Monday, January 18, 2010



Time to raise the minimum wage

Over on Red Alert, Trevor Mallard calls for a big raise in the minimum wage to help shift us towards a high skill, high wage economy. According to the Herald, its a move backed by 61% of New Zealanders but the Prime Minister has already ruled it out.

Officially, this is to "protect jobs" - despite the fact that minimum wage increases have no effect on unemployment. Instead, the Prime Minister is just looking out for the economic interests of his rich mates. Because the blunt fact is that National and its cronies don't want a high skill, high wage economy - they want a high profit economy, which they have consistently pursued by keeping wages down. Its the sort of stupid, short-term thinking common to our business "leaders", and its one of the reasons for our comparative economic underdevelopment. Businesses don't invest in improving productivity to work better and smarter; instead they simply hire another warm body. But its productivity growth from capital investment which ultimately drives long-term increases in living standards and makes us better off. National's low-wage policy thus condemns us to a low-skill economy and an even greater gap in living standards with Australia - the exact opposite of what they claim to want. This is very, very bad for New Zealand, but its very, very good for their rich mates, and that is all National cares about.