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Campbell on the nine day fortnight

Written By: - Date published: 3:48 pm, March 13th, 2009 - 33 comments
Categories: national/act government, workers' rights - Tags: , ,

Gordon Campbell’s pretty scathing of Key’s nine day fortnight scheme in his latest article at Scoop, describing the announcement as a sign workers will have to bear the brunt of the recession.

Plainly, workers are going to be the first people over the side of the lifeboat during this recession. The main policy idea to emerge from the recent jobs summit turns out to be a recipe to cut wages, since the training aspect of the initial idea has now been scrapped

He’s also done the sums on how big a pay cut it might mean.

How big a cut in income and conditions is this ? Well, work it out on the basis of a typical eight working day and an 80 hour working fortnight. This would drop back to a 72 hour fortnight, which is a 10% cut in hours. Eight hours lost would entitle that worker to four hours of subsidy at $12.50 an hour, or $50 before tax. So the scheme in its entirety would typically deliver something like a 10% drop in wages, for which the government would offer $50 before tax, in compensation.

How much is that in lost spending power? Lets assume the worker is on the average wage of $25 an hour. Losing eight hours pay a fortnight would mean a $100 a week drop in wages, offset by $25 a week from the subsidy – which comes to a net $75 a week loss in income, every week.

And there’s no guarantee it’ll save the job, or that incomes will rebound when the government subsidy dries up six months later.

Since a struggling firm can only be eligible for the scheme for six months, there seems nothing to stop employers from cutting wages by 10 % for the first six months, and then sacking the person afterwards. In other words, the job saving ‘promise’ that sweetens the wage cut could turn out to be a fairly transient one. After all, no one is expecting this recession to be over in six months.

Key’s committed even less to this scheme than his cycleway, and even at best estimates it’s picked to save between 2-3% of the jobs that will be lost as a result of the recession.

The Government says protecting jobs is its number one priority during the recession. Why then is it willing to spend $330 million to cut the top tax rate to 37 cents but only $20 million to save jobs ?

33 comments on “Campbell on the nine day fortnight ”

  1. BLiP 1

    I can’t help but wonder – or is that speculate – that this impending depression (its not a recession) is going to be a lot worse than the public thinks and Key knows this, so anything he does will be very very expensive over the next 18 months.Also, having played so integral a part of the business world when a money-lender, Key knows that anything put in place will have a battalion of lawyers looking for ways to rort the government. Then again, he probably doesn’t care about that.

    The government is under pressure to be “doing something” and has to keep feeding the MSM pap to fill its pages, so this 9-Day Fortnight is just another diversion away from things like the removal of Ethics in genetic engineering, ACC and Corrections??

    Good work by Campbell, though.

  2. gingercrush 2

    Oh yes Gordon Campbell. The man that thinks huge stimulus packages are the perfect ingredients for the creation of new jobs. And that such stimulus packages will uniquely tackle problems of unemployment. He doesn’t like small packages. He likes big giant packages. Spend 10% of GDP put it on debt and away we go. That will create whole streams of work opportunities for workers.

    I don’t put much faith in Campbell to be honest. Remember Obama’s great stimulus package is expected to create 4 million new jobs. Now anyone reading that, will know how much that sounds like utter bullshit. Right now unemployment is at 8% in the US. So one would expect unemployment from now till this time next year to decrease by about 3%. Does anyone really think that will happen? Further if the stimulus package was a great idea. Why is Nancy Pelosi considering a third stimulus package? So the US will get into even greater debt? What do you propose happens to all that debt eventually? The US needs to absorb it. What will that do? That will create huge imbalances that will eventually put the US back into recession.

    Despite these huge stimulus packages, New Zealand’s unemployment looks set to track at about the same rates as Australia, the United States, Great Britain and Europe. So despite New Zealand not having a grand stimulus package. Our unemployment is set to be no worse off than those countries that are engineering huge stimulus packages. Funny that.

    —-

    The idea that you can spend and spend and spend and somehow create jobs is horrendously backwards and outwardly stupid. The only thing we as a nation can do and should do is create small packages. These will ease unemployment but are not in themselves a solution. Since the only way for unemployment to ease is for business to once again feel good. That only happens when an economy is healthy again. And you can’t make an economy healthy by spend, spend, spend.

    The 9 day fortnight does have my support. Most employees I feel would rather lose some pay than lose their jobs. Especially in these tough economic solutions. The plan isn’t perfect. But I actually think the government is providing a pretty fair contribution. It could be more, that is true. Labour can’t fault this. That’s because they’re not nearly as ideologically left as some people here are and because they know. There is no magic way to get out of this recession. The only thing Labour has done, is criticise small tweaks. And ask well what about small business?

    • Pascal's bookie 2.1

      Remember Obama’s great stimulus package is expected to create 4 million new jobs. Now anyone reading that, will know how much that sounds like utter bullshit. Right now unemployment is at 8% in the US. So one would expect unemployment from now till this time next year to decrease by about 3%. Does anyone really think that will happen?

      You really don’t know much about this do you ginger? Where are you getting this from?

      I agree that the 4 million figure is likely to be bs. But it the sort of bs that politicians always use, the punters like numbers. The fact is that no one knows exactly how many jobs the package will produce. It’s complicated. But the economists have models that provide the best possible estimate. That estimate is what you are calling “obvious bullshit”. Where is your model? I’m guessing it’s gurgling away in your gut.

      Further, any fucking idiot will know that the plan is aimed at stemming the losses of jobs, not creating new ones using todays unemployment rate as a baseline. Your argument assumes the opposite, that these 4 million jobs should be subtracted from todays unemployment figure. Seriously. I think you need to lay off on the sarcasm about Campbell mate, at least untill you can show some awareness of even the very most basic issues in play.

      Further if the stimulus package was a great idea. Why is Nancy Pelosi considering a third stimulus package?

      A number of reasons. First, she is a politician in a very diffrent political system from urs, she is applying pressure on the white house from the left to counteract that from the blue dog dems and the GOP. Secondly, and more importantly, because the conditions forecasted just a few months ago were too optimistic, and many people, not just Pelosi, think the bill was not big enough. One of those people is Paul Krugman. Are you now going to claim that gingercrush’s gut knows more about this shit than him?

      I know these numbers make your pituitary gland go all a quiver, but just pointing at them and saying “that’s crazy” is not an argument. Neither is saying “ooh but we will have to pay back the debt”. That is like saying that “chemotherapy kills the white blood cells which is a bad thing”, ie, it completely misses the point of the excercise.

      Despite these huge stimulus packages, New Zealand’s unemployment looks set to track at about the same rates as Australia, the United States, Great Britain and Europe. So despite New Zealand not having a grand stimulus package. Our unemployment is set to be no worse off than those countries that are engineering huge stimulus packages.

      Thank the Labour party.

      • gingercrush 2.1.1

        PB

        Yes the plan is looking to stem jobs. But that in itself will not happen.Was I wrong to use the example that it would somehow come down by 3%. Yes. But in reality, this stimulus package cannot determine the jobs it will create. The likelihood is that the US continues to shed jobs and the stimulus package will not cure that problem. Indeed if unemployment stays around 8% (which as you know was ahead of forecasts) then this can be a success. But with unemployment looking to rise and continue to rise. How exactly is the stimulus working?

        What that money will do is merely create more and more debt. And unlike Snail whose so naive to think debt doesn’t matter. The US will have to pay it back. What is that going to do? That is going to cause inflation which ultimately hurts workers, puts pressures on businesses and leads to problems in the future. On one hand, the stimulus package will be a success. It will create jobs. How many jobs is very questionable. But ultimately and eventually, that debt will be required to be paid back. It will create pressure on inflation and will constrain business.

        Any plan for a third stimulus packages shows that printing money and creating more debt isn’t actually helping to ease the pains in the US. That means they become even more indebted. Surely you must understand that such huge debt is a problem.Its a problem the hard left themselves who are rarely in agreement with the right understand. Now the hard-left would understandably say, that you can’t just spend money. That ultimately, the economy has to be transformed away from a capitalist system. Obama’s plan doesn’t do that either. Because so much of the plan and other stimulus is to prop up banks and businesses.

        In my answer to Krugman. I would argue that he is far more in favour of a transformation of America’s economy.But to do that, you need someone other than Obama. And I really don’t think the US public are in themselves going to want a third stimulus package. A third stimulus package will scare business and will scare consumers. And may actually deflate the economy.

        Sorry but I don’t like these stimulus packages. I simply can’t agree that you pump huge amounts of money and somehow that gets you out of a recession. You can call me what you want. But that is what believe.

        • BLiP 2.1.1.1

          What that money will do is merely create more and more debt. And unlike Snail whose so naive to think debt doesn’t matter. The US will have to pay it back.

          . . . SNIP . . .

          But ultimately and eventually, that debt will be required to be paid back.

          Pay it back to who? The money is being used to buy the banks. Is the government going to pay back itself?

          The Obama government is mopping up because private enterprise fucked up.

        • Pascal's bookie 2.1.1.2

          Well I just deleted my reply, it was way too long already for a blog comment and I realised that this:

          Sorry but I don’t like these stimulus packages. I simply can’t agree that you pump huge amounts of money and somehow that gets you out of a recession. You can call me what you want. But that is what believe.

          means it would be a waste of fucking bandwidth. I will take you up on your penultimate sentence however.

          You are an idiot. You can fix that maybe by taking a few logic courses, and reading some history. You should also read Krugman’s pieces in the NYT. It’s free and you might at least gain some understanding of his position. ‘Wants to transform the economy’ ffs. ‘not see the economy come to a grinding fucking halt’ would be more accurate.

          Given that you are against stimulus packages, what would you propose?

  3. Graeme 3

    You have (or rather Gordon has) ignored Working For Families. Many of the poeple losing money as a result of this will pick up money from WFF, it won’t cover the lot, but they won’t be as bad off as this makes it seem they will.

    • lprent 3.1

      WWF doesn’t help if they lose their job does it?

      • higherstandard 3.1.1

        Isn’t the rationale behind the 1 day off in 10 to save their job ?

        And re G Campbell – he’s the flip side of Matthew Hooten – partisan as hell….. although in his defense he’s pretty open about where his political sympathies lie.

        • Tane 3.1.1.1

          Who’s he partisan toward? He’s ex-Green, but he opposes the scheme and the Greens support it.

          • higherstandard 3.1.1.1.1

            Read his bio Tane.

            Edit – Lynn WWF ? It’s usually me that’s had a few on Friday afternoon 🙂

    • BLiP 3.2

      Ahhh, yes – WFF – yet more corporate welfare for those businesses not prepared to pay their workers a living wage – poor old taxpayer having to mop up private enterprise greed..

      • higherstandard 3.2.1

        Employers should be paying workers more based on the number of children they have ?

        • Draco T Bastard 3.2.1.1

          If they want some labour in the next generation then the answer is yes. Of course, as having the businesses do all the paperwork themselves would not be cost effective it is far better that IRD does it. What the businesses need to do is pay more tax so that the scheme pays out enough that people actually have a living income.

        • Bill 3.2.1.2

          Not uncommon HS in worker’s self management scenarios. A recognition that child rearing is expensive and, in those workplaces, valued.

          Childless workers take home less pay for the same work. Voluntarily.

        • higherstandard 3.2.1.3

          So employers can pay childless workers less – hmmm interesting.

          Perhaps we should start with all the childless MPs who could take a voluntary pay cut.

          • Bill 3.2.1.3.1

            No. Insofar as people are not valued in the capitalist wage system, the disparity you speak of has no place and makes no sense.

            Worker self management is a wholly different value system operating, by necessity and unfortunately, within the parameters of the market.

            Important point here HS. There is no employer making a unilateral call in my example. Neither is there an employer in negotiation with an employee.

    • Quoth the Raven 3.3

      What did Bill English say on those tapes about WfF again? a sort out.

  4. Bill 4

    6 months on a reduced wage and a redundancy ( if you have such a provision)based on your last weeks of work or the average over the previous 12 months. Not uncommon.

    Volunteer to go on a 9 day fortnight and pull all those averages down? Methinks not.

  5. Paul Robeson 5

    Sorry to be lazy…but what did it cost to run this job summit, if the result is an idea to spend $20 million…

    anyone got any figures there?

  6. Snail 6

    Recommendation.. for GC — go read ayne rand — anchor yo’self!

    As for stimpacks size the plain truth is you spend up big and quick or you dive and die long. 1930s said that much.

    And on debt you tell us who the heck they owe this dough to.. who they gonna pay back..?

    Short answers are good on air supply for the rest of us.. try remember this.

  7. ak 7

    Gingernut’s quite right: Key and the masters of our universe have printed their own money, clipped the ticket and bought off the umpires to such an extent that the toxic debt now swirling about is literally immeasurable.

    Governments wield spoons in futile attempts to fight oceans of toxic debt.

    Free money for banks inspires today’s “rally”, but the rot is systemic: trust is irrevocably shaken, and legions of unemployed will no longer tolerate the obscene disparity of wealth distribution so clearly exposed and emphasised.

    They will march. And demand and enjoy fundamental change.

    The opium God is waning, and “Godless Russia” as spectre and scapegoat is no longer available; in the US, Republicans seal their fate with every desperate and archaic reference to “socialism”, while the Chinese and Indians slowly but surely cement their ideology and deserved place in the new world – to the benefit of the entire Third World.

    Thanks to Helen (who will play a seminal role), New Zealand’s status will endure the pathetic tinkering of the current amateur hour.

    And all the while the world slowly simmers.

    Nearly done to a turn: just a wee bit more heat and some eastern european spice and we can all sit down.

    Someone tell those boys.

  8. Camryn 8

    BLiP: Is this really a depression? To me, the line between recession and depression is when a large number of people experience noticeably shorter lives due to the strain and malnutrition. The flaw with my reasoning is that we now fall from such heights of wealth and comfort that it probably can’t get that low. I mean, oh no, we’ve fallen back to only our late 1990’s levels of wealth! Boo hoo! The reason why I shudder when people call this a depression is twofold, though. One, it’s alarmist and worsens the aspect of this recession that’s essentially a crisis of confidence and two, it’s like using the word holocaust to describe less than large scale genocide. It weakens the word.

    • “We’ve explained the difference between a recession and a depression before. But we’ll do it again. A recession is a pause in an otherwise healthy, growing economy. A depression is when the economy drops dead.” Bill Bonner, The Daily Reckoning

      At this moment 31.8 million people in the US live on food stamps. 23.000 people each day loose their jobs and every 13 seconds someone looses their house. Only 12% of Americans still have jobs in the production of goods (Car industry) 40% in the finance industry (Collapsing) and 48% earned their money in the service industry (Supported by Finance and Production hence collapsing as well)

      30% million Chinese lost their Jobs in the last 6 months. They were the main breadwinners for rural families who saw their income drop by 65%.

      Europe faces large scale riots and the UK house values have dropped a whopping 30% with more to come.

      Looks like the economy world wide is dropping dead to me.

      Every genocide is a holocaust. The genocide that saw 6 million Jews killed is “the Holocaust”.

    • BLiP 8.2

      Those still referring to this depression as a recession are preventing people from adequate preparation. The MSM is refusing to use the word depression because its advertisers are wanting to squeeze the last few pennies from the consumers before it all goes belly up.

  9. Rachael Le Mer 9

    Bonking gets rid of depression.

    [lprent: So does troll killing.. I’m pretty sure that is you Peter. Add to watch list]

  10. BLiP 10

    Yes Virginia – it really is a depression. Start digging that veggie patch and dust off the sewing machine.

  11. Santi 11

    What depression is Campbell talking about?

    I’m drinking the same quantities of champagne/fine wines and eating at good restaurants at the Viaduct and saw no trace of the so called down-turn. Loosen up and enjoy life and the perks of money, comrades.

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