National’s been working hard to keep wages down for the 5 years. They’ve weakened union laws, introduced fire at will, opposed $15 minimum wage and the living wage. And it’s worked: 46% of workers got no raise last year, another 18% got less than a 2% raise. 5 years ago, 59% got a raise above 2%. Strangely, though, English says high wages are good for the economy.
Here’s English defending the $1.9 million salary of Mighty River boss Doug Heffernan:
English was asked what he made of the coincidence in which the $1.9 million per year the Government had just put towards food in schools matched the annual salary of the chief executive of Mighty River Power.
Ad Feedback“He is getting paid what the market seems to need to pay,” English said.
He added that if the chief executive was paid less, and was therefore less likely to be good at his job, electricity prices would go up.
Now, there’s no empirical evidence to suggest that if you paid Heffernan half a million less that power prices would go up, or that individual executives really matter that much (especially in an infrastructure company whose basic job is to make sure the hydro turbines don’t get clogged). In fact, the evidence is rather the opposite.
But English is right in general: high wages are good and they improve growth. Higher paid workers have better morale and work more effectively. When labour is less cheap, bosses are less wasteful with it and invest more in capital and training to improve the value that it generates.
So, here’s the question: if English, rightly, believes that higher wages lead to better results, why has his government done so much to, as Key put it, “see wages drop“?
Could it be that National doesn’t really believe that higher wages lead to higher productivity, but English was just reflexively defending the privilege and extraordinary pay of a fellow member of the elite?
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