National’s policy on “Employment Relations” has all the language of the days of the Cold War – it’s going to ruin us; it’s taking us back to the bad old days, there will be strikes on the waterfront, unions will be in control, blah, blah, blah.
They devote a whole page to Labour’s plan to lift wages (and at least Labour has a plan). They try to position it as a return to 1970’s industrial relations, with a whole lot of rubbish about strikes and awards. Most people can hardly remember that far back, but we do know that New Zealand wages are too low and something works better across the ditch – and guess what? It’s a centralised wage fixing system, where wages are set by a Fair Work Commission – a system that goes well beyond the changes Labour is proposing.
Try telling an Aussie worker they have a 1970′s industrial relations system and wait for the snorts of derision – and the 100,000 plus New Zealand workers who’ve gone for good to work in Australia because the wage gap is now 38% . All they know is National has no plan.
My favourite bit of the policy is this, written by the National Party Cold War Propaganda Unit (aka Steven Joyce) :
(Labour will ) “Choke the economy by reinstating 1970s national awards and create a bureaucracy to centrally fix wages – a step back in time by more than 30 years, and a recipe for strikes and industrial action. In times like these, the last thing we need is an economy controlled by a small cadre of union leaders.
Cadre? That is so funny. All that tells me is that National is completely out of touch with the New Zealand of today, where the majority of Zealand union members in New Zealand are women, working in public services, health, education and the community services sector.
Nek minnet : Dancing Cossacks.
Well said!
What National’s comments betray is a failure to acknowledge the partnership between business and a skilled and experienced workforce which characterise successful productive enterprises and the part that fair remuneration plays in that partnership. The retoric employed by the Nats ignores the inteligence and maturity of today’s New Zeakland electorate and seeks only to polarize and create division.
This looks like an attack on Key and National. How come it’s not lead story? Or was there another Labour crtisicsm that gazumped you, as the attack of the day? I overheard a guy today at the supermarket say to his partner that vege had gone up. Lucky not media heard him, such a vicious attack on Key. Some regimes would have shot him, on the spot! Lucky he was careful in voicing his opinion.
Joyce’s comment – Cadre of Union Leaders – shows National’s aims. National wants to enable the driving down of employment conditions and rights of New Zealanders generally. To do this they have to make a enemy which seems separate to the employers. So they pretend Unions are some strange monster.
Unions are, of course, voluntary groupings of people in the workplace, who seek in union membership strength in numbers to bargain with their employers for acceptable conditions and access to advice and support in times of difficulties.
Joyce’s myth of destructive Unions is a lie designed for one thing – lower everyone’s security and working conditions. So National is planning to continue driving down working New Zealanders in a second term. No surprise there.
Thank you Darien, a good laugh and a point well made. You are absolutely right about how National and MSM are currently running this story.
Perhaps Labour could sell its policy with more compare/contrast to Australia. I think it would stick it to all the “we need to catch up with Australia” folk on the right.
Could it be they prefer NZ to remain a low-wage economy to give us the much talked about “competitive advantage” (in favour of those with money/power)?
Maybe not the best timing given that a third of Queensland hospital beds are supposed to close tomorrow because the nurses are striking over wages.
As a policy, it is, simply, depressing.
Obviously you have not been following the Qantas industrial relations issues in Australia where unions have declared to “slow bake” Qantas. An odd strategy given that their members are paid more than their members at competitor airlines.
We aren’t going to catch up with Australia by striking and simply demanding higher wages.
NZ productivity is lower than Australia’s. It isn’t just a matter of how you divide the pie. The pie is actually smaller.
Redistribution is a purely myopic policy to raise wages. It’ll work long enough to get you reelected, but then it’ll reach its limit and the economy will be in trouble.
Darien,
Have you observed that the new Qantas chairman is out to ‘smash’ all the the unions that they have to deal with, because they (the unions) have refused to allow Qantas to introduce any new business practices that would make Qantas competitive.
Years of negative union tactics have made Qantas the most uncompetitive airline in the Asia/Pacific. Sure, they have the highest paid workers. But they are about to either a) go bust, or b) de-unionise and survive.
Thomas can you show any evidence that productivity in each and every sector is higher and this is why workers are paid more? Or not?
Yep, the days of the Cold War. As I recall, we fought against communism.
our productivity is lower cause bosses dont need to invest in capital to make a profit from low paid workers. if you have to pay your staff more you make dam sure they have the best equipment and resources they can get
How exactly do you define productivity?
There is a common beleif in this country that becuse we have a very low productivity rate Kiwis are very very lazy, dont work 40 hours per week and deserve low wages.
We all know this is absolute BS, so productivity has to be the fault of bad leadership in the business environement.
@Indiana and Erudite Ernie – yes, I have followed the Qantas dispute. Firstly, the workers were not striking over the award, which is set by the Fair Wage Commission – it is an enterprise bargaining dispute, and that can happen here too. Secondly, the workers went back to work after an arbitrator forced the parties back to negotiation – that can’t happen under NZ law, and I would have thought you would think that was a good thing? Finally, Labour’s wages policy will not allow strikes for Industry Agreements, so National is just talking nonsense.
National, with its current 1870′s style labour market policy, forgets about the disincentive effect of low wages but Henry Ford didn’t.
“Ford astonished the world in 1914 by offering a $5 per day wage …, which more than doubled the rate of most of his workers. A Cleveland, Ohio newspaper editorialized that the announcement “shot like a blinding rocket through the dark clouds of the present industrial depression.”"
Come on National be like Henry gazump Labour and galvanise productivity with a big increase in the minimum wage.
@ George, and despite ever higher wages, Ford dropped the price of a Model T from $800 to $300. So he paid higher wages, sold more cars, and made more money. The guy was obviously a crazy lunatic socialist idiot compared with those shrewd and cunning businessmen Key and Joyce.
@ jennifer
,” and despite ever higher wages, Ford dropped the price of a Model T from $800 to $300. So he paid higher wages, sold more cars, and made more money.” Looks to me like an increase in productivity, The decrease in the price of the model T was gradual not a five hundred dollar decrease.
You should also be aware that the five dollar day was not universal.
To receive that rate of pay the worker had to be clean living, married not defacto, non smoking non drinking and the ford service department decided who got it and who did’nt.
Yes, you have to read a couple of those thick Ford books to catch the detail. I am a union supporter as well as a 50s/60s US Ford car fan so while I like the product, am not so keen on the labor relations practices over the years of the industry owners. Particularly these days when having speculated away millions they are slicing into the auto workers pension funds.
SPC:
I don’t have sector-by-sector data, but OECD data clearly shows that NZ’s GDP per capita is lower than Australia’s. So no amount of redistribution will close the gap with Australia.
Moreover, you can see that the gap has been growing since the 70s.
George:
He raised wages to attract the best workers. It is complete nonsense to believe that giving someone a pay rise will magically make them more productive. The causation goes the other way–more productive workers get pay rises.
It’s like suggesting that if you overpay at the supermarket, the quality of the groceries you buy will magically improve. The causation goes the other way–if the quality improves, then you will pay more.
Shockingly, this logical fallacy seems to be the basis of Labour’s policy–increase wages and productivity will follow.
Thomas going by those figures, New Zealand productivity goes up whenever unemployment rises, this results in budget deficits and growing debt.
SPC:
What on earth are you talking about? Unemployment, deficits, and debt are bad for productivity.
Thomas. My understanding is that the main reason for ol’ Henry’s wage increase was the belief that well paid workers would buy more cars, hopefully Fords, therefore increasing both productivity (mass production) and company profits. From what I have read he succeeded.
Unfortunately that concept doesn’t rest well with the majority of people who post here who seem to believe that every worker is equally skilled, diligent, honest, productive etc etc. And that if by some freak a worker is substandard they should still be paid the ‘going rate’. And that if they’re a tall poppy they should be dragged back into the pack.
And still no one can tell me exactly what productivity means.
And if Kiwis have very very poor productivity are we some of the worlds most lazy people or is it bad management/ leadership.
We’ve relied on workers working longer hours for lower pay for years and now some of you want to blame them for it. Actually, labour productivity rose 48% in the period 1990-2010 but the average wage rose only 18% after CPI. Improvements in productivity come from factors other than things workers can do in their jobs such as actions of (and improved) management, decisions of business owners and investors – and a willingness to share increases in productivity with the workforce.
@Thomas
“It is complete nonsense to believe that giving someone a pay rise will magically make them more productive.”
So a pay rise is not an incentive then? Would you argue the same about a pay rise via a tax cut? Not heard the saying “minimum work for minimum wage”?
Thomas, productivity is measured per worker, not per capita – and as the least productive wrokers are laid off first productivty per worker increases with unemployment.
@Darien – ” labour productivity rose 48% in the period 1990-2010 but the average wage rose only 18% after CPI” Anyone with a passing knowledge of third form economic theory and of productivity and salaries would know that they are not correlated linearly, so there is no point claiming they should. Another failed argument to give control of the economy toe the unions. They already have control of the Labour Party policy after all.
@waterboy
A Google search will give you a comprehensive explanation (the Wiki one is good) on productivity (not to be confused with efficiency).
waterboy:
GDP is the best measure of productivity. It measures the (undistorted) value of all the goods and services produced in the country. And NZ’s GDP per capita is falling behind.
Why NZ productivity is falling behind the OECD is a complex issue and I am hardly qualified to discuss it, but I will make some general points.
It certainly isn’t a result of laziness. Working hard unfortunately does not guarantee high productivity. The average worker in China or India works just as hard (if not harder) than the average worker here or in Australia, but their productivity is far lower. Why? NZ has a highly skilled workforce. NZ has excellent infrastructure. NZ has a high amount of investment. And NZ is an attractive place to do business. All these factors make a big difference to our productivity and we need more of them. (Australia outperforms NZ in these aspects.)
One big problem is our underperforming export sector. We import more than we export. A big driver of that is our high exchange rate and our debt addiction.
The problem with Labour’s work and wages policy is that it doesn’t address these factors. Sure, it will raise wages in the short term, but it doesn’t help us long term.
George:
You are just twisiting my words. Saying “I will pay you more if you are more productive” is an incentive; saying “I will pay you more regardless of what you do” is not an incentive.
Thomas – you may say that GDP per capita is the best measure of productivity – but no one measures it that way but you.
Comparison of average total productivity levels between the OECD member states. Productivity is measured as GDP per hour worked.
Thus is impacted by rising unemployment.
http://en.wikipedia.org/wiki/Productivity
“something works better across the ditch – and guess what? It’s a centralised wage fixing system, where wages are set by a Fair Work Commission”
I think the Fair Work Act only just came in last year. Its probably a bit early to make a call on whether its working better.
Darien Fenton:
I agree, we need more high-productivity jobs in NZ, but we shouldn’t sit around blaming someone else for not creating them for us.
I’d like to have a closer look at those numbers if you can give a reference. Labour productivity is very hard to measure and I don’t think it is fair to equate it with wages. Not only are you ignoring salaried and self-employed workers, but you also ignore capital: a worker with a digger may be ten times as productive as one with a shovel, but that doesn’t mean she should be paid ten times more–you have to pay for the digger too.
I agree; investors, entrepreneurs, and businesspeople have the largest impact on productivity. And that’s why they well rewarded.
However, it is wrong to suggest that workers are powerless. I didn’t go to university for the fun of it!
I do not agree with this sentiment. Businesses don’t “share” their revenue with employees any more than I “share” my income with the supermarket or my landlord. In a competitive labour market, individuals are paid according to how much they contribute. And I am yet to see any evidence that that isn’t the case in NZ.
The most concerning thing on all of this is that the small minority of workers still silly enough to belong to a union can be considered a cadre
Apparently better organised workers and supported by national laws that allow this are better rewarded for their contribution to productivity than otherwise – go figure.
Care workers, cleaners and fast food and retail staff are protected by minimum wage laws – in some countries better than others.
There is no higher level of productivity by these workers in Oz, they are simply provided for by higher minimum wage protection.
I wonder if the following material (from Treasury and the DoL) would help some of the more baffled above to greater clarity?
http://www.treasury.govt.nz/publications/research-policy/tprp
http://www.dol.govt.nz/PDFs/WPWG-Full.pdf
“And that if by some freak a worker is substandard they should still be paid the ‘going rate’.” Unlike people like Paul Collins who oversee a calamitous collapse in a company, get paid $4m to leave and end up sitting as Chair on all kinds of Crown Entities and other gravy trains… not an isolated story. Look at the banker bonuses heading back up again worldwide.
Interesting take on economics here. It’s not long but worth it.
http://www.radionz.co.nz/national/programmes/saturday/audio/2502425/raf-manji-money-and-the-economy.asx
Two wrongs don’t make a right.
Let’s sort out both issues correctly, rather than allowing two situations that are destructive to our economy to exist.
@Thomas
““I will pay you more regardless of what you do” is not an incentive.”
So is a wage rise via a tax cut an incentive or not?
Do employees adjust their output according to the rate of wages paid or not? Are you really trying to assert that people work as hard for cheap outfits as they would for more enlightened organisations? If so where do sayings like “minimum work for minimum wage” come from?
“Why NZ productivity is falling behind the OECD is a complex issue and I am hardly qualified to discuss it, but I will make some general points.”
Rather than regurgitating tired old explanations cribbed from some Year Eleven economics textbook why not use yourself as a concrete example?
Where is your personal productivity falling behind that of your overseas counterparts? Why? What can you do about it?
Agreed, look forward to you applying this in all yur comments
George:
Now you are just being silly. Do you even know what an incentive is? Sure, lower marginal tax rates sharpen incentives, but raising wages by fiat is not an incentive.
Correlation does not imply causation. Employees do not magically become more productive as the result of a paying them more. The causation goes the other way–more productive employees end up getting paid more.
Beats me. Even Google doesn’t seem to be familiar with that expression.
Oh dear. You admit that some of the issues are so elementary that a good high school student could point them out. You obviously don’t have a retort, otherwise you wouldn’t resort to demeaning my points.
I’m doing fine and I’m not asking the government to give me more money. But I am asking the government to create better opportunities so that I can come back to NZ.
I know many people on or near the minimum wage who work damned hard and well for their 8 hours each day. Some people, it may surprise some here, have personal pride which is not dependent on how poorly they are paid.
@Thomas
I was trying to get you to think about the issue rather than recite a catechism.
Fortunately regardless of your beliefs Henry Ford knew from insight, and plenty of others know from observation and experience, that material wage rises can induce higher productivity.
The principle is that higher wages leads to higher demand and this lowers production cost for each good produced.
My parents have just got back from Aussie, they say the mood of the Unions is set on disruption, strikes, wage claims with no regard to economic reality or what citizens they disturb, and all since Gillard got rid of Work Choices. So keep believing your regressive changes won’t negatively effect our economy comrade.
Jeremy – I have a friend who would vote for Santa Claus if he ran for National.
George:
That’s rich. You are just reciting crackpot dogma and demanding that we run our economy based on your theories.
Let’s see what wikipedia has to say about your little story.
See. Like I said, he didn’t just raise wages and see productivity magically go up. He raised wages to attract and retain better workers.
Also, while we are at it, let’s see Ford’s view of unions.
And let’s not forget that Ford had a net worth of $188 billion in today’s dollars—much higher than Bill Gates. So he was hardly a closet communist.
So Ford is a rather poor example to pick to promote Labour’s policies.
He quite liked the government of Germany in the 30′s and 40′s too didn’t he?
Correction to above, he didn’t mind his subsidiaries maKING MONEY FROM GERMANY DURING THOSE TIME PERIODS.