National – Delivering no pay rises for NZ

Written By: - Date published: 8:29 am, August 17th, 2017 - 15 comments
Categories: capitalism, class war, economy, national, wages - Tags: , , , , ,

Expect plenty of Nat boasting on “the economy” in the election campaign. They’ll be desperate to hide the inconvenient fact that ordinary workers are going backwards. There’s a lot of detail in this excellent piece:

Brian Fallow: Something is missing in Govt success story

The most recent labour market data, released last week, do not make for cheerful reading on the wages front.

The average wage (average ordinary-time hourly earnings from Statistics New Zealand’s quarterly employment survey) rose 1.6 per cent in the year to June. But that was boosted by some pay increases in the public sector that had been a long time coming.

In the private sector, the average wage rose 1.2 per cent, in a year when consumer prices rose 1.7 per cent. In other words, it fell 0.5 per cent in real terms. That was still better than the March report, when annual wage growth was 1.1 per cent and inflation 2.2 per cent.

When Perry analyses the trend in incomes after housing costs across the whole range, a clear picture of rising inequality emerges.

In 2009, the income of a household at the 90th per centile (that is, 10 per cent down the list of households ranked by income) was 5.5 times that of one at the 10th per centile (10 per cent up from the bottom). By 2016, the gap had widened to 5.9 times.

Between 2009 and 2016, household incomes at the 90th per centile rose 14.7 per cent. This is after inflation, tax, transfers and housing costs. At the 10th per centile, the increase was 9.4 per cent over the same seven years.

The increasing dispersion of incomes after housing costs has not all occurred under the National-led Government, however. It has been going on for 20 years. But the top decile has been pulling away from the rest particularly swiftly on National’s watch.

…Treasury concludes that average labour productivity over the past four years has been flat.

Zero growth over four years in what has to be foundation of any sustainable gains in living standards is not encouraging.

Nor is it a record the Government can boast about.

And for a take home message:

Bad luck: Pay rises probably off the table until next election

If you’re hoping for a pay rise sometime in the next four years, you might be out luck.

It’s unlikely because the economy won’t provide any growth to drive wages up.

The official forecast predicts wages will not keep pace with inflation, and immigration may be to blame.

Treasury forecasts show wages are expected to go up like this at over 2 percent, but inflation is also going up, meaning prices are going up at the same rate.

That means what’s called “real wage growth” is actually flat.

Financial commentator Bernard Hickey says that means more Kiwis will be stuck treading water.

This is the truth of National’s so-called economic expertise. The richest of the rich are doing very nicely thank you, but the Nats are “delivering” nothing for ordinary workers. It’s an economy where “growth” is just a reflection of population growth. Vote them out.

15 comments on “National – Delivering no pay rises for NZ”

  1. Ad 1

    +100 Anthony

    National is absent on this.

    Labour is focussing much on cumbersome collective instruments.

    Labour needs to head straight into the “I should have got more” territory after 9 years of this lot.

    • Ed1 1.1

      I thought at least one of Labour / Green was pushing for an increases to the Minimum Wage – that would have a flow on effect to benefits, and reduce profits.

      • I worked as security for a company that contracted to a well known iconic NZ firm about two years ago.

        So , … this company followed suit and relocated offshore to Thailand , Mexico , Australia , USA and sundry others. Obviously much of the production side was moved to semi developed country’s to take advantage of low waged , non unionized conditions . More profit.

        And with the result ? … about a year before I started there, several thousand staff in production were made redundant. By that I mean it was well above 2000. Far more It was in fact , a staggering number of NZ’s that lost their jobs. Following that , conditions deteriorated, and take home pay for the same hours plummeted. So too did overtime rates , weekend work etc . Around that same timeframe part of the company was sold to a mega Chinese company.

        With the deregulated ‘ free’ market economy , this has been the norm . Exactly and precisely the same sort of situation that happened in the USA , and around the west.

        Donald Trump has been successful in slapping on import tariffs on company’s that choose to locate offshore to take advantage of low wages and giving tax incentives if they stay in the USA and employ Americans.

        We once had a social democracy based on a Keynesian economy that prevented much of this gutting and privatizing of SOE’s and undermining of our workforce, when the private sector played by the rules and were by and large prevented from ‘ par for the course’ exploitation of workers, – a time when previous generations had built up successful state owned assets to serve the people of NZ and provide affordable service , – and employment.

        All we are debating about today is the fallout of Roger Douglas’s ‘reforms’ from the 1980’s , – without addressing the cause.

        I have no doubt whatsoever as to the veracity of the OP ‘s stated statistics nor the harmful effects of them, – particularly on low income earners. And one solution would be to have wages adjusted / reviewed biannually or annually and fixed to the rate of inflation and based on the Consumer Price Index, – similar to how it was 33 years ago , – pre neo liberalism.

        Steven Joyce said at the time ,…of the company that made redundant all those NZ workers :

        ” They were relatively low skilled , low paid manufacturing jobs , acknowledging’ the pain of those laid off, it was a positive transformation’ overall ” …

        Last year the same company used $15,000,000 of taxpayers money to shore up its flagging ventures…

  2. Ad 2

    There’s a good little reminder in here that politicians have to deliver stuff, for people, if they want to get re-elected. It’s not completely comparable, but there’s a useful line here from a Guardian columnist:

    “If Trump wins again, it will be by convincing voters “the system” still cares nothing for them. He will say that it will be an eight-year job to bring his anarchic rage to bear on a smug establishment, and let him “finish the job” ”

    While the columnist is railing most against standard liberal responses to race and identity issues, it can also be applied to New Zealand: it’s not enough to hate someone for hating – you have to respond to the interests of those who hate.

    We have plenty of repressed rage in this country. Part of is it simply that the system doesn’t pay enough.

  3. greywarshark 3

    When it comes to push or shove, we are all ordinary workers aren’t we, it’s a free democracy isn’t it, and I’m doing all right. If people want to better their situation they just have to get the right skills, work harder and don’t waste their money. /sarc

    I bet that is the specious reasoning that is heard from those who regard themselves as balanced, reasoning and intelligent. Those who can’t cobble together a more reasoned rejoinder just say that the rewards go to the people who deserve them because of their effort, or getting down to the basic dog-fight level, bare their teeth and snarl ‘B…ger off, you w…ing drop-out.’

  4. Herodotus 4

    In theory as I understand, a pay rise should in general terms include CPI/Inflation + what growth (GDP) has been achieved within NZ ( on a per capita basis). Otherwise every worker (be they the PM, nurse, police or on min wage) will not be reaping the gains of the economy.
    But IMO what appears to be happening is that coys are keeping an ever increasing share of the gains in profits, whist govt assistance in the form of: WWF , Accommodation supplements are needed to increase. If pay increases are being achieved and the increased wealth/productivity benefits being shared then the need for increased govt assistance would not be required, and all going well the need for such assistance would reduce.

  5. Craig H 5

    This is basically why National can’t run an economy for everyone – workers simply don’t share in the spoils unless they earn enough to purchase assets, which given the asset inflation National policies cause, isn’t much of a given.

    The problem with running an economy with nothing for workers long term is that it breeds discontent and anger, which can then be harnessed by more radical groups. People believe they should be able to see their kids leave school equipped for success, save for an OE, return to a decent career, buy a house and start a family without it being backbreakingly expensive, and finish off with a decent retirement at 65. Increasingly, that’s not happening at the pace people believe it should, or at all, and people are getting angry. Ideally, things change democratically, but if the major political parties continue on the same trajectory, we get increasing disillusionment with politics because voting doesn’t change things, and people have forgotten how to join political parties to influence policies.

    I don’t know if Labour policies of returning to awards (the Fair Pay Agreements), more Labour Inspectors to crack down on the BS, and cutting back on long term working migrants will be enough, but those in conjunction with large scale government activity (Kiwibuild, rail plans etc) seem like a pretty good start to me.

  6. adam 6

    I love the word ‘flat’ – for poor people that is a economic term which really means – y’all going backwards and they laughing at you.

    Is it one of those sick Tory jokes, where by they us the term ‘flat’, instead of being honest and saying they are smashing us down with poor wages and poor condition.


    Love how rent is not part of the inflation figures. So think, how ‘flat’ that is for you now.

  7. millsy 7

    Keep wages down but dish out credit like lollies so everyone thinks they are doing well when they arent.

  8. Stuart Munro 8

    They have a nice reminder of this in Confucian societies. Every spring and autumn the family gathers, and children and aged parents receive gifts of money, for which they bow. Of course, sometimes times are hard for some branch of the family, and they can’t contribute – which is fine – but they don’t get the bow. Similarly governments that don’t lift the material prosperity of their citizens are not entitled to respect.

  9. This is worth mentioning again in light of this post:

    New Zealand’s real unemployed/under-employed stands at 11.8% – over double the “official unemployment rate”. That figure is not what the msm will be showing the country any time soon.

    Which begins to answer the question why – when we supposedly have low unemployment – are wages continuing to stagnate?

    It really is important to note the reason why wages are stagnating.

    • In Vino 9.1


      It strikes me that opposition parties should use National’s slogan as the headline does. Really publicise the fact that National is delivering no pay increases for most people over the next 4 years.

      Can National deny it? Tax breaks will not significantly help those not in the rich bracket.

  10. Chris Trotter makes a very pertinent point about any Labour party or National party detractors who try to advise Jacinda Adern away from dismantling the ‘ pay as you learn’ system we have currently resulting in massive student debt … and that these ‘neo liberals ‘ in Labour may try to cite the ‘ Financial Responsibility ‘ between Labour / Greens agreement to discourage her, – despite the fact that if Adern chooses to go ahead with her intentions Labour would accrue huge dividends at the ballot box from thousands of students, helping towards a decisive victory for a Labour led govt…

    Let’s Do This NOW, Jacinda – NOT “As Finances Permit” « The Daily ……/lets-do-this-now-jacinda-not-as-finances-permit/

    Now while this is a separate issue from what the OP has written about , the facts that in the first few years of John Keys Prime Minister-ship , he deliberately offered a sweetener to his obvious Nat party supporters by offering massive tax cuts , – financed obviously from such as the Bank of America or such like ; he was careful to never mention exactly where he got the money to do that.

    Meanwhile , effective wage increases were absent for most of his 3 terms , – that DESPITE the fact that Australian Banks ( to which most of the banks in NZ are Australian owned ) were strong and the mining boom was made possible because of the massive markets for that produce from China.

    Nothing to do with either Key or English financial stewardship at all.

    Instead, we have had increased poverty , homelessness and degradation of our core social services under National. Obviously as a justification for privatization of the same.

    A particular statement from Chris Trotter’s article regards Aderns moves towards free education is thus , and can be extrapolated to other fields as well which will have a knock on effect on wage increases , – with the caveat being that there is a corresponding adherence to an overhaul of taxation and implementing a progressive tax system instead which seeks more from high earners and corporate’s thus providing greater govt coffers ;
    … ” The First Labour Government’s state-housing programme could never have gone ahead had Mickey Savage and his colleagues not required the Reserve Bank to, in effect, grant their government a huge overdraft ”…

    Much of the wealth is taken out of this country by foreign owned banks and various other corporate interests, jobs and work are outsourced offshore, and taxation is light on those who should be paying more to sustain our country and weighted heavily against P.A.Y.E earners , – and employers , – due to mechanisms such as the ECA /ERA have entrenched the low wage economy. It is the capitalists ultimate dream ripe for exploitation of workers wages and conditions to extract massive profit margins with little input in return.

    And it has been aided and abetted by successive govt’s for 33 years.

    It will not be until the unfairness and impracticality of neo liberalism , – that deceptive and pernicious ideology of the elite , – is overturned by popular consent such as the example set by Jeremy Corbyn ,… that we will see some semblance of a return to a balanced, equitable economy functioning correctly as a tool for all of society .

    Talk of low wages and the wringing of hands about ‘ low productivity’ is merely addressing one of the many symptoms of an economic ideology that even the International Monetary Fund has now admitted is a failure.

  11. Michael Shanahan 11

    National talks about giving hard working Kiwis tax cuts, better that they be better rewarded for their efforts by their employers than the government, they’d be getting more and it cuts out the middle man.

    Also, wages lagging inflation ultimately means more demand for Government transfers and services.

    They say they want to get the Government out of people’s lives, they’re actually doing the opposite.

  12. Zeroque 12

    The diminishing share of returns to workers is concerning. As far as I can see National have no plan or will to intervene to alter the situation. As I’ve said previously, Labours plan to turn this around with industry bargaining will be a big task and could take quite a number of years to turn the tide. I think though that Equal Pay has a place in the plan as well. Even the one settlement we have seen so far is having quite an impact on parts of the labour market with reports of some workers actively seeking aged care work where they once would not which is prompting employers in the mental health side to consider upping wages to stem the flow. If we can achieve a few more large Equal Pay settlements of the same magnitude in several different occupations it should help wages move along.

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