Monday, May 16, 2005

The wrong direction

Over the past few months, Don Brash has been highlighting the wage gap between new Zealand and Australia as a justification for a return to radical free market policies of the sort we saw under Ruth Richardson. But yesterday's Sunday Star-Times had an analysis of the gap with some interesting statistics which suggests Brash would be moving in the wrong direction.

Figures from Statistics NZ and the Australian Bureau of Statistics show that wage growth in Australia has easily outstripped New Zealand's.

In the five years to last November, Australians' average weekly earnings rose 27.5%, from $A801.60 to $A1021.90.

In New Zealand, average weekly incomes for the five years to last June went up 22.3%, from $619 to $757.

These figures show the wage gap between the two countries is widening, but they become an even greater cause for concern when GDP growth in each country is compared.

Over the same periods, New Zealand's GDP increased by 21.8% compared with Australia's more modest 16.3%.

That means Australian wage growth outstripped economic growth by 68.7%, while New Zealanders' pay packets merely kept pace with their economy, staying ahead of GDP by 2.3%.

This suggests Australian workers have been far more successful than their Kiwi cousins at carving themselves a larger slice of the economic pie.

And the reason for that is fairly obvious: Australians still have unions. Ours, OTOH, were smashed by National's Employment Contracts Act - resulting in a decline in wages and conditions which is only now starting to be corrected. So you'd think that a party which wanted to raise wages to be competitive with Australia would try and promote unionisation as a way of doing so, right?

Wrong. National's employment policy is a return to the bad old days of the 90's - limiting union access to workplace and the right to collectively organise, as well as slashing holidays and rights to take personal grievance cases where employers have violated their agreement. This won't achieve what they claim it will - instead, it will perpetuate the low wage, low skill economy that National established in the 90's and which we are trying to escape.

It is practically Orwellian for National to claim that screwing the workers is the road to riches. Instead, it will simply transfer wealth from the many to the few, from the pockets of employees to those of employers and business-owners, just as it did in the 90's. Our wages will continue to decline relative to Australia's, and our skill base will continue to be eroded by competitive pressure from Australia. But National's backers will be laughing all the way to the bank...

(Just Left also talks about this here)