web analytics

Economy-wide benefits of Living Wage?

Written By: - Date published: 5:38 pm, February 11th, 2014 - 11 comments
Categories: cost of living, Economy - Tags:

An interesting article by Colin James in today’s ODT on the living wage proposals and how lifting wages may have wider economic benefits. He starts with the example of the supermarket boycott of low-wage New Zealand produce in Australia:

New Zealand wages are around 30 per cent below Australian wages. That makes our goods competitive in Australia — too competitive for some Australians. Their solution: a non-tariff trade barrier. So New Zealand producers and exporters will likely find here and there blockages to entry that contravene free trade agreements in spirit if not in the fine print — as the Australian supermarkets are doing with CER.

What is the answer? Bill English has in the past noted the lower-wage-cost contribution to New Zealand competitiveness in Australia. But the supermarkets’ lesson is that low wages are not always a one-way advantage. There may be an economic cost….Job losses was English’s Treasury-based line last November when he savaged proposals for a “living wage”. He treated it as a version of a minimum wage and said most of those on the minimum do not have dependents and in any case Working For Families and other programmes help families on low incomes.

James report that some American economists consider that Obama’s promise to lift the US living wage from US$7.25 to US$10.10 (NZ$8.80  to NZ$12.25) “would add $35 billion in wages up to 2016 and the resulting increase in gross domestic product would create 85,000 new jobs”. He goes on to say:

“Living wage” proponents say it is calculated to buy the “basic necessities of life and enable workers to live with dignity and participate as active citizens in society”. At $18.40 it is not exactly luxury for a one-income family of four. Backing for a living wage continues to gain momentum.

The Wellington City Council has applied it to its direct employees and aims to add employees of council-owned companies from next year and put contractors in its 2015 plan. The Christchurch City Council (positively) and some district health boards are considering it. Labour and the Greens say they will apply it to direct public service employees.

Next Monday the living wage coalition of 100-plus organisations will update the $18.40 and launch an employer accreditation scheme. A bunch of soon-to-be-accredited employers will be there. Firms joining say better pay lifts employee loyalty and gives the firms branding for socially-conscious consumers who, for example, buy “fair trade” and “organic” goods

James concludes:

The implication for New Zealand producers’ low-labour-cost competitiveness in Australia is obvious. And in the 2010s tightly enmeshed global economy there are limits to what a small export-dependent economy like ours can do without killing jobs. Also, more consumption means more imports.

But the Australian supermarket lesson is that low-wage-based competitiveness is not a one-way bet. Nor are low wages an obvious path to high-value-based competitiveness which can make us a sustainably high-wage country.

I must say I think it is a pity that Colin James can only be read these days in the ODT. Whether one agrees with him or not, he is widely read, independent, well-connected and what I like most always thought-provoking and forward-looking. I miss him from the DomPost, more particularly as we are subjected to the misanthropic rant of Karl du Fresne, who is none of the above,  on a weekly basis.

11 comments on “Economy-wide benefits of Living Wage? ”

  1. karol 1

    Yes, I thought that James provided an interesting take on the Aus supermarket bans of Kiwi goods – knock-on effect of NZ’s low wage economy.

    As well as a need to raise NZ’s low wages, it seems to me that NZ should be focusing on being more self-sufficient. The ability of a small, or medium power, country to compete in the international market seems to me to be limited: a few niche markets at best.

  2. Colonial Viper 2

    I must say I think it is a pity that Colin James can only be read these days in the ODT.

    Yep. This is just another example of the narrowing of public discourse and the shutting down of any voices who might offer real alternatives to the neo-liberal agenda.

    Bearing in mind that movement towards a living wage doesn’t challenge the neo-liberal agenda, it just softens it and makes it more tolerable.

  3. Helen Kelly 3

    We do get Colins columns via email as well. I like reading them myself – they’re intelligent analysis – something that is rare in NZ MSM these days.

    [lprent: Actually that was me. Helen left my system logged in as her after I finished showing her the tricks of the posting. ]

  4. framu 4

    ” how lifting wages may have wider economic benefits”

    paying people more help economy? thats unpossible! (/ralph wiggum)

  5. Tracey 5

    So today we are like Indian, Bangladesh or Chinese made products to Australia?

    How proud we must be.

  6. captain hook 6

    It also behooves the commentariat to give some thought to those on fixed incomes.
    An item on the radio this morning says that National says kiwis have one of the best funded welfare schemes in the world but a Salvation Army spokesperson says it is not the amount of dollars someone gets but how far it goes.
    It seems to have escaped everyones notice that the cost of living has been subject to a slow but ever increasing infalation that is making it harder and harder for those at the bottom to buy the necessaries of life.
    National has a programme that is eroding the very basis of a decent life.

  7. crunchtime 7

    Correction: lifting the minimum wage WILL have wider economic benefits. No maybe, no question marks.

    So will a UBI.

  8. hellonearthis 8

    With Countdowns 100% money back and Product replacement guarantee, and the fact that they only play suppliers when items pass the checkout, one effective protest would be to buy an Ozzy product and then take it back. This would be a hit financially for twice the cost of the product to the Ozzy business. #use_their_dodgy_system_against_them

Recent Comments

Recent Posts

  • Government support for Levin community hit by tornado
    The Government is contributing $100,000 to a Mayoral Relief Fund to help the Levin community following this morning’s tornado, Minister for Emergency Management Kiri Allan says. “My thoughts are with everyone who has been impacted by severe weather events in Levin and across the country. “I know the tornado has ...
    BeehiveBy beehive.govt.nz
    7 hours ago
  • Statement from the Quintet of Attorneys General in support of Prosecutor General Iryna Venediktova a...
    The Quintet of Attorneys General have issued the following statement of support for the Prosecutor General of Ukraine and investigations and prosecutions for crimes committed during the Russian invasion of Ukraine: “The Attorneys General of the United Kingdom, the United States of America, Australia, Canada, and New Zealand join in ...
    BeehiveBy beehive.govt.nz
    7 hours ago
  • Andrew Little Budget 2022 post-Budget health speech, Auckland, 20 May 2022
    Morena tatou katoa. Kua tae mai i runga i te kaupapa o te rā. Thank you all for being here today. Yesterday my colleague, the Minister of Finance Grant Robertson, delivered the Wellbeing Budget 2022 – for a secure future for New Zealand. I’m the Minister of Health, and this was ...
    BeehiveBy beehive.govt.nz
    12 hours ago
  • Govt helps supermarket shoppers get a fair deal
    Urgent Budget night legislation to stop major supermarkets blocking competitors from accessing land for new stores has been introduced today, Minister of Commerce and Consumer Affairs Dr David Clark said. The Commerce (Grocery Sector Covenants) Amendment Bill amends the Commerce Act 1986, banning restrictive covenants on land, and exclusive covenants ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Prime Minister: Wellbeing Budget 2022 speech
    It is a pleasure to speak to this Budget. The 5th we have had the privilege of delivering, and in no less extraordinary circumstances.  Mr Speaker, the business and cycle of Government is, in some ways, no different to life itself. Navigating difficult times, while also making necessary progress. Dealing ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Future resource management system implementation funding
    Budget 2022 provides funding to implement the new resource management system, building on progress made since the reform was announced just over a year ago. The inadequate funding for the implementation of the Resource Management Act in 1992 almost guaranteed its failure. There was a lack of national direction about ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Funding certainty for quality public media
    The Government is substantially increasing the amount of funding for public media to ensure New Zealanders can continue to access quality local content and trusted news. “Our decision to create a new independent and future-focused public media entity is about achieving this objective, and we will support it with a ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Funding boost secures Defence capabilities
    $662.5 million to maintain existing defence capabilities NZDF lower-paid staff will receive a salary increase to help meet cost-of living pressures. Budget 2022 sees significant resources made available for the Defence Force to maintain existing defence capabilities as it looks to the future delivery of these new investments. “Since ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Budget 2022 supports resilient and sustainable cultural sector
    More than $185 million to help build a resilient cultural sector as it continues to adapt to the challenges coming out of COVID-19. Support cultural sector agencies to continue to offer their important services to New Zealanders. Strengthen support for Māori arts, culture and heritage. The Government is investing in a ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Minister of Finance: Wellbeing Budget 2022 Speech
    It is my great pleasure to present New Zealand’s fourth Wellbeing Budget. In each of this Government’s three previous Wellbeing Budgets we have not only considered the performance of our economy and finances, but also the wellbeing of our people, the health of our environment and the strength of our communities. In Budget ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Wellbeing Budget 2022 Speech
    It is my great pleasure to present New Zealand’s fourth Wellbeing Budget. In each of this Government’s three previous Wellbeing Budgets we have not only considered the performance of our economy and finances, but also the wellbeing of our people, the health of our environment and the strength of our communities. In Budget ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Coronial delays addressed by Budget 2022
    Four new permanent Coroners to be appointed Seven Coronial Registrar roles and four Clinical Advisor roles are planned to ease workload pressures Budget 2022 delivers a package of investment to improve the coronial system and reduce delays for grieving families and whānau. “Operating funding of $28.5 million over four ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Paving the way for better outcomes for disabled people
    Establishment of Ministry for Disabled People Progressing the rollout of the Enabling Good Lives approach to Disability Support Services to provide self-determination for disabled people Extra funding for disability support services “Budget 2022 demonstrates the Government’s commitment to deliver change for the disability community with the establishment of a ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Investing in education so all Kiwis can succeed
    Fairer Equity Funding system to replace school deciles The largest step yet towards Pay Parity in early learning Local support for schools to improve teaching and learning A unified funding system to underpin the Reform of Vocational Education Boost for schools and early learning centres to help with cost ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Primary sector backed to grow and innovate
    $118.4 million for advisory services to support farmers, foresters, growers and whenua Māori owners to accelerate sustainable land use changes and lift productivity  $40 million to help transformation in the forestry, wood processing, food and beverage and fisheries sectors  $31.6 million to help maintain and lift animal welfare practices across Aotearoa New Zealand A total food and ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • More support for first home buyers and renters
    House price caps for First Home Grants increased in many parts of the country House price caps for First Home Loans removed entirely Kāinga Whenua Loan cap will also be increased from $200,000 to $500,000 The Affordable Housing Fund to initially provide support for not-for-profit rental providers Significant additional ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Budget lifts up to 14,000 children out of poverty
    Child Support rules to be reformed lifting an estimated 6,000 to 14,000 children out of poverty Support for immediate and essential dental care lifted from $300 to $1,000 per year Increased income levels for hardship assistance to extend eligibility Budget 2022 takes further action to reduce child poverty and ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • A booster for RNA research and development
    More support for RNA research through to pilot manufacturing RNA technology platform to be created to facilitate engagement between research and industry partners Researchers and businesses working in the rapidly developing field of RNA technology will benefit from a new research and development platform, funded in Budget 2022. “RNA ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Unleashing business potential across NZ
    A new Business Growth Fund to support small and medium sized enterprises (SMEs) to grow Fully funding the Regional Strategic Partnership Fund to unleash regional economic development opportunities Tourism Innovation Programme to promote sustainable recovery Eight Industry Transformation Plans progressed to work with industries, workers and iwi to transition ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Securing the wellbeing of Pacific communities
    Budget 2022 further strengthens the economic foundations and wellbeing outcomes for Pacific peoples in Aotearoa, as the recovery from COVID-19 continues. “The priorities we set for Budget 2022 will support the continued delivery of our commitments for Pacific peoples through the Pacific Wellbeing Strategy, a 2020 manifesto commitment for Pacific ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Government delivers timely support for whānau
    Boost for Māori economic and employment initiatives. More funding for Māori health and wellbeing initiatives Further support towards growing language, culture and identity initiatives to deliver on our commitment to Te Reo Māori in Education  Funding for natural environment and climate change initiatives to help farmers, growers and whenua ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Government delivers critical infrastructure
    New hospital funding for Whangārei, Nelson and Hillmorton 280 more classrooms over 40 schools, and money for new kura $349 million for more rolling stock and rail network investment The completion of feasibility studies for a Northland dry dock and a new port in the Manukau Harbour Increased infrastructure ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • A health system that takes care of Māori
    $168 million to the Māori Health Authority for direct commissioning of services $20.1 million to support Iwi-Māori Partnership Boards $30 million to support Māori primary and community care providers $39 million for Māori health workforce development Budget 2022 invests in resetting our health system and gives economic security in ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Investing in better health services
    Biggest-ever increase to Pharmac’s medicines budget Provision for 61 new emergency vehicles including 48 ambulances, along with 248 more paramedics and other frontline staff New emergency helicopter and crew, and replacement of some older choppers $100 million investment in specialist mental health and addiction services 195,000 primary and intermediate aged ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • A Secure Future for New Zealanders’ health
    Landmark reform: new multi-year budgets for better planning and more consistent health services Record ongoing annual funding boost for Health NZ to meet cost pressures and start with a clean slate as it replaces fragmented DHB system ($1.8 billion year one, as well as additional $1.3 billion in year ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Cost of living package eases impact on households – 2.1 million Kiwis to get new targeted payment
    Fuel Excise Duty and Road User Charges cut to be extended for two months Half price public transport extended for a further two months New temporary cost of living payment for people earning up to $70,000 who are not eligible to receive the Winter Energy Payment Estimated 2.1 million New ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Budget highlights underlying strength of economy in face of global headwinds
    A return to surplus in 2024/2025 Unemployment rate projected to remain at record lows Net debt forecast to peak at 19.9 percent of GDP in 2024, lower than Australia, US, UK and Canada Economic growth to hit 4.2 percent in 2023 and average 2.1 percent over the forecast period A ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Budget 2022: A secure future in difficult times
    Cost of living payment to cushion impact of inflation for 2.1 million Kiwis Record health investment including biggest ever increase to Pharmac’s medicines budget First allocations from Climate Emergency Response Fund contribute to achieving the goals in the first Emissions Reduction Plan Government actions deliver one of the strongest ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Budget 2022: A secure future
    Budget 2022 will help build a high wage, low emissions economy that provides greater economic security, while providing support to households affected by cost of living pressures. Our economy has come through the COVID-19 shock better than almost anywhere else in the world, but other challenges, both long-term and more ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Health Minister to attend World Health Assembly in Geneva
    Health Minister Andrew Little will represent New Zealand at the first in-person World Health Assembly since the start of the COVID-19 pandemic, to be held in Geneva, Switzerland, from Sunday 22 – Wednesday 25 May (New Zealand time). “COVID-19 has affected people all around the world, and health continues to ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • New efforts to counter illegal timber trade
    New Zealand is committing to trade only in legally harvested timber with the Forests (Legal Harvest Assurance) Amendment Bill introduced to Parliament today. Under the Bill, timber harvested in New Zealand and overseas, and used in products made here or imported, will have to be verified as being legally harvested. ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Deaths in New Zealand lower than expected so far during the pandemic
    The Government has welcomed the release today of StatsNZ data showing the rate at which New Zealanders died from all causes during the COVID-19 pandemic has been lower than expected. The new StatsNZ figures provide a measure of the overall rate of deaths in New Zealand during the pandemic compared ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • New law helps secure New Zealand’s maritime domain
    Legislation that will help prevent serious criminal offending at sea, including trafficking of humans, drugs, wildlife and arms, has passed its third reading in Parliament today, Foreign Affairs Nanaia Mahuta announced. “Today is a milestone in allowing us to respond to the increasingly dynamic and complex maritime security environment facing ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Trade and Export Growth Minister to travel to Bangkok for APEC
    Trade and Export Growth Minister Damien O’Connor is set to travel to Thailand this week to represent New Zealand at the annual APEC Ministers Responsible for Trade (MRT) meeting in Bangkok. “I’m very much looking forward to meeting my trade counterparts at APEC 2022 and building on the achievements we ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government welcomes historic pay-equity deal
    Settlement of the first pay-equity agreement in the health sector is hugely significant, delivering pay rises of thousands of dollars for many hospital administration and clerical workers, Health Minister Andrew Little says. “There is no place in 21st century Aotearoa New Zealand for 1950s attitudes to work predominantly carried out ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government delivers new ICU space at Christchurch Hospital
    Health Minister Andrew Little opened a new intensive care space for up to 12 ICU-capable beds at Christchurch Hospital today, funded from the Government’s Rapid Hospital Improvement Programme. “I’m pleased to help mark this milestone. This new space will provide additional critical care support for the people of Canterbury and ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Next steps for specialist mental health and addiction services
    Budget 2022 will continue to deliver on Labour’s commitment to better services and support for mental wellbeing. The upcoming Budget will include a $100-million investment over four years for a specialist mental health and addiction package, including: $27m for community-based crisis services that will deliver a variety of intensive supports ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • 195,000 children set to benefit from more mental health support
    Budget 2022 will continue to deliver on Labour’s commitment to better mental wellbeing services and support, with 195,000 primary and intermediate aged children set to benefit from the continuation and expansion of Mana Ake services. “In Budget 2022 Labour will deliver on its manifesto commitment to expand Mana Ake, with ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Belarusian leaders and defence entities targeted under latest round of sanctions
    Foreign Minister Nanaia Mahuta has today announced sanctions on Belarusian leaders and defence entities supporting Russia’s actions in Ukraine, as part of the Government’s ongoing response to the war. “The Belarusian government military is enabling the illegal and unacceptable assault on Ukraine’s sovereignty,” Nanaia Mahuta said.  “Under the leadership of ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Queen's Platinum Jubilee Tree planting event at Government House
    Just after World War 2, there were incentives to clear forest and bring land into agricultural production. In places, the land had been stripped bare as forests were felled for sheep grazing. Today, you only have to look at the hills around Taihape and see the stumps of a once ...
    BeehiveBy beehive.govt.nz
    4 days ago