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Employer opposes wage increases – shock!

Written By: - Date published: 9:51 am, February 11th, 2009 - 33 comments
Categories: Media, workers' rights - Tags: , , ,

Yesterday I expressed concern about Unite’s referendum on indexing the minimum wage to two-thirds of the average wage on practical grounds while strongly supporting the idea in principle.

Today in its editorial the Herald takes exception to the principle, complaining that such a move, even phased in over a three year period, would deny people the ‘opportunity’ to be paid low wages and that

“More fundamentally, a minimum wage indexed to two-thirds of the average wage would trigger a ratcheting up of all wages.”

You do have to wonder – why would the Herald object to “racheting up” wages across the board, particularly when we all know how important it is to fix our low wage economy and start closing the wage gap with Australia?

It’s times like this that it pays to remember the Herald and its parent company APN are employers, rather large ones in fact, and their own record on wages is part of the reason we have a low wage economy in the first place. Makes you think, doesn’t it?

33 comments on “Employer opposes wage increases – shock! ”

  1. BLiP 1

    Not only is the New Zealand Fox News Herald a large employer, it is also a foreign owned multinational and, as such, its only moral imperative is maximising return to shareholders. Its every Editorial should be read with this in mind.

  2. Every business’s goal is to maximize return to shareholders, that is the point.

  3. Kerry 3

    Yeah maximise pay off to shareholders while screwing the everyday worker…remember these businesses make shit with out employees…..Those guys are pricks…..no other word for it!

  4. Kerry

    It seems like you got that out of the communist party handbook.

    Screwing the workers?????

    Most people I know, love their job and have a good relationship with their employers.

  5. vto 5

    How could anybody object to all wages ratcheting up? Sounds like a good idea.

    Until the obvious question gets asked – how does this increased cost get paid for? If you think it should simply come out of owners pockets and everything should carry on as before then you live in la-la-land, because that simply would not happen. What would happen is the cost of everything workers produce would rise (so are we not then back to square one?) such is the equilibrium and water-finding-its-own-level nature of investment.

    Anyone got any bright ideas on how to circumvent … ?

  6. Julie 6

    I’d add that the vast majority of their advertisers are also employers.

  7. DeeDub 7

    VTO:

    By your logic one would assume increased profits would lead to higher wages for workers in fairly short order then?

    Who lives in la la land now?

  8. DeeDub 8

    Brett Dale:
    “Most people I know, love their job and have a good relationship with their employers.”

    Can I humbly suggest you get out more?

  9. DS 9

    >>>Until the obvious question gets asked – how does this increased cost get paid for?<<<

    Or we could just let wages rot. Which means people can’t buy as many products, which means businesses have to cut back again. Rinse and repeat, leading to an ever-worsening recession. Sometimes screwing your employees really does come back to bite you.

  10. Deedub:

    Its just the people I know, dont have any employment issues with their employer.

  11. burt 11

    Lets not forget that some of the most “underpaid” people in NZ are state employees.

    DR’s, Nurses, Teachers, Police… The same people the state has trouble attracting and retaining…

    So who’s the real nasty capitalist profit taking scum in socialist nirvana NZ then ?

  12. DeeDub 12

    Burt….

    “So who’s the real nasty capitalist profit taking scum in socialist nirvana NZ then ?”

    The people who moan they are being taxed too much. What do they think those taxes pay for?

  13. vto 13

    deedub, what on earth are you on about?

    seems nobody has a solution then to the problem of how increased wages are paid for. oh well, never mind, back to all the other conundrums in the universe…

  14. SteveR 14

    We are often told that if people want their pay to rise then the number of jobs will have to go down to compensate.

    But, if people want their pay to rise this is *not* the only possibility. Shareholders could get a lower dividend, for example. Executives could take less out in bonuses (for example). It is often said to employees that they have to have their pay fixed “for the good of us all”—but why should not other people involved with the company (as, for example, executives, shareholders etc.) also have “for the good of us all” in mind too?

    So, “pay up, numbers down” is a *choice* companies make—it is not a law of nature than cannot be resisted!

  15. Daveski 15

    It’s clearly worth reading the editorial rather than rely on the spin that inevitably makes its way here.

    Why does the Herald object in principle?
    * timing – the economic conditions are quite different now and in the foreseeable future
    * practicality – increasing the minimum wage without reference to affordability, productivity or any other consideration will likely result in redundancies and/or price increases which impact on those you are trying to protect

    The problem we have is broader than simply what we pay. It’s what we do. We don’t produce enough high value unique offerings. We work hard but not smart.

    A better question (and far more pragmatic) is if this is so sensible, why didn’t the Labour govt do this during the recent golden years? I will be interested in the answers to this one!

  16. vto 16

    SteveR, that could work in some benevolent cases, and in fact does already happen. However, lower dividends means lower value means less investment means less employment. Investment flows are unfortunately imo a law of nature.

  17. lprent 17

    DS: Or we could just let wages rot. Which means people can’t buy as many products, which means businesses have to cut back again. Rinse and repeat, leading to an ever-worsening recession. Sometimes screwing your employees really does come back to bite you.

    The classic example of that in NZ was the Richardson/Shipley decision in 1991 to drastically reduce benefit payments to reduce the governments outgoings. Obtensibly this was to pay for a relatively minor budget deficit. More likely it was intended to allow tax cuts for the wealthy.

    That hit directly into the minimal disposable income of people who don’t save, in the favor of people who have a choice about saving or consuming. The nett effect was that there was a immediate significant drop in consumer spending. That plus other measures that the National government at the time did caused a major drop in both public and business confidence about the forward look in the economy. So following the example of the government, they retrenched, and increased unemployment dramatically.

    It cut a nascent recovery in the bud and dropped NZ into a recession for about 5 years (at a time when the world economy was booming). It isn’t too hard to screw things up either in the short or long term if you’re on the treasury benches.

    Ask National – they’re very good at it. It is hard to think what else they’re good at…

  18. vto 18

    lprent I don’t think that’s quite right, tho it seems to get repeated here an awful lot. The 1991 recession was due to the massive collapse following the late 80s boom. Recall the property market didn’t fail until some time after the sharemarket crash and it all took some time to flow through. Just as it will this time (probably a lot longer methinks). The 1991 benefit cuts didn’t cause the 1991 depth of the recession which was already well underway by then.

    Thinking wage rises every year are a good thing is exactly like thinking house price rises every year are a good thing. Makes you feel good but the effect is nil because it is all relative. (talking re all wages rising, not just some).

  19. BLiP 19

    Iprent said:

    ” . . . Ask National – they’re very good at it. It is hard to think what else they’re good at . . . ”

    I can think of a few things, like: transferring wealth from the poor to the rich, abdicating state responsibility for the security of its peoples . . . ummm . . . no, actually, that’s about it.

  20. BLiP 20

    vto said:

    ” . . . The 1991 benefit cuts didn’t cause the 1991 depth of the recession which was already well underway by then . . . ”

    If not, then they certainly didn’t help. But the point that fiscal fuck ups come back to haunt is still valid. We are paying now for the benefit cuts as that generation of children who grew up in poverty as a result of National’s behaviour spill over in the justice and health system, having already brought goodness knows what extra costs to education. That’s the legacy.

  21. Ruth 21

    …such a move, even phased in over a three year period, would deny people the ‘opportunity’ to be paid low wages

    Yes – a great line!

    Ideologically many say minimum wages don’t work and cause unemployment, but that is not the case according to most studies I have read. The knock-on effect is negligible.

    Certainly my teenagers don’t want an ‘opportunity’ to be paid low wages – they wouldn’t get out of bed for the minimum wage as it was 12 months ago.

  22. Draco T Bastard 22

    Anyone got any bright ideas on how to circumvent ?

    Make ownership illegal and that the investors are legally only entitled to their money back. Also make it so that the investors have no say in how the business is run – it needs to be run by the employees.

  23. Quoth the Raven 23

    Of course there wouldn’t be this disparity between the interests of workers and owners if businesses were owned cooperatively, but that’s radical thinking.

  24. Quoth the Raven 24

    Ah me and Draco came up with the same thing at the same time.

  25. vto 25

    Draco, bright ideas not daft ones.

    Ownership illegal? That was tried in the USSR.

    Investors have no say in running the business? There would be no investors and hence no businesses.

    I seriously hope you are joking

  26. burt 26

    Would anyone here disagree that if a company is loosing staff because the salaries it pays are not competitive in the market, at the same time that it is posting record profits, that the priorities of the company are completely stuffed up and the company shows no regard for the workers that produce it’s wealth?

    If you agree with that then think about the massive surpluses that we have recently had in NZ at the same time we have had Teachers strikes & shortages, Doctor strikes & shortages, Radiologists/Nurses leaving in droves for better pay and conditions in Aussie and of course trouble attracting and retaining Police officers?

    Perhaps after thinking about that somebody could explain to me how other than the name “Labour’ how the “Labour’ party claim to be a party representing workers?

    As an aside, it’s a pity the surpluses were spent on non productive liabilities rather than productive assets But hey we would also be quite happy with the private company CEO driving around in his/her new BMW’s saying the money not spent on salaries last year has all been spent elsewhere and there is none left for pay increases this year wouldn’t we .

  27. vto 27

    QtR, cooperatives can work. Good job for the unions – set up a few co-ops and get into it. There is some excellent buying of businesses out there at the moment. Aint nothing to stop people doing that right now. Good job for Tane and Irishbill. Get into it. Major applause would come your way for taking such initiative. (quite different from Draco’s oddball idea)

  28. lprent 28

    vto: The 1991 benefit cuts didn’t cause the 1991 depth of the recession which was already well underway by then.

    I was in an interesting area to see the effect. Was doing the inventory control for Cargo King (the competitor to the warehouse at the time).

    The property downturn didn’t affect us that much in terms of retail. The cranes had pretty well stopped by 1990 and the building industry redundancies had already largely taken place. The sales kept rising at a slower rate.

    The benefit cuts took place. Within a month the sales were well down. Moreover they kept falling for the months following and we started hitting the Cancel button for orders both offshore and local. All retail had the same effect. All local industries reaped the benefit.

    Essentially this was as the result of Shipley using some study out of Otago about the minimum levels for benefits. It assumed that people started to do depression level subsidence (ie growing their own food – in flats?) and ignoring the differences in regional costs, etc etc. She then trimmed money off that minimum and set that as the level for the benefits.

    Turned out the studies numbers and methods were suspect. What she managed to do was in fact cause a major slide in retail confidence by trying to introduce depression level economies into a recessionary environment.

    In short you’re incorrect. We had our longest substained recession because the Nats read what they wanted to see and acted stupidly. From where I was it was pretty plain to see when your sales kept dropping through the floor, wehere previously they’d been rising throughout the property downturn..

  29. Quoth the Raven 29

    vto – Yes, I agree that the left should put more effort into encouraging such alternatives, instead of blithely attacking “the market”. I don’t agree with Draco that ownership ought to be illegal, just that a cooperative, owned by the workers without outside owners (shareholders) is a better business model than the state favoured corporation. With corporations I think shareholders have too little say, but that goes along with the very vague property rights they have- it’s all to do with state’s weird legal framework for the corporation.

  30. vto 30

    co-ops have a long history and generally a pretty good one. Probably only suit certain industries etc but at least it would be a start. I’m sure there would be plenty of experience out there for new co-ops to get advice on dangers and pitfalls from.

    In fact, is this not a way that capitalism and socialism can work under the same roof perhaps?? hmmm…

    lprent, interesting view. I suspect what you saw may have been just one arm of that recession. From where I sat 1991 (which was the bottom of the recession) arose from 80s excess.

  31. burt 31

    Quoth the Raven

    The idea of cooperatives is a good one. There is one problem capital. If the members of the collective all have the same capital to put in to establish a cooperative then great no problem. If they don’t then we are back to a more hierarchical model where owners of capital expect returns on investment as well as a share of operational profits.

    Outside investors are unlikely to invest into structures where profits are minimal because they are shared equally between people who although they provide labour do not provide capital.

  32. Kerry 32

    Bretdale:- Thats right…bring out the old “communist” label…..doesnt worry me mate….infact I would rather me called a commie then a tory!!! Torys without doubt and people who generally are uneducated in the ways of the world…….perhaps you can ask ya mummy and daddy if you can spend some more time on the net and do some “homework” as our old mate winston used to say!!

    Meanwhile I’ll sit back and sharpen my sickle and paint my sunroom red and remember the good old days when we had a COMPETENT government……..just 4 short months ago.

  33. Quoth the Raven 33

    burt – If there were outside investors than it wouldn’t be a “pure” cooperative. Even so an impure cooperative is preferable to a corporation. Getting capital is no more a problem for a cooperative than any small business, its easier than a sole proprietor as they can pool their capital. Also multiple cooperatives could pool their captial. Better access to credit without usurous interest rates would be something, but that would require the smashing of the big banks instead of bailing them out. Mutual credit is the answer. The whole legal and regulatory framework needs to be changed to break the state-corporate plutocracy and I can’t see that happening. Even if when their would be unequal capital investment than workers would still be getting a much greater share of the profits than they already do as they have some ownership and the business would be less hierachical for it.
    vto – In fact, is this not a way that capitalism and socialism can work under the same roof perhaps?? hmmm In a way, but I wouldn’t say capitalism as that’s anti-free market. It’s fairly mutualist.

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