Monday, July 12, 2021

Saying the quiet bit out loud

Normally when people complain about unemployment, its that its too high. But the Employers and Manufacturers Association is complaining that it is too low. Why? Because it might mean they have to raise wages and compete for workers:

Unemployment is at present estimated at 4.5 percent and trending down. But the Employers and Manufacturers Association argues it needs to be closer to 5 percent, to make it easier to recruit and retain staff, and constrain wage inflation.
This really is saying the quiet bit out loud: that NZ business relies on the government to maintain structural unemployment to suppress wages and keep profits high. But it gets worse, because they then explicitly link it to immigration as well:
"And I think really what's exacerbating the problem is, we haven't got immigration. We might be able to cope with 3 to 4 percent unemployment, in terms of finding people, if we have the other side of the equation which is immigration."
Business (or at least the body purporting to represent them) views immigration not as a way of welcoming new citizens, but as a regulatory subsidy. No need to improve pay or conditions if you can just exploit a migrant! No need to change your sector's business model if you can just bring in someone who doesn't know that people don't work 18 days in a row with no breaks here! But the pandemic (and the petri-dish states breeding new and nastier variants) means the borders are unlikely to open anytime soon. Which means business will have to compete and innovate. Things like actually training staff, rather than expecting there to be someone with the perfect skill-set available from overseas or just waiting around due to structural unemployment. Offering better, more flexible conditions. And above all, paying more. And the sooner business gets the message the market is sending, rather than whining for the government to put its thumb on the scales for them, the better off we'll all be.

Finally, one of the reasons we have a housing crisis is because housing costs have massively outstripped wages. You know what would fix that? A decent bout of "wage inflation". But clearly the EMA doesn't want workers to have houses either.