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Wages fall, except for union members

Written By: - Date published: 8:05 am, November 12th, 2009 - 42 comments
Categories: Unions, wages - Tags:

The Labour Cost Index tells us that most workers this year failed to get pay rises to match inflation in the past year. 52% got no increase. 4% got less than inflation (2%, represented by the green line on the graph). 1% even got pay cuts. That’s a dramatic change on a year ago.

change in pay 08 to 09

Well, so what, eh? I can hear the Right now: there’s a recession on, we’ve all got to do our bit (unless we’re CEOs or ministers at the trough), and all that other house-slave nonsense. Why is it nonsense? Because it was almost entirely non-unionised workers who didn’t get pay raises.

change in pay union v nonunion

(derived from pay rises given for collective bargaining – Table 6.3 – and overall pay rises – Table 6.1 – and total workforce union density of approximately 21%)

Pretty stark huh? Nearly all union members got a pay rise above inflation – 50% got 1-3% above inflation, 25% got more. Nearly all non-union workers got an effective pay cut – 50% got 2% less than inflation, a few did even worse. It’s not a recession thing, that’s just an excuse. The fact is that with unemployment up the boss doesn’t have to adjust your pay for at least inflation to keep you, and that’s not going to change just because the recession is supposedly over.

So it’s pretty simple really. If you want a pay rise or even just to maintain the buying power of your pay packet in John Key’s New Zealand, you’ve got to join a union. Otherwise, get used to watching inflation eat away at your income.

42 comments on “Wages fall, except for union members ”

  1. Janice 1

    I remember my father saying about 60 years ago that the first sign of the ‘great’ depression was that wages fell. Unions wouldn’t have been very active then I guess, hopefully they can stem the tide this time.

  2. outofbed 2

    Unionism… the real way to close the wage gap with Australia

    • RedLogix 2.1

      Union membership in NZ =~ 18% of total workforce

      Union membership in Aus =~ 76% of total workforce

      I don’t suppose the Nats have this comparison in mind when they burble on about ‘closing the gap with Australia’.

      • indiana 2.1.1

        is the real question, why is there such a huge gap between union membership between Aus and NZ…excluding what happened in the 90’s but include what reforms there have been since then.

        • roger nome


          It’s pretty much all down to what happened in the 1990s. Australia retained there awards system/centralised collective bargaining legislation and National got rid of ours. Consequently workers here negotiate pay and conditions on a weak and individual basis, where as Australians are generally covered by a collectively negotiated contract.

          • indiana

            So the reforms under Labour had no impact or were worthless reforms as Union membership never skyrocketed back to pre 1990 numbers. Why is that?

            • fizzleplug

              because the people had been 9 years without unions, and the unions had been 9 years without people.

              Apathy, our nations biggest scourge (behind NZF and ACT voters).

            • Daveo

              Main reason is Labour never fundamentally removed the restrictive aspects of the ECA that made it uneconomical for unions to represent most workers.

              Labour knew this, but they never did anything because they were too scared off a business backlash.

            • roger nome


              A few extracts from my thesis:

              within the first year of the ECA’s introduction New Zealand unions lost nearly 50 percent of their members (Danin 1997: 7). This provides fairly concrete evidence that the ECA was the primary cause of union collapse in the 1990s and not the ongoing shift from a manufacturing to service based economy. Indeed, by the time the ECA had been enacted the growth of the service sector had slowed considerably. For instance, the service sector’s total share of employment only increased from 65.6 percent to 65.8 percent from 1991 to 1996 respectively (Statistics New Zealand, 2005: 132). In addition, Maloney (1998) has estimated that 80 percent of the post 1991 union decline was caused by the ECA (Gorter and Poot 1999: 81).

              As union membership remains optional, free-riding remains a problem under the ERA. The problem of free-riding involves an essential contradiction for unions operating in New Zealand. The more successful the bargaining is, the greater the ability to attract and retain new members, but also the greater the incentive to free-ride (Harbridge, et al., 2002: 3). This factor greatly limits the scope for growth in union density.

              Also, widespread industrial action is extremely unlikely while the government chooses not to ratify the ILO’s Convention 87 (the right of workers to organise and bargain collectively). This would require the legalisation of secondary/sympathy strikes and striking outside the period of bargaining.
              In sum, the lack of increased union bargaining power evident in the available figures regarding union density and number of strikes is reflective of a legal environment which has done little to change the balance of power between unions and employers since decade of the ECA.

              Hope that provides some clarification.

  3. gomango 3

    Theres also a very strong large employer/small employer effect too typically. I don’t have time to pull the numbers out but I think you’ll probably find as marked an effect from big vs small even once you control for union membership.

    The economic reasons are intuitive -typically better capitalised, longer planning cycles, more resources available etc.

    Would also be interesting to look at the public sector/private sector split too. Public sector tends to be much more heavily unionised than the private.

    And actually I’d improve your last paragraph “If you want to get a pay rise, choose the right industry and occupation”. In my business employees are very well paid and absolutely not unionised. But I know without happy, engaged, well remunerated employees I don’t have a business. Plus they are shareholders.

    • roger nome 3.1


      Collective bargaining will generally lead to better pay and conditions – and there are loads of statistical studies to show it. This is particularly true in countries such as the US and and NZ where collective bargaining coverage is the same as union density, meaning that the possibility for free-riding is limited – meaning that non-unionised workers don’t generally receive the benefits of collective bargaining.

      You can read this paper if you’re not familiar with the literature:


  4. ha ha ha (I'm stupid) 4

    What was the difference in take home THIS YEAR between the pay increases and union fees

    • Armchair Critic 4.1

      Apples with apples would compare pay increases and union fee increases.

    • Bright Red 4.2

      Typical union fees are about a dollar a day – ie $350 a year.

      For that you get higher wages and professional advocates in case of employment disputes, for starters.

  5. ha ha ha (I'm stupid) 5

    No, a fair comparison is what the wage earner takes home in the pay packet.

    And if you took away union ‘dues’ how much better off would your average wage earner be compared to inflation.

    • Daveo 5.1

      Union dues work out to about 70 cents for every hundred dollars earned. If your union membership wins you a 0.7% pay rise, once, that’s paid for your fees. In reality union members win a lot more, as the graph above shows.

      Of course, that’s purely financial and fails to take into account other benefits like redundancy compensation, overtime, better annual leave and sick pay, union help in disciplinaries, a say in roster changes and restructuring, advice and support on employment issues etc etc.

      But hey, nice try mate.

    • Bright Red 5.2

      your average full time wage is about $45,000, somewhere around that.

      If you’re a union member, you probably got a 2-3% pay rise, according to Marty’s numbers. Call it 2.5%. So you’re up to $46,150.

      Take off union fees and you’re on about $45,800. To cover inflation (1.8%) you need to be on $45,800. ta da!

      If you’re not a union member, you’re likely to still be on $45,000.

      No contest.

      And that’s not even includingthe other benefits of union membership – the advocacy in emplyoment disputes, the redundancy clauses, cheap banking etc etc etc

    • Armchair Critic 5.3

      Your assertion is only true if you assume that the only service the union provides is wage bargaining, so all your union dues go to obtaining wage increases. Unions do a bit more than this, so comparing the total dues against the wage increase is not fair.

      • Daveo 5.3.1

        Even then, like I said, you only need a 0.7% pay rise once to cover your union dues forever, because that increase becomes built into your pay and you continue to benefit from it every year thereafter.

        This ‘ha ha ha’ fella doesn’t know what he’s talking about. Just another one of those suckers who sells his own interests down the river in a sorry attempt to win favour with the boss.

  6. ha ha ha (I'm stupid) 6

    Bet that 0.7%-1.0% equates to a large majority of the quoted members failing to reach a wage increase exceeding inflation.

    [lprent: Darwinian award? ]

    • Daveo 6.1

      I’d suggest you go look at Bright Red’s figures above, but it’s obvious you’re just another stupid house slave who isn’t interested in the evidence because he’s too in love with the boss to stand up for himself.

      The facts show that even on a simple pay rise vs union dues measure union membership pays. That’s leaving out all the other conditions and benefits, plus stuff like having a redundancy cheque when you get laid off, or professional advocacy and legal support when you’re in trouble.

      But hey, enjoy your house slavery. Capitalism needs suckers like you to function.

    • Bright Red 6.2

      but you are likely to have got nothing if you’re not in the union, ha, ha, ha. so the opportunity cost of not paying $350 a year in union fees is seeing your wages fall by 2% after inflation, whereas for most union members paying that $350 saw the value of their wage packet keep pace with or exceed inflation.

      As I showed above, for the typical worker union membership was worth $800 net of fees just in higher wages last year. Add in all the things daveo mentioned “redundancy compensation, overtime, better annual leave and sick pay, union help in disciplinaries, a say in roster changes and restructuring, advice and support on employment issues” and it’s a bargain that only a fool, or a house slave, would pass up.

  7. Mike 7

    I’m a union member in a highly unionized company and this year I got a 3.5% pay rise. That worked out to a wee bit over $2k after my union fees. I pay $340 a year in fees.

    Most of the non-union people I know who do what I do got nothing this year

  8. Daveo 8

    It’s also worth remembering that winning a 0.7% pay rise once will pay your union dues forever. You don’t need to factor it in every year.

  9. fizzleplug 9

    All well and good, but then you’d have to belong to a union, and listen to all their crap.

    Sometimes, slightly less money is worth it.

    (I recognise that not everyone feels like this).

    • Daveo 9.1

      You know they’re democratic organisations eh? A union is just a group of workers combining to promote their common interests.

      If you get involved and convince enough workmates to elect you shop steward you can make it whatever you want it to be. You can even register your own union if you get 15 people together to form an incorporated society.

      • fizzleplug 9.1.1

        Democratic like VUWSA? hehe

        But to answer you seriously, if I didn’t want to join a union, why would I want to lead one? Then other people would have to put up with my crap.

        • Daveo

          Yeah, VUWSA’s not a trade union, it’s a students’ association.

          As for ‘crap’, well, you seem to have a pretty low opinion of yourself bro. I guess it’s about working together democratically for a better working life, if you’re not keen on doing that then it’s your choice I guess.

        • Armchair Critic

          LOL. I put up with listening to your crap already – and vice versa, most likely. I reckon you should start your own union.

          • fizzleplug

            Minimum membership qualification is being as awesome as me. I’ll book a small office for our meetings (actually, maybe slightly larger so our egos can come too).

            Read =/= listen. Avert your eyes if I make them bleed.

        • Bright Red

          oh, it’s a student, going on about VUWSA… as if that’s got anything to do with a workers’ union.

          kid, one day you’ll understand the value of being able to stand beside your fellow workers and demand a fair deal from your boss.

          or maybe you won’t, maybe you’ll try to get ahead by brown-nosng the boss like a house-slave.. always believing that one day you’ll be massa and someone will be kissing your arse.

          • fizzleplug

            tsk tsk, VUWSA was a joke. I went to Massey, and have been out of university for the better part of the decade. The internet needs a humour detector.

            Oh, and [quote]or maybe you won’t, maybe you’ll try to get ahead by brown-nosng the boss like a house-slave.. always believing that one day you’ll be massa and someone will be kissing your arse.[/quote] WTF? I mean… really? Did you bring the rest of the 50’s with you in your time machine?

            Edit: stupid quoting mechanisms, different everywhere.

    • Bright Red 9.2

      crap like: ‘being in a union means higher pay, better conditions, and professional support in case of an employment dispute?’

      You obviously haven’t been a member of a union ever or within the last decade or two. They’re not the dinosaurs of your imagination.

      • fizzleplug 9.2.1

        I’m a lot younger than my anti-union stance makes me seem (my receding hairline makes me look older). I didn’t grow up on horror stories of unions, but I have been a member of a union before (in the last decade). It was a few years ago, so I can’t remember exactly what it was called, but I got nothing in return for my union fees except an invitation to demonstrate something or other for some other people.

        I felt like working that day though, so I was a wee bit annoyed. Personally, I prefer individual choice rather than collectivist stuff (perhaps the wrong word to use, but I’m sure you get my drift). As noted before, I am aware that not everyone feels like this, and respect the views of others. Just figured I would add my voice here seeing as I was able to (teh interweb is oarsome).

        • Bright Red

          The numbers don’t lie champ. If you want higher wages, union membership is the way to go.

          You don’t have to be a collectivist to know a good deal when you see one. Although, maybe it helps.

          • Daveo

            Meh, settle down Red. If he wants to be an individualist then let him be an individualist. At the end of the day it’s his choice and his loss.

  10. poptart 10

    This fizzleplug is a strange fellow. I wonder if his individualism is related to that somehow.

  11. burt 11

    So any graphs showing how many people have lost their jobs broken down into union and non-union?

    • The Voice of Reason 11.1

      It’d be a similar picture to the wage rise graphs, I suspect, Burt.

      Non union dealt to; union members safeguarded with professional advocacy, proper selection processes and redundancy compensation if jobs are actually lost.

    • snoozer 11.2

      I won’t think that data is collected by the government.

      It would depend a lot on the industries. For example, manufacturing has been relatively hard hit by this recession and it is relatively highly unionised. On the other hand, the public service, police, doctors etc are highly unionised and they haven’t lost many jobs.

      Retailing has very low unionisation and has lost a lot of jobs.

  12. ak 12

    So any graphs showing how many people are so genuinely opposed to unions and “socialism” that they have refused to accept any wage increases or benefits won on their bludging behalf by their fellows?

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