Wednesday, December 19, 2007

Labour delivers

It's December, so the government has raised the minimum wage again - the ninth increase since taking office. Since 1999, the minimum wage has increased by over 70% (and by around 50% in real terms) - which is a dramatic difference with National's performance last time they were in government. Between 1990 and 1999, National only managed to raise it by 88 cents (around 10%) - and even that was due to the influence of NZ First. And in real terms, there's just no contest:

(Image stolen from Kiwiblogblog. The Standard also has a useful graph here).

While business leaders and the right will no doubt wail and gnash their teeth, these increases are a vital means of closing the gap with Australia. Not only do they have a knock-on effect, with wage increases higher up the chain due to other workers' desire to preserve their relativities; by raising the cost of labour relative to capital investment, they also encourage the latter, thus helping to boost productivity and our long-term economic performance.

The next stage is to restore the relativity with the average wage. Currently, the minimum wage is around 56% of the average; the CTU wants to see it boosted to two-thirds, and the NDU is planning a strong industrial campaign next year in support of this figure. Hopefully it will succeed.