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Nats’ wage drop plan progressing well

Written By: - Date published: 2:16 pm, March 24th, 2010 - 11 comments
Categories: minimum wage, national/act government, public services, unemployment, wages - Tags:

With higher unemployment and a minimal minimum wage movement, wages are stagnating. The consensus forecast is that they will rise by less than inflation over the next year.

A couple of years back, Steve wrote a piece on how National could reduce pay packs accordance with John Key’s statement that he “would love to see wages drop”. Let’s see how the plan is playing out:

SP: “The first thing to realise is that inflation will do most of the work for you. As a wage dropping government you don’t actually have to bring down wages in nominal terms. You just hold them still or have them increase at less than the rate of inflation. The number of dollars in people’s back pockets stays the same, it may even rise, but the purchasing power of those dollars will be gradually eroded.”
Achieved: While wages will nominally go up, they will go up slower than inflation. Inflation will be around 2.5%, wage growth less than 2%, a decrease in real terms.
How could Key make incomes increase below inflation? Well, he could follow the example of the last National government:
  • Cut benefits or don’t adjust them for inflation;

Partially achieved: National has adjusted main benefits for inflation but not some of the additional components like housing allowances. The net result is falling purchasing power of benefits, meaning less demand in the economy.

  • Hold the minimum wage steady, that will not only make the incomes of those earning the minimum wage decrease after inflation but will also help hold down the incomes of those on wages near the minimum wage;

Partially achieved: a 25 cent an hour increase this year will not quite match inflation. Getting even that much out of the Nats next year will be yet another fight.

  • Hold down public sector wages by cutting funding, this will also hold down wages in similar private sector jobs (National frequently complains about public sector pay increases);

Partially achieved: National is trying its darnedest to freeze public sector wages, which means a pay cut in real terms, by freezing budgets but public sector workers are fighting back and, by and large, have won inflation-matching or better pay rounds. The big ones are still to come, in the health and education sectors.

  • Weaken labour law, say, by weakening employees’ ability to pool their power in unions to balance the inherent power the employer has in the work relationship (as National did in 1991 with the Employment Contracts Act) or by giving employers the ability to ‘fire at will’ (as National now wants to introduce with its 90 Day No-Rights policy);

Achieved. Don’t dare ask for an inflation-matching pay rise if you’re in a low-skill job.

  • And, through public spending cuts and the flow-on drop in consumer demand from the reduction in people’s wages, create higher unemployment, putting further downward pressure on wages through labour competition (this is exactly what happened in the 1990s)

Achieved: National hasn’t had to work to get its desired level of unemployment that constrain wage growth. Unemployment rose anyway, all National had to do was what it does best – nothing. Now, the 276,000 Kiwis who want work but can’t get it serve as a drag on the wages of their 2 million brother and sisters who do have a job.

So, it looks like John Key was good to his word. Wages are dropping thanks to a combination of government neglect on job creation and policies that are actively designed to suppress wage rises.

How’s that brighter future looking?

11 comments on “Nats’ wage drop plan progressing well ”

  1. Bright Red 1

    jeez, it really was that predictable huh?

    and yet the mainstream media didn’t see it coming.

  2. Bright Red 2

    Hell, they don’t even see it now. Apart from a few online articles there’s been no coverage of this issue.

    • Of course they saw it coming. It’s just that the owners of said media don’t give a rat’s ass about us as we are just the sheeple and need to be shorn.

  3. SPC 3

    Soon it will be half way into the first term, and wages are falling, and we’re loving it. One term is such a short time to make a real difference isn’t it?

    And so if falling wages show we are failing in “our aspiration” to close the wage gap with Oz, the thing to note is that what’s important is having some aspiration. And if that means giving John a second term to cause a really big fall in our wages – so he can say while he failed, he at least failed trying to do something good and thus he meant well.

    Smile and wave goodbye back and believe he meant well too. But at the end of his first term. At the end of his second you might not believe that any longer.

  4. Peter 4

    I think the sheep’s skin is falling off, revealing the true beast within…

  5. Lucy 5

    OK The media are not doing their job. What we need is some cheap publicity. Maybe that Newspaper article where Key is quoted over his wish the for wages to drop and a few quotes from the record on the subject from parliament. Some stats on wealth distribution in NZ etc.

    So heres a plan. You might have a better one but with nothing else doing you might be desperate enough to try this.
    Enlist the help of any unions you can to get some fliers out to members then ask those union members to make some copies between 10 and 1000 around their area.

    The flyer might include details of media personel salaries.

    A link to the Standard website and a union joinup website with a list of possible unions people can join.

    Just Flyer devoted to Nationals real plan for wages to drop and those income distribution charts and you might be on the road back and National on the road to nowhere which is where they are taking us.

    • Bill 5.1

      Or as ‘freedom’ suggested on one of the mining posts…

      Regardless, it’s nice to see comments pop up that are trying to find ways to get the info off the web and onto the streets.

      Could join all the dots and invite people to participate in a movement of discontent over NACT behaviours on the issue of their choice and to whatever level they feel comfortable at and without any prescriptions for ‘correct thought’ on the issue(s) being handed down from some controlling committee or political entity.

      And all those people coming together from 101 walks of life on 101 issues of concern could start talking among themselves and come up with positive plans of action…some aspirational goals that can be worked on on the same basis as the negative ‘discontent’ issues, ie to their own level of comfort and without prescriptions being imposed by some controlling entity.

      Just saying.

      • Jum 5.1.1

        Lucy and Bill

        The Unions really are the key. The rightwing has the media and the talk back and Breakfast in their pocket.

        The Unions have access to everyone everywhere in NZ.

        We have to help one another. New Zealanders have been divided too long and are weaker because of it.

        The Standard could post a flier about the latest issues on the site. We could all print off say 25 sheets holding 2-3 fliers per sheet. Just stand under the freedom of the New Zealand flag in your town and hand them out. If you turn up same place, same time (daily,weekly?) people will start to look for your latest handout. Then you start to talk and to listen.

        More importantly, the flier should have the blogsite addresses that give all sides of the issues so that people can make their own decision. That is democracy. There is none in Auckland.

        Don’t forget the GST increase before and after analysis. Is there still room?

  6. toad 6

    Here is another one Marty. Sylvester McMonKEY McBean and The Big Cat with Spots announced it just yesterday:

    Force lot of unwell and disabled people and those with significant childcare obligations off benefits and into the labour market to compete with those already out of work.

    Sure to bring wages down!

  7. Jacko 7

    True Story – Bright young A grade student with an Honors Degree joins a reputable Government Department on a below average salary working in the front line, not the back office. Performance based pay reviews are promised after 6 months but don’t eventuate due to Mr English’s financial constraints.

    After 9 months another review deems the graduates performance to be top of the scale and worthy of a 9% pay increase having exceeded expectations in a high stress environment. Unfortunately just 3% is on offer due to the continuation of financial constraints.

    This from a Government promoting productivity improvements and performance based incentives to reward those who excel. Even when their own employees over deliver this Government does not compensate with the rewards due. Worse still they continue to demotivate the public service with incessant, condescending, talk of bureaucracy while, it would seem, taking every opportunity to lay people off. Next stop Australia perhaps?

  8. tc 8

    Yup and yet more of the folk we need to keep are departing again….just like during the Muldoon and the Shipley/Bolger era as this generation are info hungry and don’t believe what they get fed in the msm….can’t imagine why.
    Rudd’s loving this cheap pool of talent as they never trained or educated them but they’ll take the end product happily and having lived there she’s a tough place to leave once you’re settled in knowing you’re leaving a large pool of opportunities to return to a kiddies paddling pool that’s shrinking rapidly under sideshow john.

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