Larger (but still small) numbers of kiwis are leaving for Australia and higher incomes are part of the attraction. At the same time unemployment here is at a record low, which is good but employers are complaining about a lack of workers. To keep skilled workers in New Zealand higher wages are needed.
The government can continue raising the minimum wage, further strengthen work rights, invest in productivity, pay its own employees more, and lower income tax (all but one of which National opposes, incidentally) but these measures can only make a marginal or long-term difference. The real power to raise wages lies with business.
Employers are the ones who set wages for most workers and if they are having trouble finding staff that is a market signal that they are setting wages too low. It is their own fault if they choose not to pay enough to attract workers. Businesses can afford to pay more: since Labour came to power profits have risen 13% after inflation. This year businesses will get a nearly 10% cut in their tax rate. Wise employers should use these record profits and tax savings to boost kiwis’ wages and keep them here.
Fundamentally, it is business, not government, that has the power to solve New Zealand’s low wage problem.
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