Question number 3 today in Question Time will be:
AARON GILMORE to the Minister of Finance: Have New Zealand’s after-tax wages been rising faster than prices?
English is going to reply ‘yes’ and point to the same silly numbers that he and Key have been waving around for the last week or so.
To recap, the numbers they’re using are the average ordinary time wage for full-time workers. That number doesn’t include changes to the incomes of part-timers, it doesn’t include changes in the amount of overtime pay people are getting, and it is distorted by rising unemployment.
Think about it: there’s a recession. Who loses their jobs? Not the doctors, or the lawyers, or the accountants. No, it’s people on low incomes who make up most of the lost jobs. So, what happens to the average wage of the remaining employed people? It increases eh? A bad thing has happened that gives you a result that, at first glance, appears good.
It’s like you’ve got a bunch of differently sized bottles full of beer. You take away the smallest ones, the average amount of beer per bottle rises, but the total amount you have is actually less.
Same with wages. Yes, thanks to the fact that a whole lot of low wage employees have lost their jobs, the average full time ordinary wage has risen 3.2% faster than inflation since National came to power.
But you have to remember to ask – what about the 100,000 extra jobless since National came to power, who know have no wages?
What has actually happened to the total amount of wages that the families of this country have to spend? It’s fallen: the average weekly wage income per working age person is down 1% after inflation since National came to power.
And it’s going to get worse. Wages are ‘sticky’ – they are slow to respond to economic shocks. It’s only now that many wages are being negiotated for the first time since the recession started and many workers (like the teachers and the medicial technicians) are being offered below inflation pay rises.
Treasury knows it’s going to happen. That’s why they forecast that real wages will fall 3.8% over this year, and wages per working age person won’t get back to their peak until 2014.
Of course, it doesn’t need to be this way. Workers’ wages could be protected and rising. But for that to happen we would need a Finance Minister who does his job, rather than occupying himself with statistical chicanery.