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The other wage gap

Written By: - Date published: 12:26 pm, April 20th, 2012 - 22 comments
Categories: class war, wages - Tags:

In his speech yesterday, David Shearer talked about how wages have lagged productivity gains since the neoliberal revolution. Here’s what he was talking about:

It’s kind of misleading to start at 1989 – it suggests that wages were at the ‘right’ level compared to productivity then, when, in fact, they had been falling since the late 70s – but it’s when the modern data series started.

Another way of looking at it, using longer-run data, is the share of the economy’s output that goes to the people doing the work. You can see that GDP started to grow faster than workers’ share of it around 1980.

The bosses’ constant refrain is that they need to fire people and cut working conditions to increase productivity.Then, wages can rise. Truth is, it’s all been a generation-long con.

22 comments on “The other wage gap ”

  1. Draco T Bastard 1

    The bosses’ constant refrain is that they need to fire people and cut working conditions to increase productivity.Then, wages can rise. Truth is, it’s all been a generation-long con.

    The truth is that increased productivity is what the bosses use to decrease wages thus increasing their own wealth and increasing the poverty of the workers.

  2. Herodotus 2

    So as many should take heed, We in NZ were sold out by Labour following the Neolib policy as well and the tricklle down effect doesn’t work. Who guessed that !!!
    And the battling Kiwi ws severly damaged in our ability to afford every Kiwis dream … to own our own home.
    Oh how NZ gained economically i the 99-08 period. No that 0.1% gained, just that currently they are capuring the 100% of wealth at an increasing faster rate.

  3. We also need to deal with the growing discrimination against women in New Zealand, especially highlighted by Otago Rugby’s chauvinistic approach to their women’s representative side.

    We were once ranked 4th in the world for the number of women in business leadership roles and now we are 10th. In a National Government that has only 3 women in their top 15 we will see gender based disparity continue to grow. Research has shown that economic risk increases when governance bodies do contain a mix of representation.


    A graph showing the income gap between genders would also be informative.

    • kiwi_prometheus 3.1

      “especially highlighted by Otago Rugby’s chauvinistic approach to their women’s representative side. ”

      How’s that?

      What amazes me is the low crowd turn outs to women’s rugby games, when the majority of the population is female. Why can’t they support their own, instead of whinging about the huge crowds men’s rugby gets?

    • Jim Nald 3.2

      “In a National Government that has only 3 women in their top 15 we will see gender based disparity continue to grow.”

      Btw, even Natz’ women are of quite a unique ultra-species and not representative of the general women population; Natz’ women are, even within their own gender group, shall we say, “outliers”. Cough cough cough.

  4. Higher productivity with decreased inputs (ie wages and personnel numbers) is the economic definition of efficiency. The right don’t see this as a problem, they see it as something to be encouraged.

  5. KJT 5

    Note; despite all the rhetoric about employees and unions grabbing too large a share in the early 80’s they were starting to fall behind even then.

    • bad12 5.1

      The divergence of wages and productivity directly correlates to the removal of compulsory union membership in the workplace,

      While much can be said about the supposed ‘freedom’ of the voluntary nature of today’s work place unionism, most of that ‘freedom’ has only accrued to the ‘shareholding class’s’ ability to exploit the marketization of the labour force,

      New Zealand in my opinion needs reverse thrust its thinking back to that point in time…

    • RedLogix 5.2

      Actually the whole ‘compulsory unionism’ thing was based on a bit of a misunderstanding.

      There never was a law that said if you worked in a certain industry you had to belong to a collective. What did exist was a requirement that broadly speaking prevented employers from negotiating a collective agreement with it’s unionised employees, and then automatically passing the same terms onto it’s non-union workers.

      Essentially the law prevented freeloading.

      The ECA dismantled that requirement and made it unecessary to belong to a union to enjoy the terms and conditions the union had won. Then at the same time the ECA regulated unions to within an inch of their lives, making it almost impossible for them to act effectively except under a very narrow range of circumstances.

      It was this nasty and very pre-meditated combination which saw union membership plummet in this country to the very low levels we have at present. While of course over the Tasman union membership rates remain high… as do their wages.

  6. Bill 6

    But..but…Shearer nevertheless regurgitates the same old nonsense and preaches that higher wages will come about by raising productivity! Here’s the quote from his speech…

    “We need to imagine an economy where we say: Dammit, we can have a country where everyone has enough to live on. We know the answer to this: Raise our productivity by being smarter.”

  7. John72 7

    On TV One, recently, 2 very interesting and relevant comments were made.
    1. For the average Kiwi there is not much difference between $2.6 million and $26 million.
    2. If a person is not happy before winning Lotto, it is unlikely that they will be happy 5 years after winning it.
    Surely this is what is happening with the P of A dispute. Regardless of how much they get, some people will always want more because they are not happy now and money will not buy happiness. This has been spelt out repeatedly but it seems to be something that is not understood until experienced.

    “I earn what I eat, I buy what I wear, I owe no man hate, I envy no man’s happiness,I am glad of other men’s good, I accept my harm.” (Q. Shakespeare)

    • RedLogix 7.1

      Any fool knows that wealth does not buy happiness.

      But it does buy decency. Home, food and choices. Choices about how to invest in the life of your family or community, choices around how you spend your working life, choices about your health, education and recreation.

      Yes there are many whose materialistic blindness ensures they will always be miserable bastards regardless of how much money they have.

      Poverty and it’s subtle cousin, inequality, is a prison. We even know roughly what the number is; it’s about U$10k per capita. Below that number and the lack of money dominates a families’ life. Life is reduced to a constant grind of unemployment, under-employment or just plain crappy badly paid work. Bills that you never get ahead of, a lifetime of renting, no hope of building a nest-egg, saving up for a decent holiday, investing in a good education.. or just plain doing something worthwhile your heart really wants to do. There is a constant sense of powerlessness about your life that is corrosive to both the soul and body.

      And humans it turns out are remarkably sensitive to the steepness of the social gradient they live in. There is always this sense when you look about at the well off living in a world that you know you will never be allowed to enter… that somehow you’ve been cheated. It’s not so much an envy of what they have; but a sadness of what you know you can never have.

      Humans are ultimately a social creature. Shakespeare’s words while wise, cannot be used to claim we all live in some glorious isolation from each other.

    • Mike 7.2

      26 mill may not buy happiness, but it sure as fuck enables you to do things, buy things, create things, etc that will probably enable you to be happier. Anyone that says otherwise has either never had any money, or never not had a lot of money.

      Put it this way, if someone said to me I’ll give you 26 million but only if you think it will make you happier, I’m hardly gonna turn it down.

      In saying all that, I’d be happy just to have a consistent income which is enough to cover the rent and bills. (Then again, I’d be happier to have 26 mill)

  8. John72 8

    I started riding a bike to work, overtime and shift, when I was 15 yrs old, and am still limited to a bike by health. It keeps me fit. I have set achieveable goals during life and achieved them. My work oportunities were limited by health but when one door shuts another opens. I am not destitute and have not had to seek charity. Go into Asia and see what real hardship is. China will soon be teaching this generation what hard work is.Yesterday I saw 6 young men pouring one small concrete job. 2 were working, 2 offered very occasional help, 2 ate food. All appeared to be on shift pay. Does this seem familiar?

    Do not bleat “Hardship”, there will always be someone better off than you.(Can you feel compassion for the worse off?)

    • McFlock 8.1

      So you’ve worked hard and had good luck.
      Good for you.
      It doesn’t stop you making bold assumptions about other people and how hard they  work for a living, I see.

    • bad12 8.2

      ”Please dont beat us Massah Boss,we promise to work till we drop from exhaustion for you”…

    • felix 8.3

      “Yesterday I saw 6 young men pouring one small concrete job. 2 were working, 2 offered very occasional help, 2 ate food. All appeared to be on shift pay. Does this seem familiar? “

      Nope, sounds like fantasy. No-one pays people to work like that.

      I reckon you probably came across a couple of people working through their smoko break to get a job done on time. Far more common on sites these days.

      • John72 8.3.1

        I did not tell you about the time everyone spent standing around waiting for the concrete to be delivered.

  9. Brennan 9

    Using %gdp paid as wages is misleading. What if gdp and wages go up but decrease as a percentage? Were working people better off receiving less money but a higher percentage of gdp? If so, does that mean you advocate for a more equal wealth distribution even if everyone is worse off?

    [lprent: Letting this one through despite it reading like a troll especially his apparent lack on understanding of what GDP is (and why you have to remove inflation). It also reads like he didn’t read the post or he’d already have had the answer to his last question. But I guess everyone has to start off dumb and young at some time. ]

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