web analytics

Wage gap decreasing thanks to pro-worker policies

Written By: - Date published: 12:05 pm, October 3rd, 2008 - 36 comments
Categories: economy, election 2008, labour, national, wages, workers' rights - Tags:

earnings 450 gap 450

As The Standard first reported on April 1 and Radio New Zealand picked up today, Treasury figures show that the wage gap between Australia and New Zealand increased 50% under National in the 1990s and has decreased moderately under Labour since then.

Now, a lot of our readers simply won’t want to believe that is true, just like they don’t want to believe that crime is going down, because it goes against their premises (‘NZ is going to hell in a hand basket because of this socialist dykocracy’). So let’s ask: ‘does this data make sense, given what we know about wages during these two periods?’

Well, we know that in the 1990s National weakened the unions, ran a high unemployment policy, and refused to raise the minimum wage (expect one time with NZF forced them to). We know that real wages fell for many workers and incomes fell after inflation for over 40% of Kiwis during that period. We know that in Australia during that period work rights and wages were not undercut by government policy. We also know that Australia grew faster than NZ during that period, even as wages as a % of NZ GDP fell.

We know that under the left-wing governments since 1999 the minimum wage has been increased by $5 an hour; something like 40% in real terms (I don’t have the number on me). We know that workers’ collective bargaining power was strengthened by the introduction of the ERA and a full employment policy. We know that New Zealand grew faster on average than Australia during this period and wages rose as a % of NZ GDP. We know that incomes at every level have risen under these policies. At the same time, we know that Australia’s right-wing government was weakening work rights.

If we were asked to construct a hypothesis on the relative change in wages between Australia and NZ given these facts, what would that hypothesis be? Surely, we would expect the wage gap to have opened under National and at least stopped growing under Labour (remember, once you’re behind, you need to grow much faster just to stop the gap growing). And that is exactly what the Treasury figures show.

[the CTU has a list of policies to help close the wage gap further. I’ll write more on that later]

36 comments on “Wage gap decreasing thanks to pro-worker policies ”

  1. higherstandard 1

    Can you write more on that later as well.

  2. higherstandard 4

    Don’t play the innocent with me missy.

  3. Tane 5

    Ah, I can explain. Steve wrote ‘right’, I changed it to ‘write’, fixing his wee typos as I always do. Hence the confusion on all sides.

  4. higherstandard 6

    How will the children learn if you’re always cleaning up after them ?

  5. fitzyp 7

    I wonder what the response of the right will be. “You just scared cause you’re 18% behind in the polls!” is my bet.

  6. Tane 8

    HS, I know, but I think poor Steve’s beyond teaching.

  7. higherstandard 9

    On a more serious note, ignoring the fact that our two economies are somewhat different, perhaps overlaying the graph on the right with real average weekly earnings in Australia over the same time period would strengthen your argument.

    Pr alternatively a link to that information and the information you’re used for you graphs so people can make up there own minds.

    I think what is undeniable is that it is only by improvements in productivity growth that we will see stronger long-term income growth in New Zealand.

  8. vidiot 10

    So in 1996 the real average weekly wage was about $452 a week and in 2007 it’s up around $508 a week. It’s interesting to see that when you apply just a 2% average annual inflation (yes that is on the low side) to the initial figure, that the average weekly take should be now up over the $570 mark. $510 was right for 2002, but not today.

    And in your 2nd graph it shows that wage gap now is greater than what it was in 1999. So how you can claim it’s decreasing is a bit bogus, unless you are referring to 2006 to 2007 only.

    Would also be interesting to see how those figures stack up today, with the rampant wages that you can achieve in the land of Oz. $80K for holding a road sign in WA anyone ?

    Note: After all the bitching the other week on graphs [% of electoral vote] not showing the zero scale figure, I would have thought these ones would have been done that way.

  9. higherstandard 11

    Feck my grammars worse than Clintons… bring back the edit function I say.

  10. vidiot 12

    Hey wtf, the charts you have posted are the exact same ones you posted back on April 1 – http://www.thestandard.org.nz/the-trans-tasman-wage-gap/.

    Is this a bad joke or have you run out of drums to beat ?

  11. Tane 13

    Yes vidiot. I added them to SP’s post as an illustration. Big blocks of text with no pictures turn off the readers. Sorry if that wasn’t clear enough.

  12. NeillR 14

    Back to the old “before tax” argument. It’s been easy for Cullen to let everyone’s wages and inflation run out of control, which makes these figures look good, but once fiscal drag and tax are taken into account there’s no doubt that people are worse off now than when Labour came to power.
    And on the back of the best economic conditions in a generation. I hate to think how bad it will be if Labour gets re-elected and carrys on with their profligate spending in the face of the economic tsunami that is about to swamp us.

    [show us the maths to prove that NeilR. Fact is fiscal drag is a minor effect on people’s incomes. For example, say your income was 40K (above average) in 1999 – you were paying 20.35% tax, 9 years later if you income has risen only in line with inflation it’s now about 50K and you’re paying 22.7% tax. Fiscal drag does exist but it’s small and won’t take down your after-tax inxome unless your pay only goes up at the rate of inflation or a small amount about it. As we know, average wages have risen far faster than that. SP]

  13. Rakaia George 15

    Are these the figures that according to Treasury advice “cannot be considered accurate”?

  14. toad 16

    Okay, vidiot, let’s look to the future then, and to what National are actually proposing to do.

    Everything that is in (or in the case of anything about the minimum wage, not in) their policy would indicate that National are gearing up to cause the wage gap to increase if they get into power, just as they did in the 1990s.

  15. Tane 17

    NeilR. Many families effectively pay no tax now because of WfF. To ignore that is just dishonest. I’m sure SP can enlighten us with actual numbers.

    Also, a tax cut doesn’t necessarily make one richer. When you cut taxes, sooner or later you have to cut spending and that leads to a decrease in the social wage.

    To use an old example, if National had been in in 2005 I might have had a higher after-tax income based on massive tax cuts, but I’d be paying interest on my rather hefty student loan and no longer able to get cheaper doctor’s visits, WFF or Kiwisaver tax credits. Chances are those tax cuts would have made me worse off.

  16. higherstandard 18

    If these graphs are pretax what is happening to the wage gap post tax ?

  17. vidiot 19

    If these graphs are pretax what is happening to the wage gap post tax ?

    Join the Move to Aussie and find out.

    Was talking with one of the guys that were recently laid off from a local lines company (brought out by a competitor). He’s off to Oz next week, was saying his base salary was xx, but when you added on the 19% (for oddball hours), the 9% that the company pays to his super, etc etc etc – he would be foolish not to go.

  18. Tane 20

    HS. Depends what figures you use and which taxes you count. Do you count state and federal tax in Australia? Stamp tax? Excise tax? Do you count Working For Families? Do you count differences in the social wage?

    It’s fraught with difficulty, as you can see.

    Vidiot. Sounds like your mate is leaving for Australia for higher wages, not lower taxes.

  19. vidiot 21

    Sounds like your mate is leaving for Australia for higher wages, not lower taxes.

    No he’s leaving for a job. There are only a few places in NZ that his skill set can be utalised, and currently none of them are employing, ergo he’s off to Oz.

    He also did comment on how backward the Aussie system were – simple stuff (like having GPS units fitted to service vehicles) was not done over there.

  20. Dom 22

    Yep, we’re a small market and the job opportunities her, especially for certain skill sets, are limited.

    I’ve had two job offers from Oz companies in the past three years – one in Sydney and one in Melbourne. I could earn a lot more over there than I do here. But I would also have to live in Oz. It can’t offer the quality of life I have here – not even close.

    It’s not ALL about the money.

  21. higherstandard 23

    Tane

    Agreed which suggests that all the rhetoric for National or Labour on the issue is little more than political point scoring.

    [HS. you’ve been around here long enough to know that changes in tax only make small changes to after-tax incomes. The big way that aftertax incomes change is through wage increases. SP]

  22. Matthew Pilott 24

    Hs, that rhetoric’s all from the blue corner, sonny. Labour never said tax cuts are a panacea for all that ails ye…

  23. NeillR 25

    To ignore that is just dishonest.
    No it’s not. When people talk about “the wage gap” it’s really only a measure of purchasing power – how much can you get for what you earn. So the dishonesty comes from jacking up gross wages (as Cullen has done) while taking an ever increasing amount in tax, and the purchasing power of the money left over is being eroded due to runaway inflation.
    When Cullen took over the financial reigns he quickly increased the top tax rate to 39% and said that it would only ever apply to the top 5% of earners. That is now the top 12%, but i’m sure if you asked the other seven percent how they are coping they would be quick to tell you – as the massive exodus of Kiwis and the low showing of Labour in the polls will attest.

  24. Felix 26

    hs you’re really stretching the bounds of possibility there. No way could your grammar be worse than his.

  25. Chris S 27

    Was talking with one of the guys that were recently laid off from a local lines company (brought out by a competitor). He’s off to Oz next week, was saying his base salary was xx, but when you added on the 19% (for oddball hours), the 9% that the company pays to his super, etc etc etc – he would be foolish not to go.

    You mean rights that are entitled to workers? Paid overtime and employer contributions to super?

  26. higherstandard 28

    Bollocks – both this thread and Labour have been just as vocal with their spin on the same issue.

    The biggest concern for me is that those overseas and earning tend to be higher earners, I recall that around 30% of those working offshore were on 100k or more compared to only 3% of the NZ workforce. I’d like some non partisan analysis of why that is.

  27. higherstandard 29

    Felix …fair call, although my writing and grammar (and SPs) would definitely be better with the edit function in place.

  28. higherstandard 30

    Sonny ?? I’m probably old enough to be your dad

  29. Matthew Pilott 31

    Eh? Doubtful. ’twas a follow on from your ‘missy’.

    I am well aware that I’d see National spinning this a lot more that the good guys, but after two years of attacks over the underclass, the wage cap, tax cuts curing everything, and you reckon they’re as bad as each other? While one eye may be a teeny bit squinty at times, I genuinely can’t see it.

  30. Draco T Bastard 32

    From here:

    So why is it we’re always led to believe that everything is better in Australia? Does Australia have some secret PR guru working on its behalf in this country?

    Yes, yes it does. It’s called the National Party of NZ.

    captcha: intends intrigues

  31. randal 33

    hs the reson leavers are paid more is because out there in the wider world there are more things to do than pulling a cows tit.

  32. If you want lower pay, crap worker rights and high doctors fees then please, by all means, vote National.

  33. sean 35

    illuminatedtiger – and if you want lower net pay, lower productivity, booming inflation and run down health and education systems, by all means vote Labour.

    Rhetoric and spin is so easy to fart out isn’t it?

Links to post

Recent Comments

Recent Posts

  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruapehu cycle trails gets PGF boost
    The spectacular Mountains to Sea cycle trail in Ruapehu District will receive $4.6 million in funding from the Provincial Growth Fund for two additional trails, Regional Economic Development Minister Shane Jones announced today. “This is an exciting development for the local community, and one that will provide significant economic opportunities ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Update to air border order strengthens crew requirements
    Additional measures coming into effect on Monday will boost our defence against COVID-19 entering New Zealand through the air border, Health Minister Chris Hipkins said today. “As part of our precautionary approach and strategy of constant review, we’re tightening the requirements around international aircrew,” Chris Hipkins said. The COVID-19 Public ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • A true picture of Māori business activity
    A better picture of the contribution Māori businesses make to the economy will be possible with changes to the way information is collected about companies and trading enterprises. Māori Development Minister Nanaia Mahuta and Small Business Minister Stuart Nash have announced a new option for Māori enterprises who are part ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • PGF funding for Taranaki projects
    The South Taranaki museum, a New Plymouth distillery and a Pasifika building firm will benefit from a Government investment totalling more than $1 million, Regional Economic Development Minister Shane Jones says. The $1.05m in grants and loans from the Provincial Growth Fund (PGF) will help the recipients expand and create ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Fijian Language Week 2020 inspires courage and strength during COVID-19 pandemic
    The Minister for Pacific Peoples, Aupito William Sio says the theme for the 2020 Fijian Language Week reflects the strong belief by Fijians that their language and culture inspires courage and strength that is strongly needed in times of emergencies, or through a significant challenge like the global COVID-19 pandemic ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Trades training builds on iwi aspirations
    An investment of $2.025 million from the Māori Trades and Training Fund will support Māori to learn new skills while making a positive difference for their communities, announced Employment Minister Willie Jackson today. “K3 Development Limited Partnership will receive $2,025,000 for its Takitimu Tuanui apprenticeship programme, which will support the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Conservation Minister plants two millionth tree in Raglan restoration
    A long-term conservation project led by the Whaingaroa Harbour Care group in the western Waikato reaches a significant milestone this week, with the planting of the two millionth tree by the Minister of Conservation Eugenie Sage. “Planting the two millionth tree crowns 25 years of commitment and partnership involving Whaingaroa ...
    BeehiveBy beehive.govt.nz
    3 weeks ago