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Fact: The Left has risen wages during its time in power

Written By: - Date published: 10:51 am, July 29th, 2008 - 27 comments
Categories: labour, national, wages, workers' rights - Tags:

Inevitably, reaction from some to the post showing incomes fell 6.1% under National between 1990 and 1997 has not been horror at the fact the incomes of Kiwis went down  but ‘so, I bet the Labour-led Governments haven’t done better’. Bet again.

The median income in 2007 was 32% higher than the median income was when Labour and the Alliance came to power in 1999, that’s with inflation-adjustment.(sources incomes, CPI)

The median income in 1997 was 6.1% lower than the median income was when National came to power in 1990, again inflation-adjusted. (source)

It’s no accident this happened, it was the result of the policy choices the two governments made. In coming posts, we’ll look at the minimum wage over periods of National government and Labour government – the most direct way a government can force down or raise up the incomes of private sector workers. And, because the righties next line is ‘it’s the economy, stupid – National had it tough, Labour had it easy’, we’ll see how even the weak growth that National did manage was not passed on to working Kiwis, while incomes for working Kiwis have actually risen slightly faster than the economy as a whole under the Labour-led governments, meaning working Kiwis got a shrinking slice of the pie under National and that trend has reversed under Labour.

Remember, the best indicator of future behaviour is past behaviour. National has a record of forcing wages down, their leader has been quoted saying he “would love to see wages drop“, and they have released a workplace policy with no provisions for increasing wages but plenty of changes that would force them lower.

27 comments on “Fact: The Left has risen wages during its time in power ”

  1. higherstandard 1

    SP

    It’s not really feasible to use two completely different datasets to build a robust argument.

    How about running the graph backwards to 1990 or 1980 ?

  2. higherstandard. They’re not completely different datasets and all you would have to do to know that is read about the datasets in the links provided. The 1990-1997 data is from Stats’ Income of Persons’ survey. in 1998 it’s name was changed to the NZ Income Survey which is the survey in the second set but its the same data – median income of persons – colelcted in the same way. These are the same datasets – median income of all adult New Zealanders, just a differnt name for the survey.

    Even if there were a slight difference in the datasets, and there isn’t, the fact is the trends within each set over thet wo time periosds would still be reliable. Down under National, up under Labour

    Don’t attack me for being deceiving or incompetent when you aren’t even fimiliar with the data we are discussing.

    I can’t run the graph back to 1980 becuase the data isn’t available online, hence why I’m using the 1998 report.

    HS. You have absolutely no grounds for objecting to this data – just harden up and face the facts of what it shows. National brought the median income down, the Labour-Led governments have brought them up.

  3. mike 3

    Thats you told HS!- I think steve is a little ratty today due to this herald front page story.. http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10524028

  4. What a surprise, no argument from mike either. So, we’re conceding that wages went down under National because National policy is designed to lower wages? Can’t argue with the numbers.

  5. No Steve – mike has a link. Look a Link! Over here! not over there at the facts – a link! Please look over here – pleeeaaassseee…

    mike – you were starved of attention as a child weren’t you…

  6. higherstandard 6

    SP

    You’re comparing two different things median weekly income inflation adjusted with trends in aggregate earnings.

    If the data is as you say available in the earlier publication it should be easy to extrapolate the graph backwards and would make your argument more plausible and stronger, as it is your argument lacks substance.

  7. rave 7

    Do you reckon this median income could be result of WFF?
    It measures the income in the middle of the distribution, doesnt say anything about the spread up to the rich or down to the poor, or the numbers over this spread.
    This could be the income base of Key’s keeping WFF maybe. He wants to keep the mid income on side as his drive to cut wages will start at the bottom.
    My point? Labour won’t survive unless it moves left and boosts the incomes of those at the bottom of the distribution by taxing the rich speculators who figure so prominently in the 08 Rich List.

  8. Felix 8

    What’s with that photo in the Herald, mike? He looks just like Muldoon.

    Must be all the borrowing in his eyes…

  9. Greg 9

    Do you really believe National is set on lowering wages? There’s a reason the right support the policies that they do, they believe that these policies will make a better New Zealand. Now whether you agree with these policies or not, surely you must recognise that the assertion that one of Nationals goals is to lower real wages is simply ridiculous. Now I am by no means a National voter, but its scare mongering like this that turns people like me away from the left.

  10. mike 10

    Greg – I can see why you get turned off.

    Steve’s problem is that he probably comes up with a valid point now and again but they get lost amongst all the other baseless, repetitive Key smearing.

  11. Tane 11

    Greg. In a capitalist society there is a fundamental contradiction.

    Employers see labour as a cost and want to reduce it, just the same as any other cost of production.

    Workers are selling their labour to survive and naturally want to increase the amount they are paid for it.

    Thus we have the contradiction.

    We know that political parties exist to advance the interests of different sectors of society. Crudely put, those on the Right aim to improve the conditions of employers at the expense of workers, those on the Left aim to improve the conditions of workers at the expense of employers.

    Labour’s policies (though they have their own centre-right tendencies) tend to improve workers’ rights. National’s policies in every instance undermine workers’ rights.

    It’s therefore no surprise that under National wages went down. In fact it fits the model perfectly.

  12. djp 12

    Steve I have said this before but,

    I think you have ignored the lag in effect of a policy. I would estimate that the lag before a policy actually started showing effects on an economy would be about 5 years but it is impossible to know so:

    Maybe people should analyse the trajectory of these statistics: 1) when a govt gets into power and 2) when a govt is exiting.

    If you look at it that way it seems as though in the last 20 years that Nat tends to inherit an economy in decline and manages to revive it a bit before being chucked.

  13. djp 13


    We know that political parties exist to advance the interests of different sectors of society. Crudely put, those on the Right aim to improve the conditions of employers at the expense of workers, those on the Left aim to improve the conditions of workers at the expense of employers.

    Tane,

    Excuse me for saying but that sounds pretty dumb. If that is the case then Nat & Labour will eventually screw over the whole country with this “class war”.

    we should be aiming to improve the conditions of all new zealand people (not necessarily at teh expense of anyone)

  14. Tane 14

    djp. Certainly there are things that benefit both workers and employers. But you can’t pretend the class contradiction doesn’t exist, and that political parties don’t broadly represent one or the other’s interests.

    Arguing there should not be a Left-Right conflict in a capitalist society is like saying workers should be able to get a pay rise and employers shouldn’t have to pay for it. It’s impossible.

    Of course, I’d argue the interests of the Left are those of the NZ people, but that’s a matter for voters to decide.

  15. Daveski 15

    Tane – like all generalisations, yours work because it is simplistic and fails for the same reason.

    I would have thought that the fundamental tenet of a capitalist is to grow markets and economies to enable greater profits. I don’t think many companies would develop a strategy around shrinking the pie.

    In terms of an alternative simplistic generalisation, I would argue that National policies aim to improve the lot of businesses which in turn improves the lot of workers through employment and higher wages.

    Having been an employer (albeit a small business) I strongly resent the implication that conditions are improved at the expense of the employee.

    Without small businesses, there won’t be larger businesses.

    The concern I have is that the simplistic view of “up the bosses” will be futile in the long term and self defeating.

  16. djp. 9 year policy lags eh? Pretty convienant but wher’e the evidence of this beautifully timed policy lag and what exactly are these policies that you believe are lagging? because I have pointed to actual real policies to which the changes in incomes can be attributed (you cut benefits, you leave the minimum wage to be eaten by inflation – there’s no lag, that hurts incomes immediately) – all you’ve got is a theory that suits your prejudices.

    mike. no-one has been able to show any fault with my numbers or arguments in this case, so I’ll presume this is one of the instances where I have “probably come up with a valid point “

  17. Daveski etc. Obviously both Left and Right have an interest in growing a larger cake (and as we have shown, GDP growth has been stronger under Labour than it was under National) but there is also an important question over how to divide the cake – and that’s the fundamental political divide in a capitialist demcoracy like ours – how big a share should the captialist get for putting up the money vs the worker get for doing the actual work.

    Now, we live in a society based on private property, that means the the capitalist owns the means of production, without any intervention in the market they get to decide the division of the cake between themselves and the workers – naturally they favour themselves – they will pay their workers as little as they can to retain their labour – it’s a market afterall, and the captialist holds all the cards, while the worker must work to get income to survive. Government policy changes that balance – the minimum wage, labour law force the capitalist to give a larger (fairer, someone who cares about workers would argue) share to workers.

    Bringing it back to the real world – National’s work rights policies in the 1990s and the ones they announced last week take away power from workers, moving us back to that base state where the capitalist has the power. The inevitable result of that, and the result that all the statistics show, is lower wages.

  18. djp 18

    Steve,

    I did not say 9 years (my estimate was 5 years for an economic policy lag).

    You ask me for evidence for the “time lag theory” when I clearly said it is hard to prove so I suggested to readers that they should take a look at the trajectories of the economic indicators when govts enter and leave office.

    So your rebuttal consists of:

    1) misquoting me
    2) saying I have no evidence for a theory that I admitted I can not prove
    3) ignoring the main thrust of my point

    I suggest you reread what I said.

  19. djp. you’re just pulling stuff out your arse though…. you could say the Moon’s a balloon and it would be as well-backed by evidence as your arguments are here.

  20. lprent 20

    dpj: So what you are saying is that the Nat’s are aware of when they are about to leave office. So they set things up to be better for Labour?

    Time to pull the third leg…

    Sure there is a lag in most policies – the lag to legislation and then to start dates if nothing else. However there is also a anticipation – in market terms a market expectation. In a lot of cases the policy lag doesn’t matter as much as you think because of it.

    SP: Hey isn’t that my line. Mind you what else can one say. Develop a economic theory by wish fulfillment and ignoring numbers.

  21. djp 21

    Steve, I would imagine that it is a lot harder to build an economy then trash one (anyone can pull a mugabe).

    From what I have heard in 1990 NZ was almost broke. Now for whatever reason in 1999 NZ seemed to be in a better position economically.

    It just seems to me that you want to ignore these (facts?) in your analysis.

  22. lprent 22

    dpj: NZ was broke from about 1978 onwards. Effectively money was borrowed from all available sources to maintain an economy that wasn’t sustainable.

    The NZLP had little choice by to restructure the economy massively over their 6 years (the question of the appropriateness of the level of response is a different question). Consequently after 6 years we were probably slightly less broke than in 1984 because the rate of increase in borrowing was diminishing.

    As far as I’m concerned, the right have this interesting myth that they like to trot out each election about the books after the 1990 election. That the country was broke because the treasury was bare and the BNZ needed a capital injection. Those are both correct – but both had been the case for most of the 1980’s. Sure there was a minor recession in 1989 – but we’re talking about a total liability that was a fraction of the governments turnover.

    The real question is about the appropriateness of Nat’s response. As far as I’m concerned they took a mild recession and made a very bad recession. They cut off local consumption like a stone with sudden benefits cuts. The cascade went on with local sales of everything falling like a stone. That went on into the manufacturing sector and hit employment, causing more benefits.

    It took then 9 years to get to a point that was similar to where they started from the set of mistakes in 1991. On the way through they decimated a population by maintaining policies that substained high unemployment levels.

  23. Phil 23

    One thing that hasn’t been mentioned thus far, but which is very significant to any kind of time series analysis (as Steve is prone to doing) is measurement bias.

    The ability of Statistics New Zealand and other Gov’t departments to collect data in 1990 was vastly different to their capacity today. Conceptually, the methodology of HOW and WHAT you measure also evolves. I have no doubt that even on the same time series, income data for 1990 will not be the same as the 2007 ‘equivalent’.

  24. Higherstandard 24

    SP

    As an aside the RBNZ seems to have grabbed the Dept of Stats Datasets from different time periods and consolidated them giving a longer term picture.

    For future reference they are at the link below.

    http://www.rbnz.govt.nz/statistics/econind/

    Edit as per Phil’s comment above I think this is probably true as it is in the medical area where the datasets and analysis we can now do is light years away from what was possible even ten years ago.

  25. Phil. While I’m well aware that methodology improves over time there’s no evidence to suggest that would account for a 6.1% drop in median income under National and a 32% increase under Labour.

    Methodological improvements are usually at the margins and useful for sub-set analysis.. I mean, you’re surely not suggesting that the Reserve Bank’s tables of GDP or unemployment or CPI going back decades are a load of old bollocks just because methodology has improved.

  26. lprent 26

    Phil: Darn – SP made my point.

    Also I’ve been filling out those business stats forms off and on since the 1970’s. I don’t think that the questions have changed all that much.

    The processing and storage has changed considerably. But if they provided the raw(ish) data then it’d be relatively easy to reprocess it. I’d say that my home workstation could probably out process all of the government processing and storage from the 1970’s.

    I’d take a bet that the data is stored on some incompatible format though – old tapes ?

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