There was an article a while back about how Norway was bearing up in the global economic crisis. Pretty damn well. And it wasn’t thanks to the oil, not directly. Oil prices had actually plummeted and yet the Norwegian economy was going strong and unemployment wasn’t a problem.
That wouldn’t have been the case if New Zealand had the kind of oil output Norway does. Our government spends all the oil royalties it gets, Norway salts the money away for a rainy day. The bust in oil prices would have had us stuffed because it would have torn a huge hole in the government’s operating revenue but Norway carried on fine.
But this post isn’t about Norway’s oil, it’s about the other reason it survived the recession so well. It’s public sector.
One in three Norwegians are employed in the public sector (it’s one in nine here). When the recession came the Norwegian government took the attitude that it would not be slashing its workforce at this time of turmoil, instead it used its influence over the economy and the labour market to act as a keel that steadied the ship. These secure public sector jobs kept unemployment from rising and protected consumer confidence, saving private sector jobs.
What has our government done? Slashed 2,000 jobs so far with hundreds more to come. It seems like madness given the multiplying effect these job losses have on an already reeling private sector. Especially when you consider the sums saved are relatively trifling and that the government’s books are in much better shape than expected. Anne Tolley’s cuts to Education will cost hundreds of jobs, put more work on to the ‘front line’, and save just $25 million while at the end of January government debt was $3 billion less than it expected only back in December.
But here’s the thing, this isn’t really about saving money. It’s about unemployment and, through that, unemployment keeping wages down.
National does not believe in full employment, it works counter to their economic aims. In 1999, Bill English called Labour’s promise to get unemployment near 3% a hoax and nowadays he claims that the jobs lost in the recession weren’t real jobs.
A bit of unemployment is a good thing in National’s eyes. Look what happens when you have full employment – wages rise. Now, you wouldn’t be a very good party of the capitalist class if you were in favour of wages rising. Every dollar in wages is one that doesn’t go to profits. In fact, to become the leader of such a party you probably “would love to see wages drop” as John Key once told a businesswoman when he didn’t realise a reporter was present.
If National was serious about getting unemployment down they would say ‘hmm, each unemployed person on the dole costs the government about $18,000 a year in benefits and lost tax, it’s worth spending on the same order to get them into work.’ But they don’t do that. Instead they produce some window-dressing programs and throw more people out of work.
Fire some civil servants and put the wind up the rest of them is the idea. Sure, they’ll lose all the output that those people created (and don’t kind yourselves, there aren’t offices full of people doing nothing, well, not outside the Beehive anyway). But that’s a price the government is willing to pay to constrain wages, and it’s not like they listen to the advice they get from their ministries anyway.
These sackings and their multiplied effects through the public and private sectors put workers where the bosses want them – insecure in their employment, grateful to have a job when so many don’t, and afraid to push for better pay or conditions.
The Key Government has no intention of closing the wage gap with Australia and, to keep wages down, it is happy to keep unemployment up.
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