Thursday, April 05, 2018

Why we need better labour laws

Radio New Zealand reports that workers are failing to get their fair share of the economic pie:

Workers are failing to get their fair share of the economic pie, with a study showing rising productivity has not been fully reflected in pay packets.

The Productivity Commission report found the labour share of total income slipped between 1978 and 2016, from 65 percent to 56 percent.

"Wage growth hasn't kept up with productivity growth in a one-for-one sort of way," Productivity Commission director of economics and research Paul Conway said.

"Even though productivity growth is still a key driver of wage growth in New Zealand."

The Productivity Commission talks about this as if its some mystery or fluke of nature, a completely random occurrence. Radio New Zealand implies that it is a failure of workers - silly proles, not getting their fair share! But its neither. The reason workers are getting less is because business owners have leveraged their political influence to ensure that the benefits of productivity growth go to them and them alone. Laws like the Employment Contracts Act and its successors and restrictions on the right to strike have kept wages low and let them run away with the cash.

How much is at stake? The CTU estimates that if workers were receiving the same income share as they did in 1981, they'd be $11,500 a year better off on average. Or, to put it another way, average wages are $11,500 lower than they should be. That's a shitload of money, and a significant fraction of most people's incomes. And its why we need better labour laws and a restoration of the right to strike: so workers can claim what is theirs again, and regain the living standards they used to have.