Wages up at record rate

Written By: - Date published: 12:58 pm, May 5th, 2008 - 17 comments
Categories: economy, workers' rights - Tags: , , ,

The Labour Cost Index rose a record 3.4% for the March year. That means wages and salaries for doing the same job rose an average of 3.4% over the year. Public sector wages were up 3.3% and private sector wages up 3.5%. Retail and other low-paid workers did especially well, with their pay up 5.1%, thanks in part to the rising minimum wage and successful union campaigns.

This is just the increase for doing the same amount of work in the same job and it matches inflation. Increases in employment, work hours, paid overtime, as well as improving average skill level (and with it pay) of jobs are specifically not included in this measure. Because people are working more and there are more high skill/high pay jobs than a year ago, the ordinary Kiwi’s pay-packet has actually increased more than 3.4%. The data only comes out once a year but the average total income was up 9.4% in the year to June 2007. Ordinary Kiwis are better-off this year than they were last year, despite some prices increasing rapidly, because their incomes have gone up even faster.

It is incredible that wages going up is portrayed as a bad thing in most of the media. People are better off than last year because of these higher wages but all we hear is ‘oh no, inflation’. This ‘money first, people second’ thinking has got to go (Stats should start by a renaming of the Labour Cost Index to the Wages and Salaries Index).

Let’s remember, people are not cogs in the economy. The point of the economy is to make our lives better. The economy exists for society, not the other way around. And that’s why more of the economy’s wealth being shared by the people, through higher wages, is something to be celebrated.

17 comments on “Wages up at record rate”

  1. Tane 1

    While I find the whinging from business and the media tiring (see ‘Pay-rise inflation tipped to continue‘ and others in today’s papers), it does put the lie to National’s spin on wages.

    On the one hand, they have to convince us that Labour has failed on wages in order to give their misleading ‘wage gap’ rhetoric any substance.

    On the other, their business backers are undermining them every day complaining about rising labour costs.

    The right can’t have it both ways.

  2. Salaries and wages increasing is great if it is matched by an increase in productivity and as the RBNZ said last month “wage growth is growing faster than output growth”.

  3. Tane 3

    Would you say the same for growth in profits maw?

  4. I urge anyone here to go to Seek.co.nz and type in your occupation, do a search for jobs in NewZealand, then jobs in Australia, and see what the difference is.

  5. Steve Pierson 5

    If wage growth beats output growth the difference comes out of profit growth (and small inflationary impact). I’m not going to shed any tears over that.

  6. As I’ve said time and time again productivity is stupid stat if looked at by itself. The reason for this is that it is just a ratio of inputs to outputs with no bearing on real growth.

    Here’s and example to elucidate this:

    My factory produced $3m of output last year for an input of $2 million thus providing a gross profit of $1 million.

    This year I cut staff and sold off plant and produced $30k of output for $10thousand of input thus producing a gross profit of $20 thousand. Yay! my productivity doubled! Oh wait, hold on…

  7. Steve Pierson 7

    So Brett’s for higher wages too.

    Now, if only National was…

  8. I urge anyone here to go to Seek.co.nz and type in your occupation, do a search for jobs in NewZealand, then jobs in Australia, and see what the difference is.

    Good boy Brett – now the next step is to go to your boss and say you want the difference. When he says no ask yourself what a National government would do to help you get it.

  9. Steve: why should someone who risks their capital investing in a business accept a lower return on that investment to pay workers more who are not offering higher productivity in return?

    Robinsod: leaving productivity aside our growth continues to fall behind our OECD mates and 8 years of Labour has not changed that: http://www.interest.co.nz/ratesblog/index.php/2008/01/05/chart-gdp-per-capita-in-us/

  10. Steve Pierson 10

    our growth has outstripped other OECD countries under Labour. http://www.thestandard.org.nz/?p=1049

    Like I say, Hickey’s not worth listening to.

  11. Pascal's bookie 11

    mawg
    why should someone who risks their capital investing in a business accept a lower return on that investment to pay suppliers more who are not offering higher productivity in return?

    I’m only being a little facetious. It does appear to me that sometimes right wingers are a big fan of market prices untill they start to hurt capatalists. Then they start talking about productivity in ways that sound supiciously like those ‘labour theories of value’ that are not supposed to make any sense.

  12. Macky 12

    If businesses want labour they have to be willing to pay the market price, and if their labour is going offshore to Aussie, then they’ll have to boost what they offer some more.

    As Key would say ‘frankly, it’s a market’

  13. As Key would say ‘frankly, it’s a market’

    I believe his mates did in the 90’s. Funny how things change…

  14. r0b 14

    The right can’t have it both ways.

    Watch them try.

  15. higherstandard 15

    Nothing wrong with wages going up but stretching this to

    ‘.. Ordinary Kiwis are better-off this year than they were last year, despite some prices increasing rapidly, because their incomes have gone up even faster.’

    is a bridge to far.

  16. You get pay rises from asking an employer for additional wages. If people are worried about the wage gap, they should be asking their employer for a raise, if they say no, organise your workforce so that you can better press your demand.

    The government only interferes in the case of the lowest paid workers, to make sure they paid a living wage. Other than you are on your own. As its always been.

    What more can the government do? They gave tax cuts to businesses, they’ve presided over (if you can’t admit they were responsible for –
    saying neo-liberal policies were responsible for the improvement is like claiming that the post-war boom was caused by the retrenchment policies of the Great Depression.) the longest boom time in 40 years.

  17. Steve: thanks for the link. The chart/Excel spreadsheet you linked to shows quarterly GDP growth while the chart I linked to shows GDP per person. Once again we are back to productivity: more people working (e.g. soaking up the unskilled unemployed) but overall everyone less getting done ( relative to USA, AU etc etc)

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