One of the very exciting aspects of conference for me was showcasing the work that has been done on bold new economic policies. Policies that are prefaced on the belief that fairer economies are more successful economies and that there are fundamental structural problems in our economy that require a fundamental shift in approach.
One important policy area that is key to both fairer outcomes and changing our economic performance is our employment relations policy. A lot of work has been done by the CTU, Labour affiliated unions and Labour MPs to re-cast our policy. There is a recognition that while the Employment Relations Act was a necessary response to the damage of the Employment Contracts Act, it was not sufficient to really shift outcomes for wage and salary earners. In particular the ability to collectively bargain has proven to be an elusive right for most New Zealanders. As a consequence wages have lagged and many have been dependent on changes flowing from increases to the Minimum Wage.
Low wages have huge negative impacts – for families, for communities and for our economy. Low wages mean many struggle to make ends meet (or can’t make ends meet). Low wages mean that essential investment in lifting productivity by investing in technology and lifting skill levels has not had the necessary economic imperative. If you have to pay decent wages you become focused on getting the best possible results. Low wage workers are seen as readily replaceable commodities. Low wages pushes our families to Australia to get a better deal (on average wages are 30% higher).
So the new employment relations policy is focused on delivering the benefits of collective bargaining to more New Zealanders and importantly the mechanism for doing so is created through extending negotiated outcomes to become industry standards. This will require industry level negotiations. What this does is to facilitate focus on industry wide issues like training and qualifications and standards. It requires cooperation at the industry level.
In my mind this is vital to shifting our economic performance. If firms can compete on driving down wages and conditions inevitably a productivity enhancing investment approach comes under pressure. Short term cost reduction becomes the driver. We cannot become a high wage, high skill and highly productive economy with this approach.
CTU President Helen Kelly gave a very clear and passionate elaboration of a new employment relations framework. As she says “ It is time for a new look. While this Government has proven to be a disaster in all of these areas (high unemployment, low wages, long hours, unfair taxation, reduced social security and public services – my summary) , it has been able to get away with it because the current economic paradigm is completely dominant and unchallenged. That paradigm tolerates poverty as a natural partner to wealth, that paradigm values wealth over any or all social values and that paradigm makes working people the victims of all and any of its failures”.
A new employment relations framework is necessary. It is necessary because it is vital to shift to the type of economy we need, it is necessary from a rights perspective (real rights to collective bargaining and to having an independent voice) and it is necessary to deliver a decent standard of living for all New Zealanders.
Now you must think that I must be an idiot.
Performance pay and bonus provisions can be written into any contract, even union negotiated ones. As long as the contract meets minimum standards.
Wrong again. Unless you want to say that bank branch managers, police officers and PhD qualified university professors and lecturers aren’t ‘high performance’.
Come on, you can do better with your Righty arguments, dare ya.
@Richard the First
I haven’t study in great detail about NZ, I guessed a similar system might produce similar results and I did have in mind the likes of Blue Chip and Hanover.
True true, I will admit I did over generalized.
I will admit I was think more of American lines where a lot of that stuff happens.
“The only criticism would be that it is too small, and usually made up of accountants and lawyers” Always look overseas
Accountants and lawyers lol
@JMH
This stuck out to me
“I believe the economy works in a pretty counter intuitive way” This is because human psychology that is the driving force. People often do thing against there own actual interest, man invented the economy not nature.
You think about how people will spend there money and why, even if it not ‘logical’ or ‘rational’. This is why we have speculative bubbles and big crashes, this is why we have the dot.com, housing, stock market booms and crashes….
We are, at the end of the day, driven by our thoughts and emotions, of the to are interwove to become one.
I have never understood why some economist treat the subject like it physics, with various ‘mathematical formulas’. Many them often don’t apply to the real world. This is partly why many economist make predictions that don’t come true.
Personally I always found economics is more like psychiatry. You need to try and understand why people spend there money that way? What their ‘rational’, there reason?
Sand. The strongest unions in NZ are Lawyers, Doctors, Engineers and accountants. Do you think their pay is capped.
Jeremy, there is no evidence that a lower minimum wage creates jobs – so all it would do is add extra costs to government in topping up wages (that would come from education and health and require cuts to welfare benefits to support those in under paid work).
Whereas increasing the minimum wage (to $15 an hour initially) reduces costs to government in WFF.
The employment markey in the minimum wage area is quite inelastic as the jobs are all domestic economy service sector and there is no competition that can escape the same minimum wage conditions. Thus no job losses occured with the minimum wage increases – for youth workers moving up to the adult wage the wages doubled in 5 years yet (young) people are still employed in these jobs today.
@SPC, that’s nonsense, look at youth unemployment figures today and look at the increase in the total number of people of all benefits and ACC over the last 30 years…
I’m not talking about just mechanised industrial jobs, I was talking about all human labour from washing clothes to forging steel but I was largely referring to farming… The average farmer today can tend 10 times the land his great grandfather did in half the time…
I have a history book about Auckland Zoo (I’m a zoo nut) and the first keeper at Auckland Zoo in 1922 worked 6 days a week from 6 am to 6 pm and on Sunday he came to the zoo and opened up and then got the morning off for Church before going back to work from 12 pm to 6 pm – and this was working for the Council not one of those evil Capitalists… So yes we have gone from an 80 hour weeks to 40 hour weeks in the last 100 years… Maybe you’d like to borrow one of my textbooks..?
You’re now contending that since 1900 all the wealth increase in Society has gone the wealthy who you despise… Again history books, you can find them at your local socialist library…
I do love it that your plan for eliminating corporate and private favours from government, is more government… Really good luck with that…
I also love it that you so often claim the moral high ground yet your morals dictate that need to force others to work for your vision of how society should be…
@JMH
“The average farmer today can tend 10 times the land his great grandfather did in half the time…”
Not that simple, a small 300 hectare dairy farm requires 4 or 5 people just to run it. What has change is we have improved farming methods/technology, better breeding and high use of irrigation and fertilizers have lead to higher output per hectare.
Classic exmaple is sheep farming, sheep selectively breed so they are more prone to twining, have higher meat v fat ratios, better quality wool and also condition to do better in harsher conditions (droughts, snow storms).
Plus there also selective breeding of grass’s that have higher yields, more nutritious, survive harsher environments have also contribute to a improvement in sheep farming as we all know sheep eat grass.
This is how NZ farming is improved. Instead of trying to do more with more, we try to do more with less. That is efficiency and diversity.
“So yes we have gone from an 80 hour weeks to 40 hour weeks in the last 100 years…” Get a book on social credit theory, has a interesting view of the effect of this situation.
“look at youth unemployment figures today and look at the increase in the total number of people of all benefits and ACC over the last 30 years…”
Youth unemployment only spiked during the recession, mainly because new jobs aren’t being created and when being layoff, first on is first off is the most commonly used policy.
Actually the number of people on the benefits peak during ruthanasia! After that it steady drop off… but unemployment spiked during the recession. Unemployment and benefit numbers were low during the labour years 1999-2008.
Take a visit to http://www.stats.govt.nz
“You’re now contending that since 1900 all the wealth increase in Society has gone the wealthy who you despise… Again history books, you can find them at your local socialist library…”
Yes and no, depends which decade your talking about
If from 1980s to 2000s during the neo-liberal years, wealth grew only for the top luckily few and for the rest of us, our debt grew.
From 1945 to 1970′s wealth grew for everyone and that was under a various styles of Keynesian economics!
During the 1930s it fell for all. During the 1920 the wealth also grew mainly for the top few.
“I also love it that you so often claim the moral high ground yet your morals dictate that need to force others to work for your vision of how society should be…”
And so do your morals dictate the need to force others to work for your vision of how society should be…
You want everyone to have these ‘free markets’ of yours, yet some of us in society want government intervention.
This isn’t really irony, its psychological projection.
en.wikipedia.org/wiki/Psychological_projection
You just don’t get it do you? This is exactly what the wealthy asset holding capitalists in society are doing. Forcing US to work for THEIR vision of how society should be: us in debt to them, labouring for them, while they sit at the top of the elaborate ponzi scheme.
Don’t get too upset now Jeremy, just because the many are pushing back against the few. And its only just started mate.
Thanks to you RUTB.
Red, I hope they don’t make the sheep inbred, they may end up retards who can’t even be hearded
I apologise, Hilary rightly doesn’t like that term on this blog. I’m sorry,
Edit button please.
@Spud
Believe it or not, it happens, some sheep do get inbred!
Then get funny hoofs and around the ligaments
Apart from that they seem fine and are still 100% edible.
lol
Not like that movie black sheep
Jeremy,
I wrote that the employment “market” in the minimum wage area is quite inelastic as the jobs are all domestic economy service sector and there is no competition that can escape the same minimum wage conditions. Thus no job losses occured with the minimum wage increases – for youth workers moving up to the adult wage the wages doubled in 5 years yet (young) people are still employed in these jobs today.can you name one job that would be created by having a lower minimum wage?
You reply that the higher unemployment around today proves that a rising minimum wage results in higher youth unemployment. I expect you read that on Kiwiblog reading David Farrar.
It’s no better an argument than claiming the increase in the youth rate up to the adult rate caused a fall in the number of unemployed youth – because after it occured the youth rate of unemployment declined. Or as RUTB has pointed out we had higher unemployment than now throughout the 1990′s when we had a lower minimum wage.
The idea that a higher minimum wage causes higher unemployment is based on historic evidence and old markets. The modern market is global and in areas of international competition it still has validity. Whereas in domestic markets – such as services supplied by staff labour – retail and fast food or cleaning and general on site labour intensive services (carers etc) there is only domestic comeptiton and all providers are impacted equally it is a cost plus business.
One might argue that demand for these services will go down if the cost goes up – but the retail sector in food is supplying a necessity and the demand for cleaning, carers and fast food is increasing not diminishing. This is why there is no actual job loss from increasing the minimum wage.
Of course it depends on where the minimum wage rises to meet production sector jobs – which regard their workers as semi-skilled and thus pay above the minimum wage, but the gap closed with the increases in that wage from $9 to $12 (some paying as little as $15 an hour and others up to $20. Thus their fear of wage demands from unions if the minimum wage was to keep rising on up to $15 as it should. $15 is the equivalent rate today that it was back in 1990 (it fell throughjout the 90′s and recent increases have yet to restore the adult rate to what it was).
Treasury did some research on the impact of increasing of the minimum wage to $15 and it indicated that job loss would be minor. The research required is an assessment of the labour market (production sector/office intake) under $20 an hour and the impact of a minimum wage at various levels up to this amount (that is the minimum wage rising faster than wages in the $15 to $20 range) – especially given that the next Labour govwernmnet whether would have a $15 minimum wage c2011/2012 or higher in 2014/2015.
@SPC
I like to add during that some times the cause of unemployment is technically a rise in productivity but the economy isn’t growing fast enough, so not enough productive jobs are being created! This is what happened during the
1990s plus Ruth used unemployment as a means to drag wages down, so a improvement in productivity but a drop in real wages.
She was blunt all about this to and this sort of behavior clogged up the NZ economy… I give her credit for that.
Plus during that decade the prices for commodity’s (NZ main exports) weren’t great so for a long time we had a crap income combined with cheap imports that put a lot of NZ business out the door which also meant more jobs where cut!
We are total growth rate for that decade 1990 to 1999 was 1%, basically the economy stagnated. We didn’t create new jobs, only improved the ones we had, which means less people to do the same amount of work… it wasn’t actual growth, just a improvement of efficiency, which was good but… you can easily figure out the rest
“idea that a higher minimum wage causes higher unemployment” But this isn’t always the case, look at NZ for 1945 to the 1980s, high wages but low unemployment and most of the western world during that period.
Of course unionism could explain some of NZ low figures but not all, not every one was part of a union.. look at the 1950s… demand demand from overseas…
What rubbish, you are free to start your own business, co-op or non for profit company if you so wish… You are not required to work for anyone if you choose…
My belief in how an economy should work is that people are free to offer their labour to whoever they want, free from unnecessary regulation, free to succeed or fail, largely free from taxes… No force at all… The clue should really be in the name of the belief – “free” markets…
@Jeremy M Harris
But not every one want to be exposed to the ruthless of ‘free markets’. A lot of the time people fail through no fault of there own. When a company goes bankrupt and workers are laid off, is it the workers fault, no.
When a company is force to shut down because the economy is in recession and no one is buying from them. Is it there fault, no.
That’s not freedom, when events outside your control dictate want happens in your life and how you should live and survive… that not freedom. We will never have true freedom, true freedom is anarchy.
There is not such thing as freedom with free markets, instead we but come products of this market and our lives are dictated by what the market.. look what neo-liberalism did to us, the purist of pure profit has now become the only objective. We will end up becoming slaves to the system one way or another! Weather free markets or communism.
You don’t believe in freedom for the individual, you believe in the freedom for the market to do what ever it wants, regardless of the social/environmental cost.
They don’t call free markets because it makes the individual free, they called it free markets becuase the market becomes free in the purist of profit, regardless of the cost to everyone else and everything on this planet.
The only ones who win are the ones who do what every it takes to win and not care for the destructive effects, even via some dodge method or down right illegal way.
Free markets still destroys the individual… he or she has little control.
The free society you want already exists Jeremy. In Somalia.
@RUTB, the free market simply is the desires of the people, people are not slaves to it, their wants and needs direct it…
Don’t mistake neo-liberalism for capitalism, it’s not, it’s corporate welfare writ large and that again is the antithesis of a free market…
@JMH
“free market simply is the desires of the people”
Your full of it… free market is supply/demand and profit. Some people desire are not to be subject to the ruthlessness of the market and some people desire to make money at others expense.
A few people/business only have profits on there mind and don’t care how it could hurt others, destroy the environment and rip apart society. It going back to the old excuse the aristocrats used, “it the poor fault they are poor” despite them rigging the rules in there favor and quashing others who where successful.
Who cares if people life’s are wrecked and we live with acid rain. Long as they make there money they don’t care…
Most markets are dominated by heartless/amoral corporations who a basically ruthless….
If markets were truly free we would be subject to unchecked ruthlessness and greed…
If people where perfect and benevolent such a system would work, people aren’t perfect and a very small amount of people are malevolent in nature.
Remember, unemployment is not just a statistic, failure is not just a market action/effect. It people at the end of the day who a bearing the burns…
The market/economy should work for us, not the other way round.
If free markets are just the desires of the people, why is there a multi-million dollar advertising and marketing industry geared towards creating and manipulating people’s desires? What’s “free” about that? And for whom?
RUTB, yes it could be argued that we did not have (international) competition in our production market prior to 1984 and thus we were not subject to higher unemployment from higher wages because we accepted the extra cost in return for full employment. Thus of course the reality of unemployment by participation in the global market, especially if we are not able to add value (invest in R and D etc) to our comparative advantage export products.
@SPC
Import substitution,various protectionism, tax breaks subside with strong union/workers rights lead to full employment.
This as like you pointed out cost us extra but felt at the time it was worth it? What lead it to being to appear very costly was the Asian nations like China, japan(50s-80s), Taiwan, Singapore (50s-80s) with their lower wages which made their exports more competitively priced! The products weren’t any better but just cheaper.
What caused high unemployment during the late 80s/early 90′s was shock economics, most business where faced suddenly outside competition but no chance to re-adjust to there new environment! So what of many companies folded which could of survived and been globally competitive if a softer and much more slower approach was taken instead, giving them time to re-adjust for the future competitive.
Which is somewhat happened in Australia. Look at them now!
We’re green with envy
RUTB, in retrospect it’s obvious we should have ended the quotas but maintained tariffs until bi-lateral free trade. Ending the tariffs unilaterally has given countries such as South Korea and Japan little reason to engage in bi-lateral talks with us.
Tariffs should have been phased out over a 5-6 year time frame, with the major drops in tariff rates in the last 2 years.
That would have given time for many manufacturers to retool, retrain, merge, whatever they needed to do get competitive before being exposed for the first time to the full force of the large global players.
Of course, the git Douglas and his mates didn’t care about NZ’s productive economy, they just wanted their changes done and done now before they could be stopped.
Result – entire industries built up over decades destroyed in a year or two and our employment/wage structure devalued to the bottom of the barrel. And oh, how well our nation has done out of it economically
Rightwingers, whether under a Labour or a National flag, deserve a serious kicking.
@Red – a, I knew that.
b, you blew the plot of black sheep to me.
“There is a recognition that while the Employment Relations Act was a necessary response to the damage of the Employment Contracts Act”
There is also a recognition that an Employment Contracts Act was a necessary response to union blackmail that used to rule our economy before 1990.
Due to unreasonable union demands Peter Jackson has announced that the production of the Hobbit is being moved to another country. The reason it has come to New Zealand in the first place is because of the situation in the US where the closed shops have got the movie industry over a barrel. But this union has decided that their job is to support the American SAG union’s demands and stand in solidarity with them and therefore sabotage the New Zealand economy and all the benefit that would flow into this country from the money from this film being made here.
In France they have a ridiculous situation of the democratically elected government following democratic process being held to ransom by trade unions and that is why France is a tinpot little country. New zealand has benefited a lot from labour market reforms since 1990 and even Labour knows it would be political suicide to go back to the the industrial relations environment we had before then.
I’m on an individual contract, I work in education and the education unions do a lot of meddling in the education system because they have a political agenda and it’s all about giving their Left political parties (e.g. Labour) control of the education system and that is why I have chosen not to be a union member.
There is industrial action in our sector at the moment with a union making unreasonable demands and some of my friends in the same workplace will not go on strike, they will quit the union if the union tells them to go on strike because what matters is the students’ education and we are not having a union meddling in our workplace and telling us what to do so they can push their agenda through the education system.
Unions follow the desires of their members.
If you do not like what it is doing, join and vote against it. Unlike our Government, they are democratic organisations.
People who are happy to take advantage of the improvement in working conditions, wages and living that the unions sacrificed for in the past, yet, have this funny idea that they are above that, should take a good hard look at themselves.
Do they really think they are so exceptional that the employers would give them the conditions they have without the past influence of the Union movement.
Think that they would have decent working conditions without the floor that the Unions have set.
Some Unions did abuse monopoly power more recently.
I knew some of the Unionists concerned. To them it was a payback for the totally shabby way they were exploited when at work during WW2.
They did not do anywhere near the harm to the country that the monopoly power of Big business are doing. (17 billion payout for SCF. 1 Billion to buy back rail from the asset strippers. ???? billion to buy back our country from the banks.
Since the right to strike was taken away from most of us productivity has risen 80% while median ordinary time wages have dropped 25%. Wage earners share of the economy has dropped rapidly. We were promised more investment if the owners of capital were allowed to keep more. Instead productive investment dropped by 2/3. Because business investors know that a low wage economy will not buy their products.
If our only competitive advantage is to be low wages we are F—ked.
Swampy. “France is a tinpot little country” Compared to what? NZ!
Like all the countries who did not go all the way down the neo-lib “free market” road they are doing a lot better than us.
The Hobbit are engaged in blackmailing the NZ Government over tax breaks. The whole union thing is just a smokescreen.
Calling a choice of two, up until now , parties who gave us only a choice of neo-lib heavy and neo-lib slightly lighter a democracy is stretching the point.
I suspect if you asked the public directly, the teacher unions would have more public support, than NACT.
@KJT
I like to add are wages aren’t low as china or india but not higher to be of any real value either. So were double F—ked.
“France is a tinpot little country”
I pretty sure after Germany, France has the largest economy… it tinny alright but still a big and fairly wealth country.
What about the Norway, Sweden and Denmark, they have very high rates of unionism, better than both Germany and France GDP per Per capita…