The government’s announcement today of a 50 cents an hour increase in the minimum wage has left me feeling both relieved and depressed.
I’m relieved because at least the increase is 50 cents an hour, rather than the miserly 25 cents an hour in last year’s minimum wage increase – even if it still leaves a minimum wage worker only 20 cents an hour better off in real terms than they were after National’s first minimum wage increase in April 2009.
But I’m depressed because of another lost opportunity to do something tangible about soaring income inequality in New Zealand.
The government, despite its crocodile tears and phony concern about poverty and the impact on families and children has ignored what would have been a significant step in addressing income inequality.
But I’m relieved that there is almost a majority in parliament for increasing the minimum wage to $15 an hour, with Labour, the Greens, Maori Party and NZ First all condemning the government’s short sighted decision today. The only party that stands in the way of that happening is the one man band ACT Party – whose only comment today has been to criticise the government’s increase in the new entrant and trainee rate to $10.80 an hour. (Sorry, United Future could be a game changer on this, but don’t hold your breath).
Should be an interesting one to watch.
If we waited for our employers to invest as much per worker as the Australians in equipment and R and D … we would be waiting a long time before increasing the minimum wage.
This is one reason why tax cuts for business should be focused on incentives to reinvest profits in these areas, rather than being applied across the board.
Yep. NZers prefer to do up the bathroom on their rental and then flip it for a quick buck then put that money in R&D, product development or starting up an enterprise which employs full time staff. The wealthy aren’t “job creators” – its more profitable to destroy jobs.
If the current level of minimum wage and youth wages is reassuring for employers – who’s churning out the new jobs, then? Who’s hiring the many already laid off, and the newcomers to work?
Is the 90 day thingie not working as planned, then?
And, if the current employment levels are supposedly ‘lean and mean’ – who’s fool enough to risk market position by dropping morale through overworking people rather than increase capacity, just to show faux indignation at providing an insultingly small pay rise?
The proportion of innovative, inventive, and groundbreaking enterprises to the mass of humdrum comfort-zoners in this country is scarily small. Entrepreneurs all over? Not. Got as far as the Beamer and the bach before running out of steam. Easier to under-pay than stir the brain cells back into biz activity.
Yep. The descriptions “risk taker” and “job creator” need not apply to many ‘business leaders’. Hence why so many are keen on investing in the power SOEs (instead of putting that money into starting new productive enterprises). They simply want a risk free rate of return, and the power companies provide that.
As I understand it this same motive ‘risk free rate of return’ is what has lead to the futures/derivative markets to flourish, creating plenty of money, plenty of debt, causing plenty of ordinary people to lose their money due to regulated banks becoming connected with this market. This sector has created a culture of not investing in productivity.
This phenomenon, however isn’t the problem, the problem is people asking for higher minimum wages, that is what is causing low job creation, not that the people/corporations with money having found a neat little gambling game to grow their money, that allows them to make a tidy profit when it all comes crashing down too, rather than investing it in something productive.
Don’t hear too many politicians talking about this subject.
I guess that is because it will have far more impact with regards to job creation to keep wages low than to address the monumental devastation being caused by our global financial activities.
Its all low wage earners fault for not having gone to university/training, had the right connections, renounced their consciences and gotten into the financial circus sector. Yes, its all about choice, not how our society is mismanaged. Bring those slogans on, keep us in the dark, keep us voting for the wrong things, it doesn’t matter, as long as you are all right Jack, she’ll be right.
Can those who oppose the raising of the minimum wage to $15 per hour explain why National hasn’t abolished all income tax, instead of just having a policy to “lower” it. If lowing tax is good for the country and productivity then why not drop it to zero?
This is not so simplistic as
Business owner good – Employee Bad
or
Business owner bad – employee good
Why not have targets, isn’t that what the sportspeople we so laud have. They don’t always reach them but it gives them reason to work hard and climb the mountain.
A buusiness owner has some flexibility about their income – they have greater flexibility within their business to alter their own standard of living (with the responsibilities and headaches that come with it) – employees particularly minimum wage employees have significantly less felxibility (and their worries are more about paying the familie bills but they dont have to worry about the actual work when they go home).
Can we all agree that having people struggling to clothe and feed themselves and their children is not a good thing for NZ? The more people who struggle with
these things while working, the more society will have to create a net for them when they retire.
Workers need to start owning the enterprises that they are employed by. Worker co-operative enterprises with a democratically chosen executive and board. Make the employer and the employee the same. This is democratic socialism.
@Joel “If I have $5, and a pie costs $2.50, I can buy two pies.
If the price of a pie goes up to $3.00 I can no longer buy two pies.”
Not a credible argument, but let’s pretend it is. If the price of a pie goes up to $3.00 and I have $6 instead of $5 due to a higher minimum wage, I can still afford 2 pies…
“jennifer says:
February 9, 2012 at 4:40 pm
Darien, I am genuinely interested to know where you think money to pay wages comes from. I’m not trying to be cute or smart. It is a fair and reasonable question, and I really would like to know your answer. If you have one.”
Hilarious, you genuinely think you’re not trying to be cute or smart? Or are you just being cute and smart? Revenue pays the wage bill but I’d love someone to explain why jobs would be lost if the minimum wage was increased to $15 an hour, bearing in mind that wages are a tax deductible expense so should have no impact on profit?
@ Viper, you will find there is already a way to do this, called the stock market. I like your thinking. Buy shares and have a say in governance and management. Might catch on?
Actually research shows that profit-sharing with employees leads to greater productivity and “ownership” of the business, also leading to greater idea input from shop floor.
Tracey, why don’t you start a profit-sharing business, if they are so profitable and productive then?
Colonel Viper, how many people do you currently employ, and how many of them do you pay substantially more than the market rate?
@IMpact
Why do you continually pose red herring questions?
See what I did there? (sorry Colonial Viper…)
@jennifer
You do know that small shareholders have almost no say in how a company is run and governed right? About the same (and possibly less depending on the company’s HR / engagement policies) than most workers.
jennifer – the stock market is not an answer for small firms under say 10 employees – which is the vast majority of NZ employers. Further no NZ listed company is run democratically by either management or workers.
IMpact – sorry mate that’s commercial in confidence. needless to say that I too am a “wealth creator”
No you’re not, Viper, you don’t have a job and you don’t employ anybody. If you really believed in cooperatives you’d go and start one yourself, and convince your friends to invest in it. You’ve got some great theories but the fact you’re too gutless to carry them out is the exact reason they don’t work in practice.
IMpact
I know you are but what am I. Yes you are. No you’re not. Na-na-na-na-na.
“We should demand the absolute best, no matter what set of reproductive organs any candidate possesses.”
I couldn’t agree more and we currently sell ourselves and our country short in business by not adhering to this.
NZ employers are essentially subsidized by the state via working for families, in order to suppress wages and maintain our low-wage economy.
Could any of us live on $15 an hour and feed & clothe a family adequately?
The other point is that in the 1960s and 70s a family was adequately sustained on the income of one wage-earner. Feminism produced great gains for women, but one negative produced inadvertantly was in real terms the halving of incomes, as women wanted the ‘right to work’, but this led to the situation we have today, whereby it takes two full-time wage/salary earners to support a family.
I know. I raised two.
Excepting those employers that don’t want to pay anywhere near a living wage, if $13.50 per hour is all some can actually afford to pay their staff, then they’re not really very good at running businesees and should perhaps consider a paye position… Though of course in a low wage economy of their making, good luck in screwing the new boss for a raise
In addition to my remarks above, may I add that NZ employers are also subsidized in real terms by the various City Mission and Salvation Army foodbanks, who report year in and year out, how the numbers of people utilising their heaven sent services are increasingly wage-working NZers on the minimum wage.
God Save NZ. God save Godzone.
Organise, don’t demoralise. Strategise. Work wise. It won’t happen over night, but it will happen
Great debate everyone. Have been reading your comments…….
Darien: “Have been reading your comments…” – so tell me, will Labour be developing some legislation based on Colonial Viper’s recommendations around “Worker co-operative enterprises”?
If this leads to better wages and less unemployment, how can it be implemented?
P.S. – Colonial Viper – in case you get the wrong idea about my comment, I’m genuinely interested in whether an idea like yours can get off the ground. I see a lot of people say ‘we should do this and this’ but then nothing happens. I think there is some merit in your idea, but it needs to gain traction.
@Father Tim – not on the agenda at the moment, but always happy to explore. I’m not convinced about worker cooperatives – on many occasions in my past life, where work was contracted out, it was suggested the cleaners buy the business and work for themselves. Always seemed to me that the idea was fraught with complexities – and I’ve seen the margins of those who become franchisees for example. I’m more interested in the German model of worker participation – but ideas always up for debate in Labour and that’s why we have a policy process for members.
And Iri : on the button.
If you want to look at the German model Darien, then you also need to take a serious look at our banking system and all almost complete lack of business to government co-ordinated strategic planning.
It all needs to tie together.
The minimum wage in Oz is $15.50 an hour (2011).
It will probably rise to at least $16 this year.
Our currency is currently less than 80 cents Australian.
http://www.gisborneherald.co.nz/article/?id=26479
Good Post Darien, and the 77 responses is pretty indicative of the interest around he minimum wage issue. As several people have commented Australian workers are entitled to $15.50 an hour minimum wage, but for most workers this is irrelevant because Australia has arbitrated binding minimum rates for each industry, which are largely all above this. The minimum award rate in cleaning, for instance, is $16.57 an hour and on top of this they have penal rates for night work and weekend work, which don’t exist in NZ. Cleaners in the Sydney Central Business District are all paid $21.00 an hour, which is about 50% above their Wellington and Auckland equivalents.
Our current system of wage setting in this country is broken and a stingy 50c an hour increase to the minimum wage is not going to fix it.
I agree that worker co-ops would face the same competitive and cost pressures as any other business in the industry. Industries with entrenched minimal profit margins are not going to suddenly become more profitable just because worker co-ops operate within it. Also I agree that there are plenty of owner/operators in this country who have found out that “being the boss” is not all that it is cracked up to be, especially if trading conditions are tough.
However, where the co-ops become very powerful is in industries where there is strong profit generating potential, because those profits could go back to the workers instead of to a few, sometimes foreign, shareholders. IT, banking, high value manufacturing, farming, forestry would all be examples.
The example I would use of a worker co-op is the famous example of Mondragon.
http://www.ownershipassociates.com/mcc-intro.shtm
This is a worker co-op which is over 50 years old and is today a sizeable multinational corporation in its own right.
The other aspect of worker co-ops not to be underestimated is their democratic nature. Workers in those co-ops would experience the democratic process occurring in very real day to day ways at work. Which will inform them about the democratic processes outside work that they can participate in with their new found skills.
recent Radio NZ shows on cooperatives, etc.:
http://podcast.radionz.co.nz/ideas/ideas-20100725-1106-Ideas_The_Cooperative_Economy-048.mp3
http://podcast.radionz.co.nz/ideas/ideas-20120212-1105-ideas_for_12_february_2012-048.mp3