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Recreating the reserve army of labour

Written By: - Date published: 5:48 am, August 13th, 2009 - 56 comments
Categories: unemployment, wages, workers' rights - Tags:

Unemployment has shot up to 133,500, nearly doubling in 18 months. But that’s not the whole story. The official ‘unemployed’ are only the people without work who looking for work and able to start now. Add to that the ‘jobless’, people who want work but are not actively looking (because they’re discouraged or there’s none to be had) and people looking but not immediately available. there are now 102,600 people in this catagory, up from 66,800. On top of that there are the ‘underemployed’ – people with work but unable to get as much as they want or need – another 114,300 people.

Together they make up the reserve army of labour. It is an ‘army’ that does the work of the bosses by keeping wages down, and it does that better the more people are forced into its ranks.

reserve army of labour q2 2009

These are all people who must compete against each other (and fully employed people wishing to change jobs) for the limited, insufficent supply of work. Whenever there are too many people trying for too few jobs, the only way they can compete is by agreeing to do more work for less money. Workers can’t afford to simply withdraw from the market; their labour isn’t any other commodity, it’s the only way to get a decent livelihood.

sleepytimes - smallWhen few people were unemployed, jobless, or underemployed wages rose quickly (and the bosses screamed about ‘wage inflation’). Now, thanks to the capitalists’ financial crisis the ranks of the reserve army of labour are growing and the Key Government is sitting by doing nothing because it represents the interests of capital, not working New Zealanders.  Workers are forced to undercut each other and the bosses win.

The outcome is falling wages and bigger profits, which is exactly what Treasury is projecting in the years ahead.

56 comments on “Recreating the reserve army of labour ”

  1. infused 1

    So what’s your suggestion mate?

    • Sonny Blount 1.1

      “So what’s your suggestion mate?”

      I think what he is infering is that economic growth should always be a priority because the good times of high tax income never last forever

      • starboard 1.1.1

        pity labour wasted the good times…cupboard bare…stuck with a crappy train set and a big hole in ACC…

    • Marty G 1.2

      The Government’s priority should be to support employment, and thereby wages. So far, this government has destroyed more jobs by firing people itself than it has created.

      • Sonny Blount 1.2.1

        The government can’t create jobs. It can avoid destroying jobs and it can offer work for the dole.

        • Marty G

          work for the dole only serves to undermine wages and create an army of serfs.

          I’ll talk about how the govt can create jobs in response to your other comment below

          • Sonny Blount

            But all government jobs are work for the dole under a different name. These jobs have some value but any additional employment by government is fundamentally work for the dole, they still require a private sector job to provide the tax to pay for it.

        • Macro

          But! but! but! I just heard our erstwhile Paula on the radio this morning saying how wonderful her new 200 jobs for youth was!!

    • Macro 1.3

      So you admit that the right has no solution to the problem. Well we knew that already.

  2. Sonny Blount 3

    Thanks Labour for 9 years of failed economic policies

    • Marty G 3.1

      how’s that?

      4 years of sub-4% unemployment under Labour.

      • infused 3.1.1

        That wasn’t due to Labour. It was due to the economic climate at the time. An expanded Labour market because of the bubble here and around the world. Artificial jobs really.

        Any party in power at the time would have enjoyed this.

        • Marty G

          ah English’s ‘they weren’t real jobs’ line.

          The fact is that unemployment is a phenomena of the capitalist system and even then it has usually been very low – we’ve only experienced four periods of high unemployment in this country – the long depression at the end of the 19th century, the great depression, the neoliberal revolution, and the current global crisis. Each time, it was the capitalists stuffing up and the workers suffering.

          Low unemployment is natural, not an aberration.

          Anyway, my point was that this increase isn’t ‘Labour’s fault’ like this Sonny guy was saying

        • roger nome


          Labour’s active labour market policies would have undoubtedly created a more efficient labour market. More efficient than in the US – which has had much higher unemployment than us for the last 10 years, whilst pretty much “leaving it to the market”.

      • vto 3.1.2

        Marty you always try to have your cake and eat it too.

        4 years of sub-4% unemployment under the “capitalists system”, not labour.

        FFS, claiming the downturn is due to the “capitalists system” but that the upturn was due to Labour … you just have no credibility when you do this.


        waste of time and space

        • Marty G

          where did I claim the low unemployment had been due to Labour?

          reading things that aren’t there eh vto?

          The fact is that low unemployment is natural but government can encourage it by making full employment its primary economic goal (both Labour and National government’s did until the 1980s) … there are plenty of steps the government could and should be taking (should have been taking for the past 8 months) to keep unemployment low.

          It hasn’t and now we’ve broken past the point where low unemployment is self-reinforcing (when unemployment is very low, employers are reluctant to fire people because they will be unable to get new workers when the economy picks up), which decreases everyone’s job security and opens the door to a higher ‘normal level’ of unemployment

          • Sonny Blount

            What are these steps?

            • Marty G

              Investing in labour intensive areas. Public transport, education (National cut Labour’s plan to low pupil to student ratios), conservation (reducing pest numbers would also reduce our net carbon emissions), state housing construction and a home insulation scheme that helps the renting poor, not just the middle-class.

              The Greens put our their Green New Deal recently talking 40,000 jobs for just over a billion dollars a year. That’s a real jobs programme. http://www.greens.org.nz/sites/default/files/Green_New_Deal_Economic_Stimulus_12_June.pdf

            • Macro

              Why don’t you ask your mates on the right that question? – They are the ones supposedly responsible now, and was the whole point of the post.

          • vto

            “where did I claim the low unemployment had been due to Labour?”


            “4 years of sub-4% unemployment under Labour.”

            not reading what you’re writing eh marty? That would explain a lot.

            • Marty G

              That doesn’t say ‘due to Labour’. Sonny was blaming Labour for rising unemployment, I pointed out that when they were in power, unemployment had been low and stayed there. Was hat primarily due to Labour? No. No government can have complete influence over the economy but it can certainly make a difference and it’s pretty hard to argue that Labour’s policies led to high unemployment now.

        • starboard

          ..tee hee hee..

  3. Gaint Mason Philly 4

    I hope the rotund Labour army marches on poisonous sea slugs.

  4. tsmithfield 5

    So, how would you say our unemployment rate compares with most other Western economies at the moment, Marty?

    • Marty G 5.1

      it compares well because we had 4 years of sub-4% unemployment and low unemployment is self-reinforcing (although we’re passing that point now).

      How it that relevant though? You can’t attribute it to anything the Key Government has done, it doesn’t matter to the hundreds of thousands of people unable to get work, it doesn’t stop unemployment dragging on our wages.

  5. John Dalley 6

    Gaint mason alias D4J.
    For a parasite and a laughing stock in the world of Cristchurch, life still not going well for you??

  6. Andrei 7

    The outcome is falling wages and bigger profits, which is exactly what Treasury is projecting in the years ahead.

    Rubbish when less people are working profits go down as well – everybody loses.

    Perhaps if you stopped trying to cast this as a class war (tiresome) and started thinking about how we as a nation form the richest to the most humble tackle these problems some progress could be made.

    • JustRight 7.1

      I agree Andrei. The whole class thing is tiresome and unproductive. Seeing the world through this lens is unhelpful. The problems we face today cannot be solved with the same thinking that created them in the first place

      Perhaps, just perhaps everyone is right! Start with what we agree on, then we have a place to stand together in growing the pie. Why squabble over slicing up an ever descreasing pie, when collectively we should spend our energy on growing it?

      As for me, I happen to think that free markets are by far the best way for human beings to organise themselves, and I also have a social conscience. It is possible!

  7. tsmithfield 8

    Well, there is something being done, for instance bringing forward infrastructure spending and the like.

    Doesn’t matter what the government does, unemployment is going to rise in the current market. Remember, this has been the biggest shock since the great depression.

    So, how do you validate your argument that unemployment is too high, given that employment was going to increase under any scenario, no matter how much the government poured into it. Good grief, look at the US. They are printing money (quantative easing) and they are still going to be pushing 11% with unemployment.

    • Bright Red 8.1

      The US situation is clearly different from here. They started with a higher unemployment rate (none of that self-reinforcing effect marty was talking about) and their recession has been a lot worse. You can’t simply point at their unemployment numbers and say ‘look we may as well do nothing because the yanks did something and it didn’t work’

      Oh and by the way, the unemployment rate in the US is 9.4%, down from 9.5% in June.

      Meanwhile, our unemployment rate, which started nearly 1% lower than Australia’s is now higher than theirs. Ouch.

      • JustRight 8.1.1

        Our recession started 12 months before anyone else as well. This was manufactured to cool the housing market / real estate development that was destroying our exporters through a high dollar.

        The root of our ills is we as a nation spend more than we earn. The fix to both the productivity issue, current account and wage growth issues is to export more stuff the world wants. Simple, but not easy!

        • infused

          Nail, Head.

        • Maynard J

          JustRight, how do you reconcile the free-market ideology with New Zealand having a fundamental flaw (overspending) that requires intervention to rectify, since it is clear that this behaviour is not self-regulating?

          I know you did not say it was perfect, for the record, I am not putting those words in your mouth. I am just asking if you think the market will correct this, and probing to see if there is a level of regulation you are confortable with.

          To a similar issue, the market corrected for the lack of regulation in the US, which is a fundamental cause of this global mess. As an ideology, what level of control are you confortable with on the ‘free’-market to reduce the effects it has been proven to have – namely ruinous boom and bust cycles.

          These issues are related because there is a juxtaposition of a social conscience upon the freedom of free-market markets that is irreconcilable without regulation.

          • Quoth the Raven

            Maynard – You’re simply stating your opinion as fact. I’m not an Austrian, but adherents would cite the Austrian business cycle. My point being there are differring opinons don’t assume you’re right. Some would think this whole financial sector that got us into this mess would barely exist if at all on a free-market.

            These issues are related because there is a juxtaposition of a social conscience upon the freedom of free-market markets that is irreconcilable without regulation.

            This is just an absurd statement. Many of the first socialists before Marx and many after advocated a free market precisely because of their social concience. Do not masquerade your opinons as facts.

            I think there is a lack of understanding from both the mainstream left and the right about what a free market actually entails.

            • Maynard J

              “This is just an absurd statement.”

              Is that an opinion as fact?

              I was responding to JustRight’s view, and clearly referring to that concept of a free market. I am not really intersted in pissing contests and bandying words about so if you have some form of contribution to make, then by all means, do so.

              “This is just an absurd statement. Many of the first socialists before Marx and many after advocated a free market precisely because of their social concience. Do not masquerade your opinons as facts.”

              Of course it is an opinion, why even start to read into it otherwise? If it helps you sleep at night I will put “I think” in front of every sentence.

              I think most people can have this debate without lengthy analysis of terms of reference, but if you want to call someone up on it for reasons of pedantry why not start with your own?

            • Quoth the Raven

              If you like to think that everyone who supports a free-market has no concience go ahead, but your manichean outlook will only lose you arguments. You stated that the market corrected for the lack of regulation and that it is a proven fact that the boom bust cycle is caused by free markets this is what I was complaining as opinion for fact and further than that you said that a social concience and support for the free market are irreconcilable. That is a slight against all people that support a free market.
              Free-market is a term that rasies a lot of argument. The difficulty comes when conservatives and neo-liberals masquerade their policies as free market policies. More confusion comes from social democrats and the like because they continue to say that what we have is a free market system when that is manifestly false. People then start to look at the problems in our current system inequality, unemployment, consumerism etc and blame that on the free-market because they have been told time and again that we have a free-market system when that is false. What free-market actually means is simple what it would entail or how we could get there is not and subject to much argument. You can have a debate without lengthy analysis of terms of reference, but when people don’t even know what the terms of reference are it is meaningless. Right now the debate has been so muddied by left and right wing conservatives that it is meaningless.

            • Maynard J

              JustRight’s comment below was just what I was looking for. I accept that what we have at present is not a free market in its purest sense, and is not remotely like that concept.

              So I am guilty of using the term ‘free market’ in a different context to that which is the real, theoretical idea. I still find value in using that term to have the debate with people who want a majority of our current systems, but argue that the market system can remedy the inequalities, as JustRight has done below. But for what it is worth, apologies for the sleight towards actual free-market proponents, and I accept that it is lazy to use the term incorrectly.

              “People then start to look at the problems in our current system inequality, unemployment, consumerism etc and blame that on the free-market because they have been told time and again that we have a free-market system when that is false.”

              That is pretty much it. When people are talking about that as a free market – meaning arguing for a minimum of government intervention – it seems to me to be little point in arguing that it is not a free market. Incidentally I have made this point before, that there is no such thing, no realised version of the theory, at least in a modern and meaningful context that can be used as a model.

          • JustRight

            MaynardJ – Yep, I think the market would correct the ‘over spending flaw’ as you put it. However, I am mindful that market participants are human beings with hopes, desires, children yadda yadda. I think there is a significant human cost to ‘market correction’ There are winners & losers in the process.

            My belief that markets are the best way for human beings to organise themselves. The social conscience comes in when discussing the size & shape of the social safety net for people who can not take part in the market (e.g. the sick, disabled yadda yadda, and the structures needed to prevent some market participants from parasitic behaviour.

            I personally believe that well designed structures such as tax systems which incent certain forms of investment & discourage others are fine. I see nothing wrong with taxing tobacco because the cost of this is not only borne by the individual, but the rest of society in the form of having to give lung replacements! Look at the insurance premiums for smokers versus non-smokers.

            Regulations like laws are necessary to protect the majority from a minority. The minority who steal / are greedy / damage others are made to bear some if not all the cost of this behaviour in the form of fines and/or loss of liberty.

            Just as games of sport have rules to ensure a fair contest. So should markets… no different.

            • Ari

              Do you believe in market failures, JR? If so, when do they happen and how serious are they?

              Because I think there’s more point to interfering in the economy than just setting fair and socially responsible rules. I think in some places the market just doesn’t stand up on its own.

    • Clarke 8.2

      Well, there is something being done, for instance bringing forward infrastructure spending and the like.

      Oh dear, not the hoary old “infrastructure spending” meme again. How about a bit of a reality check – let’s use the Auckland Victoria Park tunnel as an example:

      Cost = $406 million
      New jobs created = “between 210 and 300 people working on the project”

      Compare and contrast with the Green New Deal in which you get 40,000 jobs for around $1 billion, which looks to be a much better investment. The downside for National is that a Green New Deal won’t funnel all those tasty taxpayer dollars into the coffers of Fletcher Building to help make up their $46 million loss, unlike the Victoria Park tunnel.

      • Armchair Critic 8.2.1

        I wonder whether the 210 to 300 people working on the Vic Park Tunnel project are people who were previously unemployed and have now been hired, or whether they are current employees who have been transfered from other FB projects as they come to an end. If it is the latter then they aren’t really new jobs.

        • Ari

          AC: That depends if there’d be enough work for them without bringing those projects forward. If not, then it would have had the effect of keeping people in employment.

          Clarke: If we spend the amount we spent on the vic tunnel on programs with the same average return as the proposed GND, we would have created or maintained 16,240 jobs.

  8. Graeme 9

    the only way they can compete is by agreeing to do more work for less money

    Surely they could also compete by offering to do more work for the same money, or the same work for less money?


  9. Pascal's bookie 10

    marty G said The outcome is falling wages and bigger profits, which is exactly what Treasury is projecting in the years ahead.

    Andrei replied Rubbish when less people are working profits go down as well everybody loses.

    Dum de doo, checking the news, ooh what’s this?


    The Labor Department said Tuesday that the American work force produced, at an annual rate, 6.4 percent more of the goods they made and services they provided in the second quarter of this year compared to a year ago. At the same time, “unit labor costs’ — the amount employers paid for all that extra work — fell by 5.8 percent. The jump in productivity was higher than expected; the cut in labor costs more than double expectations.

    That is, despite the deep job cuts of the past year, workers who remain on the payroll are filling in and making up the work that had been done by their departed colleagues. In some cases, that extra work came with a smaller paycheck.

    The higher worker output and lower labor costs have been good news for companies struggling through the worst recession since World War II. So far, some 70 percent of companies in the S&P 500 have turned in better-than-expected profits for the latest quarter.

    Hey now Mr fancy msnbc news man, what you talking such lies fer? Everybody knows that the productivity gettin better is the sure fire route to the wages going up. Shit goddam liberal media with it’s bias and it’s quotin of the numbers and such.

  10. Ari 11

    I should point out that the reason productivity gets better in a recession is because mostly the least efficient employees are the ones that get fired first. The problem with a full employment policy is that it is really unattractive to employers- they end up paying more for more employees and needing to take on inefficient ones. This means that when employers have significant influence over government policy they’re likely to try and dump the policy to the extent that they can avoid employing inefficient workers. Nice for the free market, horrible for society.

  11. Hmmmm – it is all part and parcel of the neo-liberalistic policies of governments world-wide, that are gaining favour. People are human captial, easily expendible and, in this throwaway society we live in, quickly forgotten.

    There is also another class of unemployed.

    Those who are unemployed generally through choice, not registered with WINZ, not having to work to feed the family but looking for work … generally on a part time basis. These people are generally highly skilled, motivated, people who chose to have time out from the ratrace but now want to fill their hours with stimulating and interesting paid work.

    I have observed that with the current government crying ‘recession, recession, recession’ all over the place employers have taken this as carte blance to retrench workers without having to provide reasons – the recession is forcing them to take this action (insert Tui ad here). I think that as we come out of this ‘recession’ employers will be kicking themselves that they let go so many trained, skilled and knowledgeable workers because when they have to take on new workers, employers will have to heavily invest in training and upskilling their inexperienced workforce.

    I will cry crocodile tears when this time comes. Boo Hoo.

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