ignorant blowhard to anyone who actually has any knowledge in the field.

        • Swampy 1.1.1.3

          But as they get involved in other causes and have plenty of money for these causes, they are obviously charging fees for these extras.

      • Relic 1.1.2

        No need to be a flat tyre ‘righty. Effective unions have always been about the members getting organised, that is all I am advocating. I am not saying please rescue us union secretaries.

      • Daveo 1.1.3

        The CTU endorsed the 9 day fortnight. The EPMU came out strongly against it saying it wouldn’t work without training and a proper wage subsidy, and they were accused by National of just having an axe to grind. Guess the people on the ground were vindicated after all.

        Serious question for leftrightout – how many workers have organised lately? Because you sure sound like you haven’t talked to many lately.

  2. oncebitten 2

    Now we begin the descent into third world status. Doctors here should be paid the international going rate. If we want to maintain a decent health service we have no choice but to pay doctors to stay here. I have no great wish to move to Australia but if health care in New Zealand deteriorates further I would consider it.

    I just can’t understand why people voted this National government in. Didn’t they learn from last time? Same old faces- and slash and burn is the only thing they know how to do.

  3. Mike Collins 3

    Anyone paid by the taxpayer should expect that things aren’t going to be rosy in the next year and do their bit to suck it up – just like everybody else in the economy. However Bill English hasn’t ruled out pay increases – he has just asked that productivity gains be a prerequisite.

    Fair enough in my opinion to say “we’re not adverse to paying you more if you deliver more – but in the current climate you can not expect (again) to be paid more for delivering the same.”

    • Eddie 3.1

      “but in the current climate you can not expect (again) to be paid more for delivering the same”

      we’re not talking even about being paid more, we’re talking about cost of living increases = getting paid the same to deliver the same.

      Anyway, there are no satisfactory measures of productivity in health and education – not least of all because their production isn’t directly bought by any consumer.

      On top of that, we know that productivity has nothing to do with wage rates. It’s supply and demand that sets wages, not the workers’ productivity.

  4. So Bored 4

    Anybody here old enough to remember Piggy Muldoons wage and price freeze? Cant remember how effective it was but rampant inflation again took over when it ended.

    • Eddie 4.1

      The economists say the world’s going to have high inflation, if not hyper-inflation, following a short period of low inflation or deflation… but for different reasons than last time.

    • The Voice of Reason 4.2

      Cheers, So Bored.

      I’ve been banging on to anyone who’ll listen that this period reminds me of the mid eighties. Artificially low inflation, a big swing to a party that promised change, followed by astonishing increases in prices and, in particular, mortgage rates.

      Wage rises followed suit, but in no way kept up with inflation, which was in the high teens. When the surge was over, so was Lange’s government and we entered the dark days of Bolger, Shipley et al and a decade of division and misery.

      English hasn’t forgotten those times. In fact, I think he is relishing the chance to do by bullying what Muldoon did by decree. I hope the nurses, teachers and other public servants stick it to him. Bring on the winter of discontent!

  5. The increase in doctor and nurse wages were absolutely essential to stem the tide of them that were heading overseas. It drove up the Health budget and reduced productivity but had to be done.

    Eddie is right. Wage rises are primarily catch ups to restore losses caused by inflation. A freeze is a cut.

    So much for the high wage economy.

    • Swampy 6.1

      The very large increase in nurses’ wages, some 30%, was delivered by Annette King, Health Minister and well connected in the sector, in 2005 as an election year bribe paid for by the taxpayers.

      • Draco T Bastard 6.1.1

        It was a bribe that most people were willing to pay so as to keep our health system working. Basic supply and demand really.

        So, what was you point?

  6. Maynard J 7

    I have thought about this, and there is something that really worries me. It is a bit of a web of cause and effect but here goes:

    There was an attack on the ‘bureaucracy’ during the 2008 election, and the front line was held to be sacrosanct. The rest were bonfire candidates.

    Now we get an attack on the front line – not as direct, not a “you are all useless” but a “pull your weight, no free lunch”.

    So the front line must increase ‘productivity’. What does that mean? I do not think Bill was talking about touchy-feely peer reviews, 360degree assessments and weekly one-one-ones.

    So how are we to gauge ‘productivity’? Individually or collectively? It seems we are talking about the latter here. So:

    Do teachers have to teach more students in less time? Students are not widgets, and this is not something over which teachers have control. Solution: aggregate grade assessments? Nope – too subjective. Perhaps a formula could be worked out, but it would be difficult. To do better, they need better organisation, procedures, scheduling and so on.

    Nurses and doctors: again: what is ‘productivity’? More patients/less time? Hang on – do they control this? No, they do not. Healthcare is demand-driven and resiticted by facilities and organisation. Again, that is subjective and to do better, they need better organisation, procedures, scheduling and so on.

    Let us try another one: Social workers. What is ‘productivity’? Working through more cases? Hardly a positive outcome, you would think. What is better – resolving three difficult situations over a week, or popping in to see two dozen troubled folk to clip the ticket? What else can we do? Look at outcomes? Again, that is subjective and relies on policy, procedure, organisation and so on.

    Where else do we find the front line: at our borders. What is ‘productivity’ there? Letting more people through? Obviously not. What else can we do? We look at outcomes: Less bad people/contraband getting through? Again, that is subjective and relies on policy, procedure, organisation and so on.

    What is the common thread here? If you have not seen it, it is that the productivity of the front line, and the facility to measure it, is the ‘bureaucracy’. Those worthless folk that we are trying to get rid of.

    How do you measure performance if you have no measures and no one to measure?

    How do you improve performance if you get rid of all the people looking at the problems and working out solutions (those detested policy analysts)?

    This bodes ill for our public service. That is what happens when you have a Government in the governing business, not in the business of governing.

    • r0b 7.1

      Bravo. Someone needs to be asking these questions! You should do that up as a guest post.

      How does one measure the “productivity’ of politicians I wonder. This do nothing government wouldn’t score every well…

      • Maynard J 7.1.1

        “How does one measure the “productivity’ of politicians I wonder. ”

        Laws passed. Who cares of they are terrible – we just need More and More. And amendments, more amendments… And getting rid of laws, get rid of them all. More readings per day! Plus eleventy-five meetings a day and twelve babies kissed per domestic flight in Mainland New Zealand.

        Keep to the standard, National stays in. Fail, in comes Labour. Watch productivity skyrocket!

        Then we would save a fortune by getting rid of the vote – it is all a market remember, and if they are ‘productive’ then we will pay them more and keep them on.

  7. Naturally, no mention that in non-government sectors employees are actually facing job losses, little likelihood of any significant salary increases and in some cases, cuts due to the downturn.

    I suspect that this is a bit of a pre-emptive strike setting the ground for more realistic negotiations.

    Neither should I add, any acknowledgement that the spending decisions of the previous Govt have limited the options of the new govt, which I suspect was MC’s strategy anyway.

    So, it’s the worst recession in 70 years, but the general public should pay relatively more in wages to keep public sector wages rising at the rate there were in the boom years?

    • Wendall 8.1

      “I suspect that this is a bit of a pre-emptive strike setting the ground for more realistic negotiations.”

      by which you mean breaching good faith, a condition of bargaining?

      “the general public should pay relatively more in wages to keep public sector wages rising at the rate there were in the boom years?”

      um, isn’t that what they call a strawman? Doesn’t the post specifically talk about cost of living increases, not the (slightly) larger increase doctors, nurses, and teachers had been getting? You’re trying to make the argument about something other than it is about by ascribing a false view to your opponents.

      Honestly, I’m new to this and yet I find you totally see-through. the old hands must just yawn.

  8. Thanks for that Wendall. Nice to see you play the man not the ball so early.

    Frankly, what do you expect English to say? Isn’t this what has been flagged in budgets and discussions between the Government and the CEO’s.

    Actually, it’s kind of amusing that you’re so outraged when I suspect you talk to anyone at the coalface (myself included) they will be disappointed but not surprised.

    Would the same level of increases as in the past have happened if Labour had been in power? Again, this is simply politicing on your behalf and the old hands as you call them but I doubt you’ll have the decency or honesty to admit it.

    • Maynard J 9.1

      I am private sector and I do not expect a pay rise, but the organisation I work for has not been so stupid as to come out and say that. Why would they go out of their way to undermine morale and good faith?

      Why not just STFU and let it be dealt with as it should be – between the employer and employee? Why trample on people for political gamesmanship? I expect National and English to act like this – but common decency would dictate them act otherwise.

      • Daveski 9.1.1

        Why trample on people for political gamesmanship?

        So inviting but I’ll turn down the opportunity to play games.

        As I noted, this is not the only comment that has been made so it’s not like it’s out of the blue (ha ha). Frankly, I think they’re damned if they do and damned if they don’t given the economic situation. As would Labour have been.

        I accept that there is a core issue here around negotiations. But I also think there is an issue around managing expectations which as I’ve noted has been on going since late last year.

        I expect that some in the public sector will get outraged but I doubt with the wider population would rise up in support.

        • Maynard J 9.1.1.1

          They would not have been damned if they stayed out of it. Simple.

          It is not English’s job to manage expectations, he should have much more important things to be doing, like managing the economy and this recession. I have not been told whether I will get a pay rise. I do not expect one. I can manage my own damn expectations. Why should it be any different for the public service?

      • Strathen 9.1.2

        My interpretation of politics would mean that if they did leave it to an issue between the employer and employee, the opposition would raise the issue in parliament and in the media around the government being secretive and trying to hide the fact they are pay freezing. Then the attack would move to the government not being transparent and the whole trust issue would be brought up again.

        Damned if you do, damned if you don’t.

        I’d hate to be in Government. You try your best but people just rip your best down for their own agenda. I’m not just referring to National being in government, it happened to Labour over the last 9 years too. I don’t like it, but I guess that’s why I’m not a politician. Oh, and I’ve got far too many skeletons in the closet too…

    • Wendall 9.2

      “Frankly, what do you expect English to say?”

      I would expect English to say nothing to try to pre-determine the outcoming of bargaining that has not even begun yet. Isn’t employee pay one of those ‘operational matters’ that ministers aren’t responsible for?

      “Actually, it’s kind of amusing that you’re so outraged when I suspect you talk to anyone at the coalface (myself included) they will be disappointed but not surprised.”

      And where do you think I am?

      I’m not ‘playing the man’ I’m picking apart your argument. It seems to me that this practice of crying foul is more often than not a cover for losing the argument.

      • Daveski 9.2.1

        You’re welcome to your view Wendall and undoubtedly around here you will be in the majority and will “win” all the arguments.

        It’s interesting to see a few others raising practical points about the political posturing that underpins this issue.

  9. Strathen 10

    Productivity depends on the role the person is doing:
    pro·duc·tiv·i·ty (prō’dÅ­k-tÄ­v’Ä­-tÄ“, prŏd’É™k-)
    n. Economics: The rate at which goods or services are produced especially output per unit of labour.

    I don’t interpret it to be the number of people (customers) through the door. In relation to the health sector it could be applied to waiting times, quality of service, etc.

    I think Bill English perceives the health sector as having room for improvement. The health sector needs to change his perception, either by planning and implementing changes that improve the respective service they provide as per their productivity standards, or by educating English in the causes of his perceived lack of production (educate English in the value NZ is getting from the health sector for the money spent).

    Sometimes you are being as productive as you can given the environment. There are many ways to increase productivity; you may need to change the environment, you may need more staff, you may need to adjust the services you are providing, training, work ethic, focus attention on specific tasks, or you may need to increase sales (Obviously this is not desirable in the health sector). Sometimes you can be working hard, but not productively.

    Productivity is a subjective term, the definition and standards are different from role to role, but the term applies to all. The parties being effected from this wag freeze will need to ensure they are meeting their productivity levels and communicate this to the Government. Then they may get their wage increases.

    I’ve never worked in the public sector but have always been aware that if I do not hit my service levels, I will not be receiving a pay rise at my next performance review. Personally I have never understood receiving the cost of living pay increase as a right and my perception/interpretation may be tarred because of this. This also may be why I was astounded when I read Eddie’s comment ‘On top of that, we know that productivity has nothing to do with wage rates. It’s supply and demand that sets wages, not the workers’ productivity.’ My basic understanding is supply and demand sets the base wage rate, but experience and performance (productivity) then sets the increases and additional pay scale on top of this.

    • r0b 10.1

      In relation to the health sector it could be applied to waiting times, quality of service,

      Thanks for the contribution re productivity. But that example just goes to show how bizarre the whole concept is. As a doctor I could see a lot more patients a lot quicker if I reduced my quality of service (and fewer if I increased my quality). The two measures oppose each other. Which is the “correct” measure? Neither.

      In any non cartoon world assessing “productivity” in many fields is much more about the questions that you ask, the things that you chose to measure, than it is about any real and concretely measurable phenomena.

      • Strathen 10.1.1

        You’re correct. I’ve never worked in the health sector and was only guessing with my suggested examples.

        I’ve honestly got no idea where this could be taken. That’s why I suggested that English perceives the non-productivity of the health sector and therefore needs to be educated. As you say, it’s more about the questions you ask and perhaps English is asking the wrong ones.

    • Draco T Bastard 10.2

      (educate English in the value NZ is getting from the health sector for the money spent).

      What he needs educating in, as well as the rest of the political right, is how much the GDP will go down when the number of people too sick to work increases due to overworked doctors and nurses. That’s the simple reason why most of the Westminster derived governments have social welfare and free health care.

  10. BLiP 11

    Looks like John Key got his wet dream. At least he can say “told you so”.

    Since its the school holidays, will he be taking the kids with him on his jaunt through the islands? Last school holidays his family had a nice wee break in China. And then there was the long weekend at Huka Lodge while Ms Lee was left in the wind.Lovely for some. As for the rest of us, its a long haul from Queens Birthday to Labour Day.

    • Strathen 11.1

      Isn’t National just following Labours line?

      “”The Labour-led government wants wages to increase for all workers and we do want productivity-led wage growth. That’s why we’re cutting taxes for business and working with unions and employers on improving skills.” – Michael Cullen – Sourced from your link. 😉

    • Pat 11.2

      I don’t know BLiP. Maybe you should barricade his family in their home. Would that make you feel better?

  11. Greg 12

    The question that you always fail to answer is ‘where will the money come from’? What services will you cut? Or will you just raise taxes? Despite the well documented evidence that low taxes are the key to getting us through this reciession.

  12. Maggie 13

    Strathen, supply and demand sets only base rates only when base rates as also paid rates.

    If a worker receiving above base rates knows he can get more by moving down the road, then likelihood is he will go unless his current employer at least matches the wages his competitor is prepared to pay.

    Supply and demand……..

    • Strathen 13.1

      Absolutely, however the employer will only match the rate if the productivity levels warrant the expenditure. I assume the competitor is offering the increased rates through a perception the employee will provide the appropriate productivity to justify that rate.

  13. Maggie 14

    Oops, first sentence should read: “when base rates ARE also paid rates”. Apologies.

  14. roger nome 15

    This is just another way in which National is seeking to get at wages in the over-all labour market. In a global economy, lower wages = higher profit margins, the equation is simple as that for National and its backers.
    Now all we need is a rightist to give us a faux argument about how this is good for workers. lol – i see someone’s already bought out Roger Douglas’ “ace in the hole” labour productivity – as if lowering wages in the economy creates jobs that are of more productive value. All that will result from this is more low-wage jobs … such as exist in the fast-food industry … funny that. National is playing Russian rootlet with the electorate trying a replay of the 1990s with tricks like this.

    Memo to Mr Key – it’s not FPP any more. You can’t screw 65% of the population, get 35% of the popular vote, and hope to lead the next government … This is just another way in which National is seeking to get at wages in the over-all labour market. In a global economy, lower wages = higher profit margins, the equation is simple as that for National and its backers.

    Now all we need is a rightist to give us a faux argument about how this is good for workers. lol – i see someone’s already bought out Roger Douglas’ “ace in the hole” labour productivity – as if lowering wages in the economy creates jobs that are of more productive value. All that will result from this is more low-wage jobs … such as exist in the fast-food industry … funny that. National is playing Russian roulette with the electorate trying a replay of the 1990s with tricks like this.

    Memo to Mr Key – it’s not FPP any more! You can’t screw 65% of the population, get 35% of the popular vote, and hope to lead the next government …

  15. gingercrush 16

    I see nothing about pay cuts. Just that Nurses and Doctors and other public servants may not get the increase in their earnings they’re currently receiving. That isn’t a pay cut, no matter how you try and spin it.

    • Wendall 16.1

      If the money you get paid does not buy the same standard of living that it did, your pay has fallen. No cost of living adjustment = pay cut.

      • Swampy 16.1.1

        Nope. A pay cut is a cut in the amount you are getting paid. Non increase does not equal pay cut.

        • Draco T Bastard 16.1.1.1

          Trying really hard to hang on to your delusion aren’t you?

          If the money you get in your pay packet doesn’t buy as much this week as it did last week then you have lost effective income. It’s relatively simple.

        • jarbury 16.1.1.2

          I guess you’ve clearly never heard of the term “inflation” swampy

        • Anita 16.1.1.3

          Someone may wish to correct me, but it is correctly termed “a pay cut in real terms”

        • felix 16.1.1.4

          Hey swampy, I hope you haven’t been whinging and snivelling for the last few years about the need to adjust the threshold of the top tax bracket due to inflation.

  16. roger nome 17

    “but experience and performance (productivity) then sets the increases and additional pay scale on top of this.”

    No – how much of a sycophant you can be to your manager often determines how big your next pay rise will be, according to the employment relations literature. Maybe you should do some reading?

    • Strathen 17.1

      Yes, in some cases this is true. I wouldn’t believe it to be the rule, just as what I proposed isn’t the rule. I was merely talking about productivity more in isolation. There are many factors in obtaining a wage increase. E.g. I believe the main factor driving English’s stance are the global economy, rather than ideology. In the same respect, ideology will still be a factor.

  17. roger nome 18

    ginga

    “Just that Nurses and Doctors and other public servants may not get the increase in their earnings they?re currently receiving”

    Don’t be wilfully stupid – it’s tedious. We’re obviously talking real wages here, that means inflation-adjusted.

    • Swampy 18.1

      In the real world, people don’t get their wages automatically inflation adjusted. Real wage is an actual physical dollar amount.

      • Draco T Bastard 18.1.1

        Money: An abstract representation of perceived value.

        Money is not real in any sense of the word. The amount of food you can put on the table, the house and car, etc are. If you can no longer get what you could before with the same dollar income then you have had an income decrease because, apparently, the value that you supply hasn’t gone down any.

  18. Reggie 19

    Long time reader first time commenter. As a recent member of the junior doctor’s union I was dismayed to hear several colleagues last year say that they would be voting for the nats. Quite a few nurses too. Why? Simple…they wanted a tax cut. Short sighted fuckers.

    Having said that the RDA does not piss around. Eddie is right, they will rip Bill English a new ring-piece come negotiation time if he keeps up that sort of rhetoric.

    On the subject of pay disparity, I am about to start as a new consultant in the public health system. After 6 years undergraduate training + 10 years post-grad specialist training (working shitty hours as a junior doc) + a student loan with its own gravitational pull, I can expect to start on a salary of about $125,000. Now personally, that is OK with me. Didn’t go into medicine for the cash. I could earn more in private but I don’t want to work in private: the public health system trained me and I believe in supporting it. But…I have had several offers to work in Queensland and Western Australia for DOUBLE that amount. Again, I don’t want to go to oz, but a lot of docs are wage sensitive. Its short sighted in the extreme to think we can keep NZ trained specialists (who are well regarded internationally) here if we don’t keep up, at least to a degree, with the rest of the western world.

    • r0b 19.1

      Long time reader first time commenter.

      Welcome aboard!

    • Swampy 19.2

      The RDA will get the same kind of response (with bells on) that they got from Labour last year when they tried to screw 30-40% increase.

      It is most encouraging to hear some of your colleagues are not swayed by pro-Labour union rhetoric.

  19. roger nome 20

    For obvious reasons productivity used to drive wage increases under the Keynesian model, but this no longer applies, since demand is global, and employers don’t rely on domestic wage levels for demand of products. So now there’s a disconnect between productivity and wage levels in the macro-economy.

    This BBC article illustrates this point nicely.

    http://news.bbc.co.uk/2/hi/business/5303590.stm

    I get really sick of explaining this to brain-dead rightists . grrr

  20. gingercrush 21

    Well English’s comments are going to have to change since according to this news item they will have no choice but to keep increases high and of course it’s rather good for your argument:

    A group set up to look at why senior hospital doctors are leaving New Zealand to work overseas says senior doctors here earn roughly a third less than they do in Australia.
    http://www.radionz.co.nz/news/stories/2009/07/03/1245bb3910d6

  21. Zaphod Beeblebrox 22

    The productivity argument is totally the wrong way round. The people who are your most productive are your most qualified, experienced and technically proficient. For this reason they are the most employable. They will be the first to leave for overseas (especially with the $NZ at 0.80$A), leaving you with the less motivated, efficient, experienced and qualified staff. This will reduce productivity as well as demoralise those experienced people still remaining.
    Of course we then have to go off shore to recover the skills we have lost. This is why 40% of our doctors are foreign trained.
    This is the same government who we trumpeting their rural bonding program for doctors, nurses and veterinarians. Suppressing all their wages runs counter to what you were attempting in the first place (ie getting qualified practitioners to rural areas).
    i would propose-
    1. paying people what they are worth.
    2. lots of training, research and support to improve their productivity.
    3. then getting rid of your less effective staff.

    • BLiP 22.1

      At last! Some sensible commentary in relation to the fallacious “productivity” gambit. Thank you.

      And, just to point it out again for those who missed my last 100 posts in this regard: if the multinationals had invested in infrastructure instead of shipping container loads of Kiwi cash back to head office, the productivity of the local workers would have gone through the roof. Give a man a spade and he’ll dig a hole a day – give him a bulldozer and he’ll move mountains!

      Of course, Labour was just as bad as National in using “productivity” to deny workers a living wage.

  22. gobsmacked 23

    The various right-leaning commenters here are making a legitimate point (tough times, shared sacrifice, etc).

    Trouble is, it’s not what National – and especially John Key – say. Not before the election, when they promised to lead workers to the sunlit uplands. Especially health workers. The loss of medical professionals to Australia was a disgrace, they told us, and ambitious National were going to do something about it, by golly.

    And not since the election either. In 2010, New Zealand will be coming “aggressively” out of the recession, the PM assures us. Under his inspirational leadership, the good times are coming, and soon. Woo hoo! Here come the lollies! And I want mine!

    It is the failure of John Key’s leadership. He is simply addicted to telling every audience it’s all good. Even the bits that were all bad just a few months ago. He wants our love, you see.

    As long as the PM is sending that message, we’ll be “aggressively” bargaining for our share. If he doesn’t have the political balls to tell voters what they don’t want to hear, that’s his problem. Why should doctors, nurses and teachers do his job for him?

    After all, aren’t they in the famous front line?

    • Swampy 23.1

      Why not? Key is looking for opportunities to change the Employment Relations Act to reduce the power of the unions. If the doctors, nurses and teachers want to play into his hands, more fool them.

  23. RedBack 24

    I’ve just got back from annual leave and caught up with this topic and with my brother, sister & father all being public servants in NZ I have a vested interest.

    I do have to laugh at the sheer incompetance of English’s reasoning behind this. A recession really isn’t the time to see who can race to the bottom the fastest, no matter how much the NACT collation would want it to be. Its a funny old attitude alot in the workforce have been conned to having by their employers. ‘i’m not getting a payrise so why should others get one?’. Payrises have a knock on effect in society. One sector or large group recieves one then others can use that as a benchmark and jusitification for recieving either a payrise or at least a cost of living wage. Sadly it seems NACT use the opposite example in an attempt to con the rest of the working public not to expect much from their employers. No surprise there.

    The Public service is always a lazy target for the socially ignorant and right wing media. The Herald are no exception. What they tend to overlook and not mention is the fall out from this backwards step , not just for the employees of the public sector, but for NZ as a whole? I thoght it would’ve been blindlingly obvious for any half decent political journo to pick up on.

    • Swampy 24.1

      I know a lot of public sector people who are moderates and won’t be joining the union protests even if they are a union member. If the union calls a strike they could end up dividing the community and losing members because it’s clearly of a political nature.

      Has there ever been a time when a union didn’t seek a pay rise in wage claims.

      • Anita 24.1.1

        I think a “wage claim” necessarily means a claim based on um… wages 🙂

        But yeah, there are plenty of examples of unions making claims for not wages, often for terms and conditions (breaks, health and safety, education, leave).

      • Daveo 24.1.2

        Dickhead. Unions don’t “call strikes”. Their elected delegates and chosen representatives call a motion to strike if they think it’s necessary, everyone meets to discuss the plan and then members take a democratic vote on whether to go ahead with strike action.

        I’ll say it again, you’re a blithering idiot with no understanding of how unions actually work. Go educate yourself, you’re an embarrassment.

  24. Swampy 25

    What I mean is, has there ever been a time where a union’s opening round of a wages claim was not for an increase.

    There has been cases, say the EPMU negotiating with Air NZ where I think they accepted a cut, but I bet that was not what the union wanted when they commenced negotiations.

    • Anita 25.1

      A “wage claim” is a claim for wages, that’s what it means!

      Your argument seems analogous to

      Swampy: was there ever snowy day when there wasn’t snow?
      Someone else: no, huh?
      Swampy: see, the weather is evil and always snowy

      As I said, unions have made many claims that were not for increased wages (and therefore not a “wage claim”) much as there are many days with no snow and therefore not snowy days.

      • Maynard J 25.1.1

        I guess the other thing to point out is that Swampy is also wrong (in what Swampy is trying to say). When jobs are at stake, unions will propose a wage decrease in order to preserve jobs. Happened with Air NZ engineers recently. But Swampy thinks unions are evil and inefficient, so I am sure this will be duly ignored.

        Swampy, out of interest, have you even asked for a pay decrease during individual negotiations? If not, why would you expect something from the collective negitations upon which you freeload?

    • Daveo 25.2

      Swampy. That wasn’t collective bargaining, moron. The company threatened to outsource and make everyone redundant during the term of their collective agreement. Under the crazy socialist ERA it’s illegal to strike under those circumstances. The EPMU had to negotiate a package to keep the bulk of the jobs here in a situation where there was no right to strike.

      You’ve shown your ignorance yet again mate. Best quit before you embarrass yourself further.

  25. Bill 26

    Just read an interesting wee piece on the financial crisis that makes a couple of salient points.

    1. Wages in the West have stagnated since the early 90s and arguably the 70’s

    2. As states stepped away from their obligation to provide health care, education and so on, the banks stepped in and offered us loans to cover such necessities. (50% of total lending was to individuals)

    3. Unlike businesses that are leant to, we don’t make profits although the banks still made a profit from lending to us. ( An obviously unsustainable scenario)

    4. Nothing has changed except the banks are less willing to lend and when they do lend again the whole thing will crash all over again ’cause we are in no position to be the bank’s source of profit any more.

    5. Solution? Substantial increase to wages across the board otherwise we will, collectively and individually dribble along, dying by inches .

    • Draco T Bastard 26.1

      Bill, profits are an unsustainable scenario. The accumulation of wealth into fewer and fewer hands will bring the economy down every time.

      • Bill 26.1.1

        The growth needed to generate profits is unsustainable.

        The profit motive is simply stupid.

        I get that.

        Now looking at the (stupid) game and the possibilities as they stand right now viz a viz where the goal posts are as of this moment of time….

        Taking profit from citizens who cannot possibly make a profit themselves to subsequently allocate a portion of those profits to pay down debt, as would be the case with a business, is beyond stupidity.

        But that\\’s the scenario that the banks are going to continue to pursue and no government is doing anything other than to encourage them.

        • Draco T Bastard 26.1.1.1

          /agree

          We have to get over the idea that the profit motive is good. It isn’t, it costs far more than we can ever possibly afford. AGW is proof enough of that.

  26. That is an interesting article Bill – thanks for sharing.

  27. Zaphod Beeblebrox 28

    Times of low inflation are the perfect time to pay people more to boost your manufacturers. How do you think Ford, General Motors, GE, Westinghouse etc.. were able to mass market their products. Giving the social wage, providing welfare protection, decent health care and education are what allowed western countries to progress economically, socially, politically and scientifically. Productivity boomed and so did profits between 1950 and 1970.
    Since the 1970s we have been hell bent on stripping these protections for society away and you can all see the effects of this in productivity, wages, GNP and deficits.
    Since 2000 GDP has actually been below the long term average, so even before the recent recession we were not doing that well anyway.
    This sort of thinking guarantees low growth, unemployment and atrophy.

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