Thursday, June 15, 2006



The headline says it all

Cullen warns against large pay rises after getting 8.1pc

And this is a Labour government, you say?

13 comments:

It's a fair cop in a sense, except that Cullen doesn't set his own pay.

Also except for the rather more important point: if everyone in the economy was getting 8% pay rises, inflation would be spiralling out of control and interest rates would be up at double digits.

Posted by Jordan : 6/15/2006 09:39:00 AM

See you on the Clean Start March today Jordan?

http://indymedia.org.nz/feature/display/46177/index.php

I assume Cullen will be putting in his apologies. ;)

John Anderson

Posted by Anonymous : 6/15/2006 09:49:00 AM

And yet he's happy to take it, rather than refuse it on the grounds that it could lead to inflation.

As for the wider point, I've yet to see anyone explain why workers on the minimum wage who rent their accomodation (or indeed, anyone other than an economist) should give a shit. Yes, inflation is a Bad Thing. But the lived experience of ordinary people is that prices have already increased, and it has become notably more expensive to (e.g.) get to work in the morning, or pay off the mortgage. Why shouldn't they demand that wages increase to match, and fight hard to get those increases?

Telling people to suck it so that others can benefit from their restraint just doesn't cut it - particularly when those at the top are still handing themselves big fat pay rises while drinking champagne.

Posted by Idiot/Savant : 6/15/2006 09:54:00 AM

Oh hell, I was meant to post about that, wasn't I?

Posted by Idiot/Savant : 6/15/2006 09:55:00 AM

cullen may not set his own pay. But it seems rather more than coincidental that the higher salaries comission keeps recommending pay rises for politicians (and that applies to ALL parties). Im not saying "conspiracy" but it is a very tidy arrangement. Personally i think that comments like this are extremely offensive when coming from a public servant who gets yearly pay rises of a greater % than ordinary workers ever see. also where is the condemnation of the raft of money lending organisation with exorbitant and restrictive intrest rates and the growing practice of 100% finance? neither the government or the reserve bank seem to have anything to say on the matter. Im no economist, but isnt part of the equation "how much are we borrowing"?

fraser

Posted by Anonymous : 6/15/2006 10:06:00 AM

Not today John - I have to go to Akl for a work meeting on 2pm flight, too busy to get away :( Otherwise I'd be there and there ought to be a good few YL people there too.

I/S - he could refuse it, or he could take it, and it would not make a jot of difference to inflation. The traditional economic notion is that inflation hurts low income earners (who can't adjust pay easily) and asset owners. It helps those who owe money thru devaluing debt.

If you are saying that inflation shouldn't be worried about on the basis that it will only shaft the middle classes, not the poorest, well I'd have to disagree with your premise and with the political sustainability of it...

And i'm not sure who is a public servant in this discussion? I'm not one. I didn't think I/S was one?

Posted by Jordan : 6/15/2006 11:27:00 AM

Jordon: sure, Cullen refusing his pay rise wouldn't make a jot of difference - but it would send a clear message. Really, if our (highly paid) business and political leaders want everyone to pull together and forgo wage rises to fight inflation, they should start by putting their money where their mouth is. Otherwise they just come across as hypocrites.

And yes, I think the government should worry about inflation. What I'm not sure about is why anybody else should. From an individual perspective, we can all make the same argument as Cullen - "my pay rise won't make a difference" - and the financial incentive points one way: regardless of what inflation does, we are no worse off pressing for a pay rise than we would be anyway - and substantially worse off if there is inflation and we don't get one. Better then to fight for the pay rise, and bugger the macroeconomic effects. At least that way you're not going backwards...

Posted by Idiot/Savant : 6/15/2006 11:45:00 AM

My suggestion is to adopt something like the last amendment to the US constitution (27th?) that says if congress vote themselves a payrise then it ahould wait until after the next election. I know Cullen didn't give himslef the rise, but the principal would be the same: in order to qualify for more money you need the confidence of the people. (BOCTAOE: According to wikipedia the cunnig pollies have got around it by awarding themselves cost of living allowances that circumvent the requirements of the amendment, so there would need to be tweaks)

Interesting amendment in that it was proposed by Madison, sat around for 200 years and was passed in 1992, for those of us who are interested in the US constitution.

Frankly, I don't begrudge politicians their salaries, but it doesn't look good, does it?

Posted by PabloR : 6/15/2006 11:52:00 AM

jordan,

Cullen = public servant

You and I/S = not public servant.

I am of course presuming that you were refering to me when you said that you werent sure who was a public servant.

I like the idea of pay increases set back till after an election. My only worry though is that it would just be another tool for grandstanding during an election.

fraser

Posted by Anonymous : 6/15/2006 12:03:00 PM

"Cullen doesn't set his own pay". Points for ingenuineness. He's not exactly in the same position as workers who have to strike to get an increase and if he was unhappy he has the power to legislate to his own financial advantage. I'm not really that left anymore but even I can still understand the reality of power imbalance.

Odd to hear lefties say that giving more money to the rich isn't infaltionary but giving money to the less well off is. Makes one sympathise with Trotter.

How about some sort of incentive sytem? Link MPs salaries to a fixed multiple of the median wage and any increases linked to rises in that. Succes will bring rewards.

It's also one issue where business leaders need to clean up their act.

Posted by Neil Morrison : 6/15/2006 12:59:00 PM

He may not set his own pay, but then neither does he have to bargain with his boss (Helen?) for a few more dollars like all of us. I know I wouldn't mind an independent body that could make annual, legally binding decisions on my pay. Funny, it sounds almost like collective wage bargaining as there once was in Australia. Of course, we all know what that led to... a comparatively high wage economy with a lower cost of living and a distinct lack of hyper inflation.

Posted by Writeboy : 6/15/2006 10:30:00 PM

The higher salaries commision (or whatever the latest spin is) sets MPs pay relative to the increases of executives throughout the country.

MPs then went on to set up state owned enterprises (OWTLSI) that create thousands of worthless high-payed executives.


And the rise in oil prices still isn't inflation, and people still can't boost wages to cover it.

Posted by tussock : 6/16/2006 01:27:00 AM

Why not just set all MPs pay at a fixed multiple of the median after-tax, before-benefit national income?

Posted by Duncan Bayne : 6/16/2006 10:09:00 PM