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Posts Tagged ‘wages’

Labour’s plan for lifting wages

Posted by on October 18th, 2011

There’s been a lot of debate and hard thinking in the Labour Party about the current Employment Relations framework and how it could be part of a cohesive whole in building a high wage, high skill, high productivity, high value economy. The Global Finance Crisis has provided, if nothing else, a chance to rethink the last 20 years of our Employment Relations system, which if we are honest, is still pretty deregulated in New Zealand. The IMF, the OECD and a myriad of economists both here and abroad have, in recent times, pointed to low rates of collective bargaining in first world countries, including New Zealand, as a contributor to the global financial crisis and the high ratios of household debt to income.

Despite Labour’s changes to the Employment Relations Act in 2000 (which were pitched as being “extreme” by some in business at the time), only 9% of New Zealand’s workforce in the private sector are covered by collective agreements. Our government, the Minister of Labour and Labour Department officials go merrily off to the International Labour Organisation every year, confidently asserting that New Zealand’s labour laws provide for the freedom to join unions and collective bargaining rights, yet they know that that reality for the vast majority of workers, accessing these rights is high risk and for many, simply not realistic. So, while the Employment Relations Act theoretically provides for collective bargaining as a means of recognising the inequality of bargaining power, the truth is that most workers’ wages and conditions are still set unilaterally by their employer.

Labour’s wages policy reasserts our founding values of fairness at work as fundamental to a fair society. We aim to help lift wages in New Zealand across the board and to help stem the drift to Australia of our workforce. New Zealand’s economy must be lifted from a reliance on low wages and longer hours to an investment in more productive workplaces where high trust, high skill and high wages are the success indicators of New Zealand business and jobs. And we cannot truthfully talk about social policy and tackling poverty unless we talk about low wages and how to deal with them.

A critical first step, and one which will help the lowest-paid workers directly, is an increase in the minimum wage to $15 an hour, which Labour has long signalled.

But it will take more than improvements to the minimum wage to deliver decent wages for all New Zealand workers. The experience of the past twenty years shows that New Zealand’s current labour market arrangements have led to lower pay for New Zealand workers. Lower pay means New Zealand businesses face fewer incentives to lift productivity and lift investment in workplace, or in workers’ skills and education. It’s a vicious cycle: low wages and low productivity, with New Zealand families bearing the consequences.

Labour’s plan will tackle this long-standing problem. We will amend the Employment Relations Act 2000 to implement a new framework where better pay and standards can be extended through Industry Standard Agreements –  a new form of agreement under the Employment Relations Act (ERA) – that builds on the the existing individual, collective and multi-employer collective agreements that the ERA currently provides for.

An industry union or employer will be able to apply to a Workplace Commission for an Industry Standard Agreement. The Commission would determine the “norm” of the standards already applying in collective agreements in the industry and “extend” those to all those workplaces in the industry where there is no collective agreement.

Employers and unions will still be able to negotiate collective agreements for their enterprise as an alternative to the Industry Standard Agreement. Individual Agreements can still apply, but cannot be less than the Industry Standard. Workers will not have to join unions to be part of an Industry Standard Agreement, but unions will have access to workers in the industry to talk about the standards and other rights, as they do now.

This model of “extension” is widely used in successful economies and the adaptations in Labour’s policy will continue to enable unions and employers to bargain directly with each other when that is the most effective approach. It’s nowhere near the centralised wage fixing approach of Australia.

Industry Standard Agreements are about improving the pay of New Zealand workers. It is part of the wider structural change that needs to occur in the New Zealand economy. Labour has already signalled other changes such as tax, monetary policy, research and development and our yet to be announced savings policy.

There’s a lot more detail to our work and wages policy,  but that will have to wait for further posts.


Trickle down no more

Posted by on October 16th, 2011

On the last day of Parliament, I asked the Minister of Labour a couple of questions about wages. Minister Tony Ryall answered on her behalf and as a True Believer in the one market way he spouted the old trickle down theory.

“This is one of the reasons why the Government is focusing on growing and building a strong, growing economy, because a strong, growing economy will give all New Zealanders the opportunity to benefit in higher wages. “

Say what?

The truth is that working families and other middle income kiwis are finding it harder by the week to get by because the cost of living is rising and incomes aren’t keeping pace.

Over the last 3 years, median household income rose 1.4% while consumer prices rose 9%. The gap between high income earners and low income earners is growing, and the gap between New Zealand incomes and Australian incomes continues to get wider

Isn’t this the government that promised that it would stop our workers leaving for Australia by closing the wage gap? And hasn’t it blown out to 38% in the last three years?

New Zealand workers aren’t paid enough. We still believe in the old maxim “a fair days pay for a fair days work” but our rules don’t deliver that.

Labour will be changing the rules. We need some new ideas. Watch our for our policy announcement  this coming Tuesday.

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Filed under: policy, wages

Blue, Harry, Trotter – then and now

Posted by on September 26th, 2011

Chris Trotter has strong opinions, when I get the time to follow him – which isn’t often. But this short story, about Blue and Harry, stalwarts of the good old days of unionism, has turned up on my media monitoring, repeated in every little down-home country paper throughout the country. Blue says :

“I heard that Darien Fenton woman talking on the radio the other day – Labour’s industrial relations spokesperson. You know what she says?”

“What did she say?”

“She says: ‘Nobody on the Left is calling for the reintroduction of compulsory unionism and national awards.’”

“Never asked us”, said Harry.

“No, she bloody didn’t”, muttered Blue. “But I know what I’d like to ask Darien Fenton. I’d like to ask her how much longer Labour’s going to let this wretched experiment in voluntary union membership go on before declaring it a failure?

“Ninety-one out of a hundred, Harry. Ninety-bloody-one! That how many private sector workers lack union protection. Hundreds-of-thousands of ordinary Kiwis stripped of the ability to negotiate with their employers on equal terms. To look the boss in the eye and say ‘no deal’, without being sent down the road.”

Yep, well Blue and Harry (and Trotter) have got that right. There’s only 9% of private sector workers covered by unions and collective bargaining in NZ.  It’s not a NZ only situation –  and there’s plenty of international evidence mounting now, including from the IMF and the OECD, that the decline in unionism and collective bargaining has contributed to rising inequality and even the GFC.

I honour the commitment of the Blues and Harry’s and of those who followed them. I’ve worked in workplaces where there’s been strikes for weeks on end. I have my share of war stories, just like many Labour MPs (and they’re not all glorious). We worry about leaving the next generation much worse off than the one we inherited from their struggle. But the world has sadly changed. In Blue and Harry’s day, a casual worker would have been unheard of. Working the weekend for ordinary rates would be a strikeable offence. But women getting equal pay, paid parental leave, domestic leave and four weeks holiday were also just as unthinkable, so it’s not all about what happened yesterday.

That doesn’t mean there aren’t injustices, low pay and exploitation. There is plenty to go around.

But Blue and Harry would find today’s workplace unrecognisable and while we learn from our history, yesterday’s solutions aren’t the only solutions for today’s problems. Try, for instance, telling a young IT worker they should be compulsorily bound to a union.

So, Blue and Harry (and Chris Trotter) be patient. Talk with me if you want – anytime. Labour’s policy will be announced soon. We will be standing up for workers, and as we have always done, standing up for the poor and the lowest paid, and taking into account the fragmentation of the labour market, the huge inequalities that have developed, and the need to create a fairer society for everyone.


State subsidised wages or bargaining equality?

Posted by on April 29th, 2011

I’m doing this post knowing that it will send the right wingers scurrying to their keyboards in a high dudgeon, but it’s a risk I’m prepared to take. Because, like it or not, we have to have the conversation about the how the inequality of bargaining power has contributed to NZ’s low wages.

I was surprised to find this article in the NZ Herald which very succinctly outlines the link between weakened collective bargaining rights and low wages. The authors, Andrew Gawith and Susan Guthrie, describe how the era of the 1930s and 1940s were labelled the “Great Compression” because the gap in incomes between the haves and the have-nots narrowed significantly.

“The policies that delivered this compression – including a strengthening of collective bargaining regulations, which provided a floor to wages and high tax rates on capital – were follow by unprecedented income and output growth that persisted until the 1970′s.”

By contrast, economist Professor Paul Krugman describes the post-1980s as resembling the “gilded age” of the 1920′s – one characterised by a high and rising concentration of income in the hands of a narrow elite.

Gawith and Guthrie ask :

Do our current labour market laws and institutions deliver the wage “floor” that Krugman (and the IMF) see as valuable to lifting output and incomes?
The fact that we have had to introduce a significant income subsidy – Working for Families – suggests not.

The Employment Contracts Act 1991 undermined the bargaining power of workers, which probably goes some way to explaining why from 1992 to 2009 average real output per worker rose on average by 2% a year, but real wages rose at less than half that price…….”

They go on to describe how the Labour Government recognised that wages were too low, particularly for those trying to raise a family and how Working for Families was introduced to top up the incomes of low and middle income wage workers.

Gawith and Guthrie acknowledge that Working for Families has definitely alleviated financial stress among low and middle income families, but they say it has distorted “market signals”.

Low paid jobs are a traditional route for younger workers to get more experience. However, under Working for Families, low-paid jobs are more likely to be accepted by older workers with dependents; their living costs are higher and not normally covered by a low wage, but unlike younger workers, their take-home pay (thanks to Working for Families) can far exceed what the employer pays.

That’s an interesting proposition. Not sure if I totally agree, because my experience of low wage workers is that’s it’s far more complex than that. However, they make the point that experienced workers being employed in jobs that don’t use their full potential detracts from productivity growth and because of Working for Families, they are employed at “artificially” low wages to the detriment of workers without dependents.

And I like this :

Rather than chasing the dream of matching Australian incomes, let’s first make sure workers with families can live with dignity from the wages their employers pay them instead of having to rely on selective income subsidies from the Government. That may involve giving workers more bargaining power to negotiate an increase in their share of national income. That should be a step towards narrowing the distribution of income and wealth in New Zealand which has broadened over the past three decades and may be cramping our ability to grow.”

And this :

“Joseph Stiglitz states that ….”growing inequality is the flip side of something else : shrinking opportunity. Whenever we diminish equality of opportunity, it means we are not using some of our most valued assets – our people – in the most productive way possible.”

Expect to hear more from Labour on these themes.


The Wage Gap

Posted by on July 28th, 2010

Before the last election the wage gap with Australia was John Key’s #1 issue. Key even went as far as to say that the ‘fundamental purpose’ of his government would be to narrow the gap. Listening to Gerry Brownlee and John Key in the House today and yesterday, apparently the problem has been solved already.

Yesterday Brownlee claimed that the gap ‘is certainly a lot less than it was when Labour was in office’ despite the fact that it has blown out by more than $50 a week since National took office. In the last quarter, according to official statistics, Australian wages have increased by $17 a week, compared to $3 for Kiwi workers.

Kiwi workers will fall even further behind from October when they will be paying a consumption tax (GST) that is 50 percent higher than in Australia. We have caught up with Australia in one respect though, when National took over we had a lower unemployment rate – they’ve managed to turn that around in 18 months!

So where is John Key’s plan? Smiling and waving for the cameras won’t get us there. As Annette King said in the House yesterday, “It’s time for the Government to stop kicking the tyres, put some petrol in the tank. start the engine and go somewhere!”. Couldn’t have said it better…!


Bed making challenge

Posted by on June 22nd, 2010


Locked out

Posted by on June 21st, 2010

Today I went to support the locked out staff at Auckland’s 4.5 star hotel, the Rendezvous – that’s the staff who keep the hotel clean and help provide an enjoyable stay for hotel guests. This trans-national hotel chain is offering a measly pay increase of 1.5% from now (no backdating) for two years until 2012.

The last pay increase was in January 2008 so the workers have already been 18 months without a pay increase. And there’s a catch. The employer wants the workers to give back one day’s sick-leave, to increase the costs of staff parking and remove a subsidy for health insurance.  The Rendezvous says this is the final offer and the workers have been locked out from their jobs until they accept it.

Look at these workers.  Are they militants?  Are they highly paid?  I don’t think so.  One housekeeper told me that she is expected to clean 18 rooms a day – an increase in 4 rooms since the Rendezvous took over the former Carlton Hotel.  Isn’t this a productivity increase?  Isn’t this supposed to deliver better wages?

This is a disgraceful overreaction from a hotel that will be looking to cash in big time come the Rugby World Cup.

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Wages are the big issue

Posted by on June 9th, 2010

Wages are the real issue in NZ (as opposed to tax cuts) but they are also the big story of the day in Shanghai. Not, perhaps what people might expect. The story here has not a very pleasant basis. Foxconn the manufacturer for major technology companies such as Apple and Dell, and currently producing millions of I-Pads has been rocked by ten suicides at it Shenzen plant in Southern China. The response has been a commitment to a (relatively) massive wage increase of 122% for workers at the Shenzen plant from the 1st of October, and other big increases at Foxconn plants in China.

It is easy to be cynical about the company’s motives here. There has been considerable concern about the conditions that Foxconn workers have worked under, though the company (and Apple and others) are adamant that these are not sweatshops.

But I am told that the real story here is of the growing strength of workers in the South, and of the days of them accepting such low wages being over. Its really hard to tell as a visitor, but what I read says there have been significant wage increases in other areas as well, as the pool of available labour reduces. Of course we can not forget they are coming from an incredibly low base, but there is a sign of real movement. The response has varied from threats of moving production to India or Vietnam, to the likelihood of increased prices for I-Pads and the like. Whatever the case it seems that the “dignity” of workers as the Chief Executive of Foxconn has described as being behind wage increases may be a very significant factor in the future of this country.

Ok, off to Expo now for Young Leaders Forum and Wellington’s big film and business night. Report to follow.


Aussie loses rugby basketball but wins on wages

Posted by on September 3rd, 2009

John Key correctly identified the wage gap between NZ and Aus as an issue pre election. NZIER says stemming the flow of skilled workers to Aus will be vital to our successfully charting our way out of the current recession.

Yet John Key says his plan is for 2025, and in the interim the gap is increasing because his government is suppressing wages wherever it has a chance.

How can this make sense?


Key to Detail Solutions for Economy – Don’t Hold Your Breath

Posted by on July 14th, 2009

John Key has signalled that his major speech in the morning will detail solutions for the economy.

Remember Key’s promise to bring wages up to the Aussies.

Every move of this government have us headed well south of that.  Aussies stimulated well, had a much shorter downturn.

Maybe we will get the plan tomorrow – but I’m not holding my breath.