Government says "Fuck the poor"

One of the big achievements of the two previous Labour-led governments was regular, large increases to the minimum wage. These lifted incomes and helped drive wage growth for all workers, while incentivising employers to invest in productivity and technology rather than low-skilled production. Well, that's definitely over now, with the government ordering a sub-inflation increase:

Minimum wage workers will get a 2% increase from April 1, when the minimum wage rises from $22.70 to $23.15.

That is despite a warning from the Ministry of Business, Innovation and Employment that an increase below the rate of inflation could make it hard for minimum wage workers to keep up with the cost of living.

Inflation was running at a rate of 4.7% a year in the 12 months to December.

And lest anyone forget, a sub-inflation increase is effectively a cut. So National is deliberately cutting the real wages of the poorest workers.

Reading the Cabinet paper its even worse, because employment minister Brooke van Velden wanted only a 1.3% increase, on the basis that it had increased above inflation since 2018. MBIE recommended 4%, to almost keep pace with the PREFU inflation projection. The overwhelming tone of that paper is of the Minister - a woman who is paid $296,007 a year plus slush - saying "fuck the poor". Which seems like a strong argument for Ministers to be put on the minimum wage, to see how much they like it.

What is wrong with Labour?

On April 1, the government raised the minimum wage to $21.20. At the time, I thought it was an example of the progress you get under Labour. But there's a nasty twist:

Workplace Relations Minister Michael Wood wanted the Government to increase the minimum wage from $20 to $21.40, before Cabinet eventually worked him down to $21.20.

A Cabinet paper shows officials from MBIE recommended an increase to $21- a real-terms pay cut for roughly 160,600 minimum wage workers, as the increase would have been lower than the rate of inflation. Wood overruled this in his advice to Cabinet, and pushed for a larger increase.

Officials also presented Cabinet with a compromise option, which was to increase the minimum wage in line with the four-year average of annual increases under the current Government.

This would have seen the minimum wage increase to $21.25. Instead, Cabinet opted to undershoot that and landed on an increase of $21.20.

As the article makes clear, Wood stood up for Labour's professed values, pushing for a larger increase to drag wages up across the board, while encouraging employers to invest in increasing productivity (which in theory increases wages even further). The fact that the rest of his party rejected this in favour of something less than even MBIE's "Goldilocks option" casts real doubt on whether Labour subscribes to those values. Instead, they just seem to be pushing NeoLiberalism and protecting the rotten status quo, rather than supporting the people who vote for them.

Delivering last term's promises

The government will raise the minimum wage to $20 an hour from 1 April. Good. Not only will this help people on the bottom by giving them an immediate pay rise - it will also help ratchet up wages for everyone else as well. But let's not forget that this is last term's promise, agreed in their coalition agreement with New Zealand First - so Labour is simply doing what it said it would in 2017. As for this term, they've promised further increases, but nothing specific. That's probably something we can trust them on, but the lack of any specific target means that there's no accountability for whether they're meeting even their own expectations - or for whether those expectations are, as in other sectors, too low.

Any excuse for class warfare

The government's reaction so far to the pandemic has been what you'd expect: trying to contain it, and trying to ease the economic effects. The National Party's response? class warfare:

National is urging the Government to defer the minimum wage increase on 1 April in light of growing economic uncertainty due to coronavirus, Opposition Leader Simon Bridges says.

“Businesses are facing substantial cost increases when the minimum wage goes up on 1 April. With many industries already feeling the pain of the coronavirus outbreak, this additional cost will hit them hard.

“We are urging the Government to defer the increase for six months while we reassess its affordability during this fast-developing economic situation.

Of course, they were demanding this before the pandemic became a real threat as well, which shows you that it is just an excuse. For National, the policy is keeping the poor poor and the rich rich, no matter what the circumstances.

National wants lower wages

Just days after talking about how people feel "squeezed" and promising tax and service cuts as a "solution", National is talking about cancelling a rise in the minimum wage if elected:

National is considering scrapping the Government's planned minimum wage increase if it wins this year's election, the party's finance spokesman Paul Goldsmith says.

The Government has progressively been increasing the minimum wage and promised it would reach $20 an hour by April 2021.

But, speaking to RNZ this morning, Goldsmith said National was considering putting a stop to this.

If they were really worried about people feeling poor, they'd be supporting a higher minimum wage, because increasing the minimum ratchets up wages for everyone else. But it seems that that is precisely what they want to avoid - because higher wages for ordinary kiwis means lower profits for National's big-business backers. So instead, they're promising to keep people in poverty, and cut the services they need to get by, so they can channel more money to their rich donors and cronies.

The one thing the government is delivering on

Last year the government gave us the biggest ever increase in the minimum wage, from $15.50 to $17.70 an hour. This year, they're doing it again:

New Zealand's minimum wage will rise to $18.90 an hour from April 1, the Government has confirmed.

Workplace Relations and Safety Minister Iain Lees-Galloway said it would mean a quarter of a million workers were better off next year.

"The new $18.90 rate will mean an extra $48 per week before tax for Kiwis who work for 40 hours on the current minimum wage," he said.

Which means they're on track for another increase to $20 an hour in April 2021, as promised in their confidence and supply agreement with the Greens. Which will mean that they will have increased the minimum wage by 20% in their first term - which should deliver a significant benefit to workers, both directly for those on the minimum wage, and indirectly by ratcheting up other wages in response.

This is the one thing the government is delivering on. They've failed on child poverty, on KiwiBuild, and on climate change; on banning mining on conservation land, on public media, and on transparency. But they've succeeded on this. Its something, but its nowhere near enough.

Delivering

When Labour became the government, they promised (as part of their confidence and supply agreement with the Greens) to raise the minimum wage to $20 an hour by April 2021. And they're delivering:

More than 200,000 people will benefit from an extra $48 a week next year in the biggest boost to the minimum wage in its history.

The minimum wage rate will rise from $16.50 an hour to $17.70, taking effect on April 1 next year, Workplace Relations Minister Iain Lees-Galloway and NZ First employment relations spokesman Clayton Mitchell announced today.

"For a fulltime worker, this will mean an extra $48 a week before tax – enough to make a real difference for working people," Lees-Galloway said.

"The increase will benefit approximately 209,200 workers and their families, lifting wages throughout the economy by $231 million per year and making a big difference for families.

It's a great step, which will make a huge difference to a lot of people. But Lees-Galloway also laid out his expected increases over the next few years, to give employers certainty: $18.90 an hour in 2020, and $20 an hour in 2021. Which means that they will have delivered a 27% increase to the living standards of the working poor by the end of their term. Now that's what I call progress.

A bottom-up plan for inequality

Labour released its "work and wages" policy today. The headlines? Abolishing the 90-day law and increasing the minimum wage by $2 to $16.25 an hour by April 2015. Those are fairly obvious ways of delivering to their core constituency, but there's more: imposing a "good employer" requirement on all government contracts, and running a commission of inquiry into industrial relations, which will (eventually) mean a rewrite of the Employment Relations Act.

Overall, this looks to be a significant move to tackle inequality and the low-wage economy. Traditionally, we've done this by supplementing low incomes with government transfers, but that breaks down when wages are so low that you need schemes like working for families to keep the middle classes afloat. Increasing wages, both directly through the minimum wage, and indirectly through the ratchet effect and better employment law, achieves the same effect from the bottom up. It costs the government a lot less, but the downside it its potentially more unstable - people recognise immediately if a government is cutting their working for families payments (which is why National has been very careful about doing so and is instead just eroding them through inflation), but they're not so quick to notice when it effectively cuts their wages by strengthening the power of employers.

And on the gripping hand: all these policies did last time Labour was in government was stop the rise of inequality. If we want to see it actually drop, we need stronger measures, such as sharply more progressive tax rates. Labour is not committed to those measures. What they're offering is a more tolerable business as usual, not change.

Miserly

Yesterday the government raised the minimum wage by 50 cents, to $14.25 an hour. While its better than last year's miserable 25 cent increase, it still shows National's complete lack of commitment to reducing inequality and raising living standards of ordinary kiwis. But then, that's not surprising - National is the party of the 1% who benefit from inequality and from grinding people's faces into the mud; their policy goal is not to raise living standards, but to keep wages as low as possible while still getting re-elected.

Meanwhile, Labour has made it clear that their $15/hour election promise - which has since been heavily eroded by inflation - is a beginning, not an end: they're planning not just an immediate increase to $15/hour, but another substantial increase 6 months after that. Which even if they then drop back to annual increases, will put them well on course to meet that inflation-adjusted target over the term if they become government.

The new target

Yesterday when talking about David Cunliffe's promise to immediately raise the minimum wage to $15/hour, I pointed out that that totemic figure had been eroded due to inflation, and that we needed to set them a new target. So what should it be?

The $15/hour target was set in late 2007. Using the Reserve Bank's inflation calculator, its worth $17.01 now. Depending on the rate of inflation, it'll be worth somewhere between $17.50 and $18.50 by late 2017.

Will they do it? It would be a big ask, requiring not just an immediate increase to above $15/hour, but large increases every year after that as well. Labour can be relied upon for a 75 cent a year increase (roughly twice the rate of inflation), which would get them to $16.50. They'd probably need to be pushed for more. OTOH, if they make good on their promise to introduce a living wage for public servants, that would help drive wages upwards, and give them more space to increase the minimum. And on the third hand, even assuming the high-inflation scenario, they could catch it up in two terms without breaking a sweat. And that latter prospect gives them room to manoeuvre. Provided they're making strong steady progress, and clearly heading for that goal, then I think people will be happy enough.

Good to hear

David Cunliffe went to the CTU conferance today, and made some solid promises about Labour's initial agenda in office:

David Cunliffe has used one of his first major speeches as Labour leader to further outline his party's major focuses for its first 100 days in office if it wins the next election.

In a strident speech to a receptive audience at the Council of Trade Unions conference in Wellington this morning he promised to scrap National's "anti-worker" employment policies "in the first hundred days" and ensure workers a "better share of the benefits" of a strong New Zealand economy.

There would be no more "fire at will" and no more "attacks on vulnerable workers'' or "undermining health and safety" or a youth wage.

"In the Labour government that I lead John Key's attacks on workers will be gone by lunchtime," he said.

This is all pretty easy to do - National's 90-day bill, its restoration of youth rates, and its theft of lunchbreaks are all easily unravelled. A bill introduced after the election and sent to select committee over the holidays would have time to pass within the first hundred days. It would also send a clear message to employers: any anti-worker provisions they get National to enact will be swiftly reversed the moment the left takes office, so they will be of short-term benefit at most. But all that does is restore the status quo ante. What's interesting is what comes after (and on that front Labour looks pretty positive as well).

One thing worth noting though is that the totemic $15 / hour minimum wage which Labour has promised to meet was set five years ago, when the minimum wage was much lower, and has been effectively eroded by inflation. Rather than being a significant increase (as it was when first pushed), its now a slightly-above pathway one. It will be important as a sign of what's to come, and Labour has an excellent record on using above-inflation minimum wage increases to drive wage growth and equality, so I don't doubt their willingness to go further. But we really need to set them a new target to aim for.

National: Restoring discrimination

National's bill to restore age-discrimination in pay rates passed its third reading last night. So, from May 1st, National's cronies will be able to pay someone less simply because of their age. And this is apparently how National "closes the wage-gap with Australia": by cutting wages. No, that doesn't make sense to me either.

We wouldn't accept "Maori rates". We wouldn't accept "women's rates". We wouldn't accept "gay rates" or "Catholic rates". So why are we accepting youth rates?

Any reintroduction of discrimination is a backward step. But its so very, very National, isn't it? Impoverishing the young and poor to enrich the greedy old.

Miserable

The government has raised the minimum wage by 25 cents, to $13.75 an hour. Its a miserable increase which will do nothing to address the very real problem of poverty in New Zealand. But that's what you get when you have a National government focused on keeping labour costs low for its rich mates, rather than on ensuring every kiwi gets a fair go.

Meanwhile, over the Tasman the minimum wage is now A$15.96 an hour. At current exchange rates, that's about NZ$19.60. Which sends a clear message to kiwis wanting higher pay and a better standard of living: you won't get them here under National.

Supply and demand

Its January, and therefore it must be time for the usual seasonal whine from employers about a lack of unskilled workers. Normally the culprits are orchards, but this time its from Christchurch, where employers can't find people willing to work for minimum wage:

Trish Paterson, recruitment manager for Christchurch-based employment agency Ryan Recruitment, said many local companies were struggling to fill positions that required no qualifications or skills that can be learned on the job.

"It's not so much that [jobs] are not available, but in a lot of cases they are paying minimum wage and there are other employers paying more, even if it is only 50c per hour, people will move jobs for that," she said.

The company was even struggling to find people to stand with Stop/Go signs to manage traffic at road works.

As is clear from Paterson's comments, the real problem here is that the wages on offer are too low. Housing costs have risen, so people want more money to match; meanwhile, thousands have left the city, so there's a local labour shortage and they can shop around. But rather than recognise this and suggest the obvious solution - increasing wages to a level where people will take your shitty boring job - she instead suggests flooding the market with unskilled immigrants to keep wages down.

Its a perfect example of the hypocrisy of our business community - its all "free market" and "deregulation" until they're on the sharp end of it, when suddenly they want the government to intervene to set prices at an artificially low level and effectively give them a social subsidy through the welfare system. And all so they can enjoy higher profits at our expense.

If you live by the market, you can die by the market. If your business isn't profitable at prevailing wage rates, then its not profitable and should fail. Its that simple.

Submit!

The Transport and Industrial Relations Committee has called for submissions on the Minimum Wage (Starting-out Wage) Amendment Bill. Two copies, by Tuesday, 27 November 2012, to:

Transport and Industrial Relations Committee Secretariat
Parliament Buildings
Wellington

Or use the form on the link above.

The bill would effectively restore youth rates, setting a lower minimum wage for those under 20. Please take the time to tell the government that you believe this is unfair and that they should not be endorsing discrimination.

More autocracy

Consultation is one of the core underlying concepts of our democracy. When the government makes a decision, it is supposed to consult those interested or affected. So naturally, National is seeking to reduce consultation requirements around setting the minimum wage:

The Government is being accused of silencing the voice of low-paid workers through plans to streamline the way the minimum wage is assessed and set every year.

The Government considers public submissions when it reviews the minimum wage every December.

It also takes into account more than 20 factors including: unemployment, productivity, inflation and the principles of fairness, protection, income distribution and work incentives. The impact on new migrants, women, Maori, Pacific people, the disabled and part-time workers is also considered.

It is understood the Government wants to reduce that to four factors: inflation, wage growth based on the medium wage, employment and the impact on jobs, and ''other factors'' which could include changing conditions.

It also wants to only consider public submissions every four years but will consult Business New Zealand and the Council of Trade Unions annually.

And the reason for this of course is so they can ignore the voices of those affected, and the issues which they are excluding: things like fairness, equality, and the status of women and ethnic groups. because obviously, none of that matters when setting a minimum wage. its typically autocratic - but so very, very National.

Turning a blind eye to exploitation

Back in August, TVNZ exposed several Auckland businesses who were unlawfully paying their workers less than the minimum wage. The problem is widespread, and the businesses TVNZ named were just the tip of the iceberg. So what has the government done about it?

Nothing:

Businesses exposed for offering below the minimum wage are still operating and have not faced any consequences.

[...]

The Government promised a 'crackdown' on businesses exploiting migrants after the investigation.

However ONE News can reveal that the number of unannounced workplace checks has dropped, the promised education campaign hasn't been put in place and there have been no changes to labour inspector numbers or processes.

ONE News went back to China Hong Kong Restaurant, Glitter Takeaways and Smiley Mart, three Auckland businesses offering illegal wages. It found they are still open for business and the owners aren't facing any penalties.

"We can't crack down on something that's not there, that we haven't found," labour inspector Antoinette Baker told ONE News.

Reading further, the labour inspector claims they were helpless because "nothing's recorded". Oh, if only there was an obligation on employers to keep records of wages and hours so that their compliance with the law could be checked! If only labour inspectors had the power to demand those records, or to demand they be compiled if they are not kept! If only those powers could be enforced by the Employment Relations Authority!

This is not a problem with officials being helpless - it is a problem of them not giving a shit. And that is part of a wider problem of the government generally not giving a shit about worker's rights and turning a blind eye to exploitation.

This isn't good enough. These scumbag employers who pay less than the minimum wage need to be prosecuted and forced to pay what they owe. Anything less makes a mockery of the law and is a sign that it can be broken with impunity.

Miserly

That's the only way to describe the government's 50 cent increase in the minimum wage. Yes, its higher than inflation (unlike last year) - but it shows that they have absolutely no commitment to reducing inequality or raising the living standards of those outside their small clique of rich pricks at the top. Indeed, this decision is about preserving existing inequality - because minimum wage rises ratchet up wages elsewhere in the economy, and fairer wages would impact directly on the 1%'s profits.

Meanwhile, Australia has an A$15 minimum wage, worth about NZ$19.45 at current exchange rates. And the government wonders why more kiwis than ever are fleeing across the Tasman. But that, I guess, is how the market "sorts itself out": by people becoming economic refugees to get a decent wage.

Labour fails again

Kate Wilkinson's admission about her plans to lower wages by applying discriminatory youth rates to 24 year olds last night was a total gift for Labour, showing National's true, radical, batshit-insane-like-Roger-Douglas colours. So you'd expect them to have a strong response about it, right?

Wrong. Having trawled their website and Red Alert, there's nothing but dead silence and blowing tumbleweeds.

Thanks, Labour. No wonder National feels it can get away with running on an agenda of naked privatisation, wage cuts, and upwards wealth transfer: because you dicks are too fucking lazy to even voice your outrage on a core issue. Which raises the obvious question: if you won't fight for us, why should we fight for you?

Update: Jacinda Ardern has a press release up here. Meanwhile, two of Labour's senior figures have spent the afternoon slagging me off on Twitter. Stomping on disloyalty from people they incorrectly perceive as their vassals is apparently more important than contesting government policy in a key area in their book.

National to introduce "youth rates" for adults

In 2007, Sue Bradford abolished youth rates, ensuring that workers would be paid on their skills and experience - merit - rather than discriminated against solely for being young. Now National wants to bring this discrimination back. Worse, they want to extend it to 24-year olds:

The government looks set to propose the re-introduction of special lower pay rates for young workers. There are signs it may even extend the definition of a youth so that workers into their early 20s may be forced to accept lower pay rates.

[...]

National isn't ruling anything out.

When asked what her definition of a ‘youth’ was, Wilkinson said the bracket used was "15 to 24," but she had no view as long as they got jobs.

This is simply wrong. You wouldn't pay someone less because they're a woman, or gay, or Maori. So why the hell is it OK to pay someone less because they're young? It is discrimination, oure and simple. But National doesn't care about this; instead, they just want to see wages drop, so their corporate mates can make bigger profits. And they're quite happy to effectively legislate pay cuts for hundreds of thousands of workers to do it.

As for those who think youth rates affect youth unemployment, bullshit. It tracks overall unemployment, though at a higher level. That higher level is an indicatation of the pervasive discrimination against young people in the employment market - discrimination which will not be reduced by officially sanctioning it.

Correction: Corrected obvious braino.