Bowing to the neo-liberal economic theory of cutting the minimum wage rate to what the market can bear would lead to some very low wage rates in New Zealand, Prime Mininster John Key says.
Speaking to Newstalk ZB's Mike Hosking on Monday morning, Key was dismissive of the ACT Party's policy for a reduction in New Zealand's minimum wage, although indicated a policy around youth rates or schemes for 16 and 17 year olds was an area that may be looked at for young people with limited training who were looking for work.
“It’s the classic neo-liberal economic theory that you pay what the market can bear, and I think you would see very low wage rates on that basis," Key said on Newstalk ZB when asked about his view on the ACT Policy.
“You would definitely see some companies that would say, well ok, I’ll hire you at two bucks an hour," Key said.
The question then would be how much less would that see the state paying because people still needed a certain amount of income to live off, he said.
There was certainly an argument to be had around 16 and 17 year olds with limited skills, and whether they needed another helping hand to get them into work.
“The government’s actually been trying to address that on a lot of different fronts,” Key said.
That included one option that saw the government give an employer NZ$5,000 if they took a young person on-board through one of the government’s youth skills schemes and helped train that person.
“But people need a basic amount to live,” he said.
Asked whether the idea of paying people just more than what they would receive on the benefit could work, Key replied:
“Yeah, assuming they turned up and a variety of other things.
“Isn’t the point here though to say, well look, yes of course we want to get people in work, but what is equally important in that young group, actually I think, is getting them into training," Key said.
“It’s also addressing why they’re not in work. In some of the cases they’re not in work because their basic foundation skills – their literacy and numeracy – are so poor, they actually can’t hold together a job. They actually basically can’t carry out that work," he said.
“So sometimes it’s actually addressing those early issues that are stopping work, as opposed to just the pay rate. It’s not as simple as just pay.”
132 Comments
And how would you pay for you X-Box and Playstation? New games, cost! Or will you play the same ones, day afterday, after day...? Becasue that's what 'retirement' on a survival income is. And worse. It's not going anywhere, or buying another new car or going to the pub etc. Worse! When you don';t work, you spend more - everything you get in, or can borrow. A wage, whatever the level, is a starting place. And we all started somewhere. It's where we end up that matters....
I guess then, that's why places like Singapore and China have done it well, then. Break the law and you are flogged or hanged. Work, and contribute towards your own future welfare, or starve. The sooner we abolish the minimum wage, and institute a society wide' incentive' to participate int the nation good, the sooner we will be able to compete with our new commercial adversaries. Because unless we do, we are headed for a real economic disaster somewhere down the track.
Yup, can't wait to live in a communist dictatorship. China mass produces products for export, with cheap labour, and all the profits go overseas, making fat cats fatter. If govt provided jobs then there is opportunity to work and earn a decent living. I have a few staff (all well over minimum wage and low skilled) and to me even the minimum wage is pretty low, I could pay them less, then the money I save goes to me and I get richer but where is the value in that?
There is no code of conduct for employers and some would take advantage of no minimum wage to line their own pockets. Thats what is so dissapointing.
There is a code of conduct for employers, skudiv, and you have outlined it, through your procedures.It is self imposed. My policy, like yours, was to pay people more than they thought they were worth, and they will live up to your expectations. The vast majority of the time, that works. But lower wages, in general, are coming to NZ, whether we like it or not. Do you think the Greeks saw a 30% nominal cut in their wages coming? Or the Irish a 13% public wages cut? I doubt it. And that's the competition we face - 'democratic' competiton as well as those from the command economies. Do you think the 67,000 banking sector worker in the UK are going to get a salary similar to that which they have lost? Or the 14 million unemployed in The States? That's where our wages competition lies. It's worldwide.
Fair point. Has the minimum wage dropped in those countries? Would it be possible for average wages to drop without the poor getting poorer? If high minimum wages ruin economies the people in denmark and australia must be crapping themselves. The highest in the world and I don't hear them mentioned as having a terrible economy.
Australia probably is! It's manufaturing base is as crippled as ours. Only digging up dirt keeps Aussie afloat. When that stops, like us, they will realise that they outsources their minimum wages possibilities to Asia, years ago. Denmark? I'm not up with the Scandis. But Maybe they have kept a manufacturing safe haven. Wages power comes from a comparetive advantage. Where is ourrs? Dairy, maybe, until the unempoyed in The States etc. cut their wages to compete against us...and they will. What is it that 'we'( the west) do that can't be done cheaper, elsewhere? And the answer to that is the answer to where wage price will be set. It;s going to be the old "East meets West" on the wages front. That's - theirs up, and ours down.
(PS: Does Denmark have 'minimum' wages? No, according to this list. http://micpohling.wordpress.com/2007/04/14/countries-without-minimum-wage-law/
Australia has full employment 5.1% and I note that both those countries have the lowest and nearly the lowest income inequality in the world. High taxes, a high minimum wage and low income inequality. Kicks ass over China if you ask me.
"It's going to be the old "East meets West" on the wages front." But what about the cost of living front? It's all very well to be paid $2/hr if you only need, say $200/month to provide for an average family. But that's hardly the case in NZ.
Wages are closely linked to the COL, eg, salaries are higher in NZ than India, in Auckland than Chch, in cities than in rural areas etc. If wages become disconnected with the COL (which they would be if people were paid as little as $2/hr in NZ), well, I can't see too many people making the effort to get up in the morning. At the end of the day, people usually work to live - if they can't do that, working becomes a bit pointless.
I agree. And that's why I see our asset prices ( and interest rates, of course!) falling. When the cost of 'buying' things falls ( lack of consumer demand), wages will fall as well. The lower wages go ( say, the vege farmers) the lower the wages component is for a product. It's like if you charge less for your software applications, the buyer of your product can charge less for what-ever-it-is that he uses it for ( you and your customer have both lowered wages and prices). When the cost of Western society has deflated to meet the East ( emerging economies) that process stops ....and we all get on with life.
Yes, you are right but I guess this process will happen quite slowly. It wouldn't really work (for me!) if I cut my rate by half today when my (electricity/food/phone...) bills are still the same. Both have to simultaneously decrease or else it could be quite painful!
True enough NA, it is surprising we enjoy the high standard of living we do, maybe we're in the Wylie Coyote phase prior to the big drop!
Globalisation has been allowed to develop too quickly and left the majority of Western workers very vulnerable IMHO. The Neo Libs think it's all good of course, market forces blah blah blah. I just wonder if they've considered the long term consequences of having a common market with China etc. When our unemployment rates have fallen and wages have risen due to these same market forces they inevitabley want an increase in immigration to push down wages. They embrace "market force"s only when it suits them.
The Aussie miners are putting pressure on to open the immigration floodgates, something the government are reluctant to agree to since the immigrants tend to cluster in the cities and take jobs from the low skilled Aussies - taxi drivers etc. and is, naturally, hugely unpopular with the Aussie electorate.
So how is that like the minimum wages legislation enshrined in New Zealand ( and other counties) labour laws? It's not. It is collective bargaining, and an industry based assessment of the needs and capacity of each sector of the economy - not just a banket $14 per hour ( or whatever) acrossthe whole economy. Each union has to take into account the needs of its members according to employment availability, demand for the product, competition from outside sources... and, then, wages, not.....just wages. As I started off by saying, posts back, employment is more than just remuneration.
I am sure the dole rate will be cut to compensate for your laziness.............lol, prefer it to be $0.
Pretty sad in some ways, but we are now quite globalised so the chances of this happening is higher. But I look at the positives, low paid employment should incentivise people more to upskill, those who don't get what they deserve.
Are you saying that there would be no unskilled jobs? Would cleaners, upskill and become managers, who would do the cleaning? Society needs the poor so treat them well. Say everyone got a job, and I need someone for an entry level position but there is zero unemployment in your utopia, It doesn't make sense. It's around 5% unemployment=full employment.
The huge hole in the Neo Con/libertarian no minimum wage argument is the effect it has in lowering productivity, hence the very low levels of per person productivity in places like India and China.
They build roads in India by manual labour, the $2.00/day man can compete with a bulldozer. Wealth is built on high productivity not cheap labour.
Supply and demand....if there are 5 youth and 1 job the employer can bid down the hourly rate until there is one youth willing to do it....(assuming he/she can of course).
The problem is one of relative balance/power between the emplolee and the employer.....If its laizzez faire, at my skill level I can demand a salary at about what the limits of what an employer will pay, but an employer wont employ me if he cant turn a profit....(fair enough)...at the opposite end is the minimum limit at what an unskilled worker can work for and still buy food etc to survive.....in effect the worker has to turn a profit....(fair enough).....but the effects are a lot more severe. Hence I think a minimum wage is quite reasonable.....In that case the employer then goes to the buyer and tells them the price, if its to high, no sale and no job....it obviously wasnt worth doing via subsidizing of low wages.....so no loss IMHO.
regards
that's a common misconception... Human beings are significantly less energy efficient than machines are in general. The amount of energy you have to put into one of us to get us to do a certain amount of work is in general a lot more than the energy you have to put into a machine to do the same job
Totally agree with John Keys' comments....
It is such simple ..straightforward common sense... that one has to wonder if Don Brash has his feet on the ground.
This is so yesterdays' thinking ...and so lacking in insight , and so out of touch with how difficult it is for people on the minimum wage to make ends meet.
In my opinion it also shows some ingorance of the impact of Globalization, the structural flaws in the Global Monetary system and the deflationary pressures of 3rd world wage rates.... ( So called free trade.)
The last 4 yrs has shown that a blind belief in Capitalistic free market forces is a false paradigm...
It will be interesting how well the ACT party will do.....
They have lost me...... ( even thou I like some of their ideas )
With the benifit of hindsight... the paradox is that it would have been an increase in the minimum wage,( as well as the proper regulatory reform ), that would have given the world a chance to dig itself out its' debt mess.) ie. the real engine of a robust economy is the consumer, who rather than borrowing to spend, has disposable income to spend....Putting money in their hands would have been far more meaningful .!!!!!
Richard Duncan advocated that the Emerging Economies slowly increase the minimum wage, over time, to a level where the ordinary citizens can become discretionary spenders.
This is very counterintuitive..... but if u give it some thought... it makes alot of sense.... I agree with that.
Of course , with politics and vested interests if will never happen.
Economics has, and is, evolving.... Brashes' thinking is a little out dated.
Cheers Roelof
"Richard Duncan advocated that the Emerging Economies slowly increase the minimum wage, over time, to a level where the ordinary citizens can become discretionary spenders."
i agree......he's talking about creating a middle class who can consume extra goods. I think until we deal with the death of the middle class over the last few decades we're not going to get anywhere
Yes.... and a part of that is affordable housing . There is a problem with the "financialization" of an asset class that should really be mainly... "a roof over our heads"....Part of the basic "food... shelter...clothing" metaphor.
The next generation of working class are trapped into a lifetime of debt... if they want their own homes.
When u look at how much most Banks assets are in the form of mortgages.... one feels there is something perverse going on..??? Why on earth should there be so much debt in housing..????
There is alot to be said about affordable housing being an important component of a vibrant, robust and healthy City... ( and therefore the Economy. )
It is a shame John Key does not focus on that.
Cheers Roelof
If we adopted a Guaranteed Minimum Income approach to economic/social policy reform (Gareth Morgan's Big Kahuna) - then we could abolish minimum wage legislation. The Big Kahuna to my mind really allows for non-interference by government in the labour market as it removes all the perverse incentives of present.
I like the GMI thinking, but am concerned it suffers from the same problem as other proposals - conflict of interest, of various shades, resulting in inadequate political will for implementation.
So, how about something a little more conventional regarding this problem. Expand Labour's idea of a so called "tax free zone", the $5k tax-free allowance, with a modification based on age to allow, say, people less than 21 yrs old to have an allowance greater than $5k? But we implement a youth rate. I've not thought it through in detail but wonder what others think. Got to better to have youngsters working and learning, rather than sitting on chuffs doing zip - and still getting paid by the state.
The idea fits with my preference for a flat uniform tax rate system (with effective capital/gains/asset taxation = CGT/land tax) where redistribution to lower incomes is facilitated via a tiered tax-free allowances. (The tax free allowance would reduce with increasing income.) This removes, to a degree maybe, some of the motive for tax avoidance at the high end of the spectrum, but would deal with support for lower incomes, rather than using the likes of WFF.
Keen to hear thoughts on both ideas, even from fundies at the left and right extremes. Others, don't be put off, they are with us all the time, and do serve a purpose, if only to give us a laugh, eh, Wolly.
Cheers, Les.
Les, you're suffering from a similar trap that you have identified as the problem with our politicians - the "will" to stick to (without adulteration or compromise) what (I assume) you consider to be a well considered and properly articulated economic and social policy framework (the Big Kahuna).
As you point out yourself regarding your alternate idea - "I've not thought it through in detail ..."
Where the Big K is concerned, Gareth Morgan has thought it through in reasonable detail. If you like the idea of eliminating the perverse incentives of our present social welfare system, coupled with a flat income tax rate and a CCT (which would similarly remove most of the perverse incentives of our present tax system) - then stick with the prescription, regardless of whether you think it might be unpalatable politically.
Thanks Kate. I agree. The "will" aspect is the real problem, not the functionality of some of the ideas that get proposed from time to time. From the more radical to the less complex, like others from the various working groups and advocates around the place, they all suffer from this blocker.
As for TBK (The Big Kahuna - another tla, yay!) they have a good explanatory article out today, here:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10748261&ref=rss
I think what Gareth and Susan ought to do, is come up with an implementation plan, that is, a series of steps to get us from here to there. Just illustrating a vision is never enough when it comes to managing change, people have to know how the journey is made. Anyway, as Gareth says, at least Labour are taking steps in the right direction with the intention to tax capital gain.
Cheers, Les.
Agreed - and I haven't read the book yet but in terms of steps from here to there - I think the last comment made about educating the public toward the goal of political consensus is the first step in mind.
If people affected by the policy understand the negative aspects (i.e. the perverse incentives) of the current system - then perhaps such consensus will emerge. The biggie is getting the majority of superannuitants on board - given the voting block they represent. Gareth should go on a book tour - speaking to every Greypower local branch that would have him. He's brilliant in person and can deliver a very serious message in a lighhearted but poignant way. Many of our current superannuitants simply do not realise how destructive for their grandchildren the present policy circumstances which they benefit from are. And in my experience, many are also unduly influenced by their babyboomer children who (misguidedly) think that by supporting the status quo where Mum and Dad are concerned they are protecting their inheritances going forward.
In my opinion, unless we urgent redeploy capital in this country to productive, profitable uses - then we're down the tubes ala Greece - BBers and all.
Distribution of money - unethical.
Time of capping maximum salaries - it would make talks about minimum wages unnecessary.
Excessive salaries in large cooperate businesses are increasingly killing the real economy consisting of mostly medium/ small businesses. No wonder there are no jobs and a daily financial struggle for “Hands on Kiwis” the majority of the population.
Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.
And what do you define as "excessive"? A million dollars? Five million? This is the problem with government intervention in the marketplace - its decisions are inherently arbitrary, whereas decisions made by companies (such as how much to pay employees) are driven by market price signals.
Good CEOs can add millions, even billions, to a company's profit. Why shouldn't they be rewarded with high salaries? And why is it any of your business if companies overpay underperforming CEOs? They're just shooting themselves in the foot.
Other then benfiting employers what is the gain from having no minimum wage? The US has a lower minimum wage (by purchasing power parity PPP) then NZ seems to be going well for them. I also notice the PIIGS have lower minimum wages then NZ. Where is the advantage making the poor poorer?
It's like trying to tell them to eat their veges, kleefer. Just keep giving them the same plate of left over ,cold veges, and when they are hungry, they will eat them. Next time they are served hot, they eat them, straight away.... ie: give them not money, and they will work for $2 per hour ( or whatever)
Have you given thought to the downstream consequences? So $2 an hour is 80$ per week, which would probably not cover the cost of transport to get to work. Perhaps a bicycle? That means large numbers of people are going to have to move closer to work, which means moving out of home into a flat. Right rent is going to be $150+ per week in most places that will supply work, so how does that get paid? Maybe the rent will have to come down, which means the price of property to correspondingly have to come down.
What if putting youths on a low wage replaces those on a higher wage? All of a sudden the tax take comes down?
It all seems like tweak and fiddle again to me, what is needed is a complete overhaul.
Yep. Transporters wages bills get lowered: they can then charge less to attract-back the commuters who left because they had a wages cut;The cost of transport across the system is lowered; people can move back out to the extremes of the system to cheaper accommodation( that has also fallen due to rents/prices falling as the buyers wages also fell) and we all get on with life at lower prices, and pay less interest to run the country to overseas lenders! ( NB: The tax take is lower, but only has to power a lower asset based environment, and Government Debt can be discharged as it's no longer needed in the same quantum)
It seems like a pretty nice diversion to blame to teenagers for not wanting to work for $2/hour NA, rather than having a go at the pro-free market "wealth creators" such as yourselves who have had 3 decades of dwindling regulation but have still FAILED to create decent jobs for new workers to do.
Pretty conveniently you ignore the fact that many thousands of jobs have been exported, which has seriously damaged our economy just so we can have cheap flatscreen tellies.
I ask you NA, and Roger Kerr, and Don Brash, on behalf of the teenagers who you think should be willing to work for $2/hour, "WHERE ARE THE FECKING JOBS NICK?"
Try giving us a decent answer to that. This country needs to make stuff. We can't all be speculators. And don't tell me about dairying, cos that industry is massively subsidised and so not really operating in a free market.
Well, despite the minimum wage being $13 more than 70% of 15-19-year-olds who want work are employed. However, those who aren't productive enough to earn this amount are banned from working.
I doubt we'd see any teenagers working at $2 an hour if the minimum wage was abolished (their productivity would have to be super low to only be worth that). But at least they would have a choice whether to work or not. At the moment they have no choice.
Yes..and ,no! I have 'one' myself, and he can't find a permanent job. Is it because no one values his effort at the minimum $13 p.h, but might at $2 ? He's as keen as mustard to do 'anything', and; the money isn't 'it' for him ( we, of course, support him in the meantime) but a chance to get started. And whilst the minimum wage is $13 p.h, I doubt he's going to get a job in the short...and worryingly...the longer term.
The govt is giving $5k to help youth get jobs, at a 40hr week this drops the minimum wage paid by employers to $10hr. I'm thinking that there is not a lot of work that needs doing, otherwise unemployment would be lower. I don't believe removing the minimum wage will create jobs, but it will increase profits.
Exactly! That's why we don't need to 'import' any more people at the moment. We don't have enough work. Or more precisiely, we don't have enough work at a price that will encourage business to hire. Unless we can compete on the international stage with whatever we produce, we will not sell it - that no jobs groth. The only way to compete is on product, price or promotion. And price is the factor in the world at the moment. That's a lower wages imput into our goods, if we ever hope to sell them against a world also trying to do the same ( and lower interest rates to both stimulate business development and lower the exchange rate).
OK so price is set on the international market, the same goods are still profitable at higher wages, just not as profitable. Take the addidas jersey as an example, you could have still made a good profit at $13hr, and you can still compete and pay decent wages if you don't pursue massive profits at any cost. I can still sell my product for the same price as my competitor even though I pay higher wages, my profits are lower is the only difference. It's the mindset of profits for shareholders that pushes wages down. Not the costs of production!
The addidas shirt is however a monopoly item commanding a price far in excess of its manufacturing cost. So I bought 2 tee shirts last week at $5 each at k mart...Now I can bin my old ones (I use for doing DIY, though right now they are pretty good)...you couldnt make them here for $5 I suspect, not at $13 an hour....
However that leads onto to the size of NZ and its agility and its marketing brand.....for me NZ is small enough that we could make the likes of the Addidas tops here in NZ at those margins easily, ie chase the high margin or luxury product categories...... from that yes as you say its the mindset of the business owners thats as much if not more of the issue....
For instance I bought a NZ made lifejacket some years back....cost me a few hundred, I then went back to get one for my wife and found that the product was now made in china but "designed" in NZ.....same price though (well actually a bit more).....At the time I was in a hurry so I accepted that, now if Im buying a decent brand/quality item I look for made in NZ.....if it isnt I keep looking.....I do the same with fruit and veg....I look for made in NZ, then OZ and I walk away from USA.....
So I think consumers have great power when they wield it....
regards
So NA why don't you hire your son to work for say $5 per hour working around your house doing house work, garden etc in exchange for his board. He could build a vege garden to supplement the family food bill and sell the excess at the gate. You could work a few hours extra at your rate somewhere to earn the money to pay him. You or his mum would have more leisure time, he would learn some skills and that money doesn't come from doing nothing. He could then do similar jobs for a set amount for the neighbours (which could translate into less than the minimum wage if he does more time than he signed up for for free). Pretty soon he may be hiring one of his mates to help him in his new business.
That's how jobs are created,and small business started, not waiting for John Key to make some!
He already does chores....and does various bits of gardening to earn extra.....however to do my job he needs education and not labour. He has plans to do various things when a little older....so Im quite pleased he's thinking along those lines...but his education has to come first.
Its not practical for me to do a few hours extra at my rate, wish it was, Ive looked at it, plus I want a life....I earn a reasonable amount blanced against my time and my time is my time.
regards
@LAJ: Hard to build a vege garden in a unit complex, LAJ! But, seriously, I don't because it is a zero sum game. What I pay him to do, I pay someone else less, in compensation ( purchasing other goods or services) and end up with the same household worth as before. I could work 'some hours' somewhere else ( I don't work, by the way) but that does nothing to provide him with the start on the employment ladder of life that I had at his age. And 'the neighbours' are doing the same for their sons. Do we swap sons to just provide subsidised work for them? The problem is that we do not have the jobs for the young ( or aging in fact) that we need to sustain our society at the level of wages that we pay. Why else do we borrow $350 mio per week ( or whatever the real number is). Not becauue we have an excess of income earning jobs, but becasue 'our' jobs are being done elsewhere for lesser rates of pay. Until we lower our wages bill in-toto, New Zealand is going to go deeper and deeper into debt with each passing year; selling off whatever assets it has to bridge the gap in the meantime.
I really think we have to stop trying to compete on price in NZ. We don't have a lot of natural advantages in that department, partly because of the need to ship everything across oceans. It would be better for us to compete by supplying better products with better services to go with them.
Well I for one would pay more for quality food/baked products. Every biscuit, baked item etc has been so depleted of quality ingredients and replaced with fillers that nothing tastes like it used to when I was a kid. There must be a market there for a start,
The only jobs that can't be exported are ones where the services are provided here, like hospitality, cleaning, gardening, transport. They can never be lost overseas. Perhaps we need a campaign to encourage wealthy/ middle new zealanders to "buy back their leisure time / spend more time with your kids" by hiring more people to do those necessary but time consuming jobs none of us want to do. Run an ad campaign to make it virtuous to have a lawn-mower, a cleaner, a babysitter to help the economy, rather than feeling lazy for not doing them yourself. What would you rather have- 5 hours more free time per week or a new pair of trousers/ dinner out etc? Spend your dollar at home rather than buying a chinese product.
All those jobs you mention, LAJ, can be 'exported'. It's called immigration. The job doen't have to be 'done' overseas, just filled by labour from overseas. This leaves the local target labour market still unemployed; the rates of pay asked by the new arrrivals, lower than the resident workforce, and the services of the country expanded to cover a growing population. Whichever way it goes, wages are going to fall. Either through competative necessity or imported competition. Only by growing the jobs market ( lower wages; lower interest rates and hence a lower dollar to sell our goods at) can we employ the people that we have here already. Then, we can look to restore real incomes, but not before.
No, not the same thing at all. The jobs stay here. They are extra jobs that didn't exist before. If the locals won't do them then no amount of the government creating jobs is going to have any effect at all is it? If you are right then if John Key creates jobs the immigrants will take them too. So then the problem is not the jobs aren't there, it is NZers don't want to do them.
And on that we agree! So the quetion is "How do we incentivise the unemployed here/provide them with hope?" The answer is not " give them an alternative to work" but neither is "Remove the dole". It has to be by creating more jobs ( you'll know my remedy by now!) and resrticting the competition from outside the country. I have no problems with immigration during times of plenty; when work that has to be done cannot be filled from the local pool. But to contemplate it now? That's not my remedy. But allowing employers to take on people at economically viable rates...is.
I think everyone is thinking too big. If instead of trying to get a few employers to take a chance on young people by hiring them 100% why not have pools of young people supervised by leaders where the general public can hire them to do small jobs an hour at a time. Then thousands of people of provide 5% of a job each so not too much risk for anyone and everyone in NZ who has a small cash surplus/time shortage could be part of the solution. Make it a feel good campaign run by WINZ/ rugby players / high profile NZers. Help create NZ jobs. At the same time reduce imports by encouraging people to buy labour from NZers rather than imported goods. Could it work? If they aren't employed fulltime at the minimum wage initially WINZ could supplement it. Instead of taking other people's jobs away from them who are working for minimum wage as youth rates might you'd have to create new "micro jobs".
Teams of teens might quite enjoy trips to fruit pick etc too so would solve that problem.
"Every biscuit, baked item"
Hence we do our own baking....Shop stuff, the latest is fructose as a filler/sweetener that's bad crap for your liver and wasteline....Watties I think it was cut their tomato puree by 50% and made it up with fructose and salt and "flavourings" I havnt bought it since. Pukoe also are a "premium" brand who use fructose, I wont buy it and told them so....they they lied to me about it being fine.....yeah right.....
"the services are provided here, like hospitality, cleaning, gardening, transport." trouble is these are usually poorly paid/ productive jobs....we need high income earners like compter software...If you are selling it globally it matters not where you live.....theses are the services to encourage.....they bring in external dollars and earn good wages....
"Spend your dollar at home", yep...could not agree more, I pick up NZ made from choice....do as much of it as I can....
regards
Yes, my point exactly- so there may be a market for homecooking.
Services provided here may be poorly paid unskilled but that is exactly the kind of job that is in short suply for the uneducated unemployed isn't it? It is the alternative to exporting more. Import less and spend your money on employing local unskilled people's labour.
Good point Nicholas, teenagers in employment gain not only from the money but from the life skills and experience they get from the job. These skills enable them to increase their productivity, meaning that by the time they hit 20 they are worth at least $13 an hour anyway.
It seems to me that a lot of the training that used to be done on the job at entry-level wages (apprenticeships etc) is now conducted at polytechnics, at a cost to the students and the taxpayer.
Act have the wrong end of the stick IMHO....they seem to harp on about beating the poorly paid to death with yet lower wages instead of making their efforts at improving productivity and quality.....and making our Nation richer / better off.
I really wonder if most business man are as bad as this ACT lot.....I dont think so...I hope not.
regards
My 17yr old son has started his first job. His most outstanding skill is his ability to play "Starcraft". Nevertheless he went door to door and found a job that required very little skill, and was given on-the-job training. His boss seems blissfully unaware of the minimum wage laws, so my son gets paid less than the minimum wage, along with the rest of the staff. When he started there I suggested that he keep quiet about the wage situation, because of the happy state of affairs. That is, I am happy because he is not on the dole, he is happy because he likes working and is saving money for further education, his boss is happy and the customers are happy. Occasionally one of the staff members leaves because he can get better pay elsewhere, so no one is trapped there. I have managed to work out how much money the business is earning (from getting my son to ask questions) and it is barely profitable in the winter. They need a good summer to make it work. If the boss has to pay the minimum wage it would have a significant effect on his profit and it could close the business down. As you can see, this would cause a lot of unhappiness. The great thing about removing minimum wage laws is that it restores the freedom of people to contract without interference from the government. It gives unskilled people like my son a powerful bargaining tool to get a foot in the door and get some training and build a reputation. Key is right in that there would be some low wages, but unfortunately he thinks it is a bad thing when the reverse is the case. Brash is heading in the right direction but does not go far enough. Keep the government out of wage negotiations altogether.
Another option is to work for free.
"With young people nearly shut out of the market (by recession, regulation, "child" labor laws, and ghastly minimum wage laws), I would like to suggest the unthinkable: young people should work for free wherever they can and whenever they can. The reason is to acquire a good reputation and earn a good recommendation. A person who will give you a positive reference on demand is worth gold, and certainly far more than the money you might otherwise earn."
Would a non mimimum wage work both ways??
For example, you want to be CEO of Telecom, or Commisioner of Police or sit on the Christchurch Earthquake Recovery Board............then submit your CV and also the salary you are prepared to do it for!!!
Bye bye big fat salaries, hello value for money!! The troughers woundn't like that ......skip that idea eh Don?
Release from Anne Tolley this morning:
Education Minister Anne Tolley has announced that the number of new Trades Academies is to double, keeping even more 16 and 17 year olds engaged in education and practical skills training, who would otherwise be at risk of dropping out of the system.
Budget 2011 funding of $63.1 million and some reprioritised funding will be used to increase the promised new Trades Academies from five to ten, starting as soon as possible from next year, bringing the total number of Academies to 21.
The number of students attending Trades Academies is set to rise from over 700 to 2000 in 2012, with these young people better prepared to take up apprenticeships, enter the workplace or go on to further study.
“There was great demand from right around New Zealand to set up these new vocational skills and technology programmes for 16 and 17 year olds,” says Mrs Tolley.
“The Budget investment and some reprioritised funding has given us the flexibility to deliver twice the promised amount of new Trades Academies, on top of the eight which opened this year and the three which were already due to get underway next year.
“It means that the total number of 16 and 17 year olds taking part in the wider Youth Guarantee, Trades Academies and Service Academies will rise to over ten thousand next year and 12,500 by 2014.
“These young people, who have either dropped out of education or are at risk of dropping out, will now be engaged in practical skills training while earning worthwhile qualifications, free of charge.
“Trades Academies, which are partnerships between schools, tertiary providers, industry training organisations and employers, only started operating this year, and I want to acknowledge the courage and enthusiasm of everyone involved in making a real difference to the lives of our young people.”
The locations and successful providers for the ten new Academies will be announced over the next two weeks.
Alex - sounds to be a step in the right direction. To make such programs possible to succeed, the government should allocate orders for NZinfrastrucure (transport, energy. telecommunication) to NZcompanies to the NZworkforce in order to provide/ support permanent and skilful jobs. In the current and upcoming worldwide economic environment, it should be an important national long term plan to build on better comparative advantages also.
Andrew – you are right, in the current difficult environment without a government having a comprehensive plan, working together with the private sector – educated people go overseas. The private sector alone cannot do it.
Taxpayers money spend – on foreign economies/ companies.
Our local power company (Top Energy) used to recruit local school leavers for electrical and lines technician apprenticeships and electrical engineering cadetships. They got all carried away with right wing dogma bullshit and somehow figured this was inefficiant.
They are doing a major expansion/upgrade and, of course, they didn't have the workforce anymore. So they recruited, at great cost, from overseas - UK and South Africans mostly. So our young guys are still dicking around with no jobs or prospects of jobs.
Now I would have thought they could have kept on with the local intake, staged the expansion (over ten years say) and given our youth a break. Very short term thinking typical of business today. Even though they are owned by the Far North community at large they seem to have lost the plot when it comes to grass roots responsability.
Even low skilled stuff -fruit picking, pruning and farm work is being done by labour from third world countries. And what's up with our fisheries being manned by Indonesian workers on Taiwanese boats? I can only conclude that this is being done to force down or maintain low wages for Kiwis. This is just crazy and needs to be stopped now.
There used to be a lot of trade and service training provided to youth who left school with nothing more than School Certificate, if that. It was called the NZ Defence Force.
Youth could learn a trade, discipline and a valued work ethic that could serve them and the economy in the future once they'd completed their service. All highly transferable skills.
What cost to the economy over the past 30 years of politicians narrow thinking - massive cost cutting of the defence force to pay for increased welfare and other non productive spending?
Of course, there was also a desire to work by those that joined the defence forces.
What do we do about those that have no desire to work, those with the welfare entitlement attitude? We bloody well make them work doing whatever jobs are necessary. It's time to get rid of the political correctness bullshit and ask the serious questions.
Unless we know what the cause is how do we figure out the solutions?
New Zealand losing more valuable jobs.
Absolutely right you guys. New Zealand has a good education system and the majority of the population has a great “Hands on culture” – but where are the skilful jobs for these people ? A South Pacific financial hub - ha ? We need skilful jobs for Kiwis in the production sector not imported Singaporeans. A planning disaster by the Key government.
Now in difficult times, we need a government, spending taxpayer’s money for full employment - for skilful jobs here - not for Asian and other countries workforces.
Little wonder Key is riding so high in the polls when people fall for his take away hook line and sinker that employers would be paying youth $2 per hour. I have no doubt some youth may only be worth this much to start with but to suggest this would be cross the board is utter nonsense
“You would definitely see some companies that would say, well ok, I’ll hire you at two bucks an hour," Key said
His other comments effectively acknowledge that the current minimum wage is too high and the Govt will fill the gap with subsidies. Expensive churn.
“Being fussy is not going to be a choice soon”
Exactly, blanket rules across the board just don’t work. Circumstances are vastly varied. The key point is to provide as much flexibly where possible. Employment is not just about learning the job it’s a critical part of learning a multitude of life and social skills.
We constantly make the mistake of setting everything to match the lowest common denominator
My 2 pennies worth...A company takes on 17 year old who has no skills, average qualifications and is keen to learn. The company invests in teaching this youth a wide range of skills and helping this person pass the exams and stuff for five years. In that time, as his/her skill level increases, they pay more in wages. The youth had a sister/brother who took on a student loan and sat in a class for five years to gain very similar qualifications but far less experience.
Being paid to learn skills that lead to higher wages seems to me to be better than borrowing money to pay to be taught.
Perhaps there are instances where $2 an hour would be the best way to go.
QED....a person with vast experience in antiques...extensive knowledge...would you as a 17 year old want to know what that employer was prepared to pass on to you...would you start work for him/her on $2 an hour.....?
Assuming as an employer you access the youth has a few brains, an appetite to learn and is clearly prepared to work offering $2 per hour is hardly going to get the kid too excited. It’s probably too low but perhaps if there is a genuine offer to review quickly upwards say every fortnight at the same time as an employer you commit to extensive knowledge transfer and training. It could work very well for both parties.
Wolly jnr worked for a watchmaker...a nice old bloke...got paid $2 an hour and listened to all the old chap's stories, cleaned the floors and did odd jobs...and then when Wolly jnr aged 18 was on holiday he found a junk shop in which he spotted a watch for sale for $45...a 1930 Girard-Perregaux wristwatch...only it was dirty....but he bought it Walter....go figure...did the $2 an hour job pay off?...what do you think!
Yeah well it was a spur of the moment bit of story telling Walter....what about that lady in the UK who took to the Antique Roadshow a bashed about bit of pottery she as a child was allowed to keep from her dead grans mantelpiece, cos no other sod in the family wanted it....turns out it was English pottery and a bust of either James Rex or his son James 2nd...about one hundred thousand pounds worth.....There are heaps of these true stories and they all make the point that knowledge and learning are worth more than an hourly wage to yell about.
Yes, it's not good and what's more, the older age group is even worse. Problem is that at least 50% of population have an IQ below 100, and the least intelligent 20% have an IQ that is barely inteligent enough to learn even basic maths or language skills. I still remember my calculus professor saying 'never under-estimate the intellectual stupidity of the average person', in those days we thought he was just having a laugh, but may be he was being serious.
That is the tragedy of this situation.
Because NZ has such a culture of under achievement, a very large proportion of teenagers leave school with negligible skills and no hope of being useful members of society.
It isn't hard to study at school, then go on to university or a trade.
Of course, the other problem is that of those that do try, a demoralising percentage are guided people into wasting their lives as bureaucrats or paper-pushers.
Those paper pushes will soon find themselves out of work in a vastly different employment situation, they are worth what in the real world? not the 130 k average wage paid to state sector workers in Wellington. We have too many high paid jobs in the unsustainable state and local body sectors, these will slowly atrophy as it simply cannot be affored by the few industries still creating wealth but being taxed to death to fund the unsustainable beauracracy. It all gets to end sometime.
This problem is not being addressed and is going to get a lot worse, we have a leadership deficit when it comes to important issues, our leaders yell, world cup, and expect us to respond like the dog on Up, when they yell squirrel.
I don't know where you dug up the $130,000 average wage paid to state sector workers in Wellington -- I reckon it is way high. Thinking about the government department I work for I would estimate that a max. of 10% in Wellingont would be over $80,000; and that is being very generous. The median is much much lower.
The Western World is trying to avoid deflation with financial magic tricks, JP. Ergo: the underlying condition is...deflationary. What's the chances of us all missing it? Slim. And if one gets the diesease, then in all likelyhood, we all will, becasue we all drank from the same poisoned chalice.......
"The Western World is trying to avoid deflation with financial magic tricks, JP. Ergo: the underlying condition is...deflationary."
The West has been struggling against the inexolerable process of deflation since the 1870s. The tendency of the rate of profit to fall is an intrinsic element of capitalism. Karl Marx didn't invent the idea. As in all the broad characteristics of capitalism he described, he was preceded by Pierre J. Proudhon, the first self-described anarchist.
"But industry, under the influence of property, does not proceed with such regularity. . . As soon as a demand begins to be felt, the factories fill up, and everybody goes to work. Then business is lively. . . Under the rule of property, the flowers of industry are woven into none but funeral wreaths. The labourer digs his own grave. . . [the capitalist] tries. . . to continue production by lessening expenses. Then comes the lowering of wages; the introduction of machinery; the employment of women and children . . . the decreased cost creates a larger market. . . [but] the productive power tends to more than ever outstrip consumption. . . To-day the factory is closed. Tomorrow the people starve in the streets. . . In consequence of the cessation of business and the extreme cheapness of merchandise. . . frightened creditors hasten to withdraw their funds [and] Production is suspended, and labour comes to a standstill." [P-J Proudhon, What is Property, pp. 191-192]
They succeeded in the wake of the Great Depression largely to resolve the internal contraditions of capitalism largely through employing a wide array of institutional trickery. What do you think the "New Deal" was aimed at? Or in our case the Economic Stabalization Commission? http://www.nzetc.org/tm/scholarly/tei-WH2Econ-c12-1.html
Its the thesis of Joseph R. Stromberg that the reforms of the New Deal were efforts by corporate leaders to consolidate and cartelize U.S. industry through legislative means which they'd been unable to achieve through the workings of the free market.
and Britain had her own solution.
Since the Mother Country is suffering from unemployment (many of her plants being closed), and since the dominions buy a great deal of manufactured goods from outside the Empire, cannot an imperial agreement be made for the dominions to buy proportionally more manufactures from the Mother Country and for her to buy proportionally more raw materials and food from the dominions?
Read more: http://www.time.com/time/magazine/article/0,9171,744015,00.html#ixzz1WOsEQIuM
employment of women and children . . . the decreased cost creates a larger market. . . [but] the productive power tends to more than ever outstrip consumption. . . To-day the factory is closed. Tomorrow the people starve in the streets. . . In consequence of the cessation of business and the extreme cheapness of merchandise. . . frightened creditors hasten to withdraw their funds [and] Production is suspended, and labour comes to a standstill." [P-J Proudhon, What is Property, pp. 191-192]
Trickle Down Economics; works like this, you give the company a low tax rate, guarantee their bonds and make life easy for the company, the company is making lots of money and pays good wages to it's employees, sells it's products cheaply and is happy. This has the money multiplier effect, where the employees earn good money, so they can afford to go to the restaurant, the movies, buy a good house etc. As the employee does all these things he in turn creates demand for the goods and services he can afford, this creates more jobs with good pay and the cycle of growth and prosperity continues.
With comments like these I have little faith in trickle down economics.
my son gets paid less than the minimum wage, along with the rest of the staff.
“You would definitely see some companies that would say, well ok, I’ll hire you at two bucks an hour," Another option is to work for free. Perhaps there are instances where $2 an hour would be the best way to go.
You’re a boss considering employing a 17 year old @ $13 per hour that’s $520 per 40 hours.
Your time $45 per hour you need to spend at least 10 hours per week with jnr that’s $450.00. Add the sums your spending $23.00 per hour for a youth who is probably producing bugger all and has the wrong attitude. Business is tough you just would not bother just go find a mature experienced person and pay $20 odd per hour.
John Key should have allowed his brain cells to meander down the thought process a little more...yes the wages would drop very low..right down to the point where nobody applied for the job...and perhaps Tolley would start receiving calls from school bosses to be told classroom behaviour had improved greatly and they were seeing less bunking at all levels....Crikey, the % who are illiterate may begin to fall...fewer school leavers with not one bloody qualification may result....parents might...nah...they won't.
Give it a go John. The unintended consequences could be positive.
Wolly the bottom 20% are intellectually challenged, actually the botttom 75% if truth be told.
I have had plenty of workers , not just young guys, who couldn't write a decent essay (good test of developing ideas logically and sequentially) for love of money, and as for simple algebra, get real!
Also, the feral class will riot rather than accept what you hope for.
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