Had anyone with a job (other than the top 2 tiers of management) had a wage increase higher than inflation recently?
Why is it that wages don’t increase when our headline unemployment rate is so low at 4.6% and falling?
Too often on the left we are used to seeing wage competitiveness falling over time due to the weakening collective bargaining power of unions.
What really matters in wage weakness is concentration of power. Simple as that.
New Zealand is a nation rife with duopolies and oligopolies. They control our economy far more than the government does. Let me list them:
– Fonterra Dairy products
– Fletcher Building, Carter Holt Building supplies
– BP, Shell, Mobil and Z Energy Petroleum
– Progressive Enterprises, Foodstuffs Groceries
– Air New Zealand and Virgin Airlines Local air routes
– Lantern Insurance
– Vector, Genesis, Contact, Meridian, Trustpower Electricity
– Talleys, Moana Pacific, Sealord Seafood
– Auckland Airport International air travel
– Ports of Auckland and Port of Tauranga sea ports
– Talleys and Watties Vegetables
– Westpac, Commonwealth, ANZ Banking
– Constellation, Heineken, Kirin, Pernod R Alcoholic drinks
– Silver Fern, ANZCO, AFFCO, Alliance Meat
OK maybe I’m a little harsh on wine producers there. But I’ve just described most of our private sector economy. Downstream they control even more of it. Some are regulated, somewhat. But that regulation makes no difference to the wages that we get: primarily they regulate price to consumers.
Those industries above exposed to the public sector operate very, very closely with a tiny and concentrated public sector – a public sector who are overall weak regulators and overall naïve clients.
And you could put a cape on E Tu, give it a running start, a pole, and a favourable wind, it wouldn’t leap the tall buildings of concentrated capital enough to gain big wage lifts.
So the core reason that wages are not lifting is: there is no competitive pressure for those companies to do so. They have a market position and no one challenges it, so you get paid what you get paid, or you can leave and there is no one else to go to. And that won’t be solved either with altering legislation to make collective bargaining slightly easier, or by toning down the pay of public sector chief executives.
Wages will lift when there is real competition for workers.
Funny thing about genuine intense competitive pressure: it tends to squeeze profits. Now look across our sharemarket: filled with low-risk near-monopolies or oligopolies who roll out reliable dividends every year. Profits are rolling in nicely cheers.Sure, they bitch and moan and complain about having to deal with a new government. But this government is not lifting a finger against them. Profits are fine (granted Fletchers are fucking up).
So rather than responding to intense competitive pressure, it looks more like our key employers are resisting real wage rises to further lift profits, pay bigger dividends, and earn their senior executives bigger bonuses. They are squeezing down pay rises because they can.
So here we get to the limit of what this government currently is: it is great at redistributing tax. It is great at effectively subsidising the wage increases that companies should be delivering, through Working For Families and other fat handouts.
It has no plan for the economy. Write some tiny R&D credits here, throw meaningless grants out the window to the regions there, hand out fried bacon, build a fake horse racing track. Sweet F.A.
This government needs to be held to account to smack the heads of the highly concentrated capital and their entrenched positions. Unless they do, our wages are going to stay exactly where they are.
At 4.6% headline unemployment, and a sustained boom in most sectors, there will be no better economic conditions for them to do so. We deserve a pay rise.
When times are this good, and a Labour government is in power, we must get our share.