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CTU on closing the wage gap

Written By: - Date published: 4:20 pm, October 3rd, 2008 - 4 comments
Categories: election 2008, greens, labour, wages, workers' rights - Tags: ,

The Council of Trade Unions has done a lot of work on why wages are low for many workers in New Zealand and how they can be increased to close the wage gap with Australia. They offer six proposals:

Increase the minimum wage to at least $15 per/hour
We know from the painful experience of hundreds of thousands of Kiwis during the 1990s that if the minimum wage doesn’t go up, wages for low-paid jobs (not just those on the minimum wage but also those close to it) don’t go up. If we want wages to go up at the lower end, we need minimum wage rises. Higher minimum wages encourage more people into the workforce.

Improved collective bargaining
Collective bargaining redresses the inherent power imbalance between employer and employee. When workers are divided and forced to compete against each other a race to the bottom occurs and wages drop. When workers are permitted to stand united, wages rise. While New Zealanders lost work rights in the 1990s, Australians didn’t. That’s when the wage gap opened up.

Build union capacity
The end of industry-wide bargaining means that each union has to bargain individually with each business in which members are employed. This situation was created on purpose to undermine workers’ ability to bargain for better wages. To counter this support for unions could include more research, expanded mediation services, funding for bargaining initiatives, and advocacy training.

Good employer and responsible contractor policies
A lot of work is contracted out by the public service. Workers don’t have the same protections working for these contractors that they do working directly for the government. The public service should refuse to work for contractors that don’t meet acceptable benchmarks.

Increased Productivity
The two biggest things that are needed to help this happen is for workers to get their fair share of increased productivity (labour productivity is up 42% since 1988 but wages have not gone up anywhere near that much) and more capital investment.

Close gender gap
If women earned as much on average as men, the wage gap would be much smaller. Many women work in industries with low rates of unionisation, which prevents them getting effective wage increases.

Good stuff. Looks a lot like the Greens’ work rights policy and the EPMU’s Work Rights Checklist. It’s good to see the Left thinking along similar lines. We’re still waiting on Labour’s policy but word around the traps is it will be good. Hopefully, they’ll have the sense to run hard on it.

4 comments on “CTU on closing the wage gap ”

  1. Carol 1

    All those suggestions sound pretty good on first viewing.

    I remember hearing/reading that it’s difficult to make a comparison between the average wage in Aussie and that in NZ, because it’s not comparing like with like. ie maybe it’s best to compare wages in specific jobs.

    As I recall, the biggest problem is that there are some jobs in Australia (eg in the mining industry), in which the top earnings are way off the scale in comparison with any jobs/industries in NZ. So this skews the Aussie average wage upwards. But when you compare people in most middle wage occupations, they won’t earn that much more in Aussie than in NZ.

    I tried to find a report on this but can’t locate it. I know it was out there once.

  2. Pascal's bookie 2

    off topic, but there’s an interesting graph here:


    Go the GOP! Sorry HS but Reagan was the beginning of the end.

  3. Strings 3

    I see there’s no thinking been done on the other side of the equation in this proposal. Getting an average 25% increase in wages is good, as long as the profit doesn’t erode. If profit drops, we end up with fewer investors, in a market that’s already got too few, and so businesses start to collapse (that’s why the $700 billion thing in the USA happened).

    So to get a 25% increase in wages, you need (as one option) an off-setting 25% increase in productivity. How does the union see that being achieved?

  4. Pascal's bookie 4

    “that’s why the $700 billion thing in the USA happened”

    What? Pardon my thickness, but are you saying that the Wall St rescue/bailout/socialisation happened because wages growth in America has been outpacing productivity gains, leading to less profit and a flight of capital?

    I did not know that.

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