By Alex Tarrant
Labour has taken another swipe at National’s economic management, saying working people’s share of the economy has shrunk over the past nine years.
As part of a drive to focus the Election 2017 campaign on helping lower-to-middle income New Zealanders, Labour on Thursday promised a boost in the minimum wage while revealing a set of employment relations proposals for if it heads a government after 23 September.
Leader Andrew Little said the policies would “prevent the small number of bad employers undercutting good employers and driving a ‘race to the bottom’ on wages and conditions”.
“After nine years of National, working people’s share of the economy is falling,” Little said.
“Less than 40% of economic growth under National has gone to working people through higher pay. If working people’s slice of the economy hadn’t shrunk under National, pay packets would have been a total of $23 billion larger.
“When 40% of children in poverty live in a working household and two-thirds of workers’ pay fell in real terms last year despite the economy growing, working people are not sharing in economic prosperity. That’s just not fair,” he said.
Included in the wage and employment relations package announced Thursday are:
- Increasing the minimum wage to $16.50 an hour (from $15.75 currently).
- Replacing the current National Government’s ‘fire at will’ law with fair trial periods that provide both protection against unjustified dismissal and a simple, fair, and fast referee service.
- Introducing Fair Pay Agreements that set fair, basic employment conditions across an industry based on the employment standards that apply in that industry.
- Promoting the Living Wage by paying it to all workers in the core public service, and extending it to contractors over time.
- Doubling the number of Labour Inspectors.
The proposals should have been expected – many mirror Labour Party policies from the 2014 election when Little was the party’s spokesman on the issue. When Little became party leader he put all policies under review.
Labour’s key criticism of Steven Joyce’s May Budget was that the incomes package as announced would make the wealthier better off while only delivering small income boosts to the lowest paid workers.
The announcement comes as the party is head down in work on its own ‘families package’ and Alternative Budget, which are set to re-focus Joyce’s scheme to having a greater impact on low-to-middle income families.
Minimum wage boost, aiming to be two-thirds of average wage
On top of promising to boost the minimum wage, Labour is also proposing lifting it to two-thirds of the average wage over time, as economic conditions allow. The proposal matches a call from the Council of Trade Unions earlier this year.
Interest.co.nz’s reading of the promise is this would suggest a greater proportion of workers could find themselves on whatever the minimum wage is at that time, than is the case now – albeit perhaps a higher minimum wage than currently.
The average hourly wage is just under $30 a hour, meaning the proposal would imply a minimum wage of just under $20 an hour if introduced today. Median hourly earnings are about $24 an hour. Two-thirds of that is just over $16 an hour - above the current minimum wage but below Labour's $16.50 proposal for the short term before the two-thirds rule comes in.
Meanwhile, Labour has committed to paying all core public sector employees at least the Living Wage, at an extra cost of $15 million, which will be extended to government contractors over time. Labour also promised to double the number of Labour inspectors to 110 at a cost of $9 million.
Fair trial periods
Labour has also promised to replace the National-led government’s 90-day rule with trial periods that “include recourse for employees in the event of unjustified dismissal.”
“Employers, particularly small businesses, have legitimate concerns that resolving employment disputes can be time-consuming and expensive. So Labour will establish a new referee service for claims of unjustified dismissal during trial periods,” the Party said in the policy announcement.
“The referee will hold short hearings without lawyers and be able to make decisions to reinstate or award damages of up to a capped amount. This simple, fast, and fair service will be provided free for the parties involved, at a cost to the Government of $4m.”
Fair pay agreements
Labour also announced a desire for Fair Pay Agreements (FPAs) to be agreed by businesses within an industry and the unions representing workers within that industry.
“FPAs will set basic standards for pay and other employment conditions within an industry, according to factors including job type and experience,” it said in the announcement.
“The recent care and support workers’ settlement is an example of how employers, employees, and government can come together to create an agreement that sets base conditions across an industry. By setting a floor, FPAs will prevent the ‘race to the bottom’ seen in some industries, where good employers are undercut by some bad employers who reduce labour costs through low wages and poor conditions.
“FPAs will create a framework for fair wage increases where good employers are not commercially disadvantaged for doing the right thing. FPAs will cover all employees and workplaces within the relevant industry. Negotiations on FPAs will begin once a sufficient percentage of employers or employees within an industry call for one. This threshold and the precise implementation of FPAs will be developed in government in consultation with all stakeholders.”
You can read and compare all published Election 2017 party policies in our extensive database here. See party lists here.
104 Comments
Agreed. We have one of the highest minimum wages in the world but are also one of the least productive nations among OECD. Simply raising the minimum wage without pushing up productivity will increase the cost of living and neutralise the higher wage in the medium to long run.
This wage increase is less after tax then the benefit from national's tax threshold adjustment? It also benefits those who work full time more than those who can only find part time work unlike national's accomodation supplement increase. Additionally it looks like it is designed to support individuals more than families by giving those who only need to look out for themselves more per capita than those with families. The whole thing sounds exceptionally regressive for a Labour policy.
It is, if people choose to live that way - albeit it provides them more flexibility to target how they spend it, including for accommodation. And it's less targeted to a particular location, also of interest.
Personally I think we shouldn't have the accommodation supplement or Working for Families, but should instead rely on businesses to pay what they need to in order to attract workers to where they are. Of course, National works around this by importing people as fast as they can to provide businesses with cheaper labour that's more accepting of exploitation.
Technically, you probably shouldn't need a minimum wage either...Except the urge to import as many as possible from the third world to drive down labour costs stands to undermine a whole lot of Kiwis.
but should instead rely on businesses to pay what they need to in order to attract workers to where they are.
That sounds a bit too much like free market capitalism ;-)
I thought we were trying to get away from that and move into more of a Master/Slave type economy.
Raising wages and inflation everywhere is the alternative to resetting the housing market. Inflation is death to retirement savings. Retirees are a larger and growing demographic in NZ that historically vote with high turnout percentage. Would Grey voters really want their savings to become increasingly worthless?
Interesting, by doing this Labor are really backing Nationals housing policy - protect the ponzi at all costs.
Goodness me how is this supposed to help the people like the 40% of children that Little talks about?
When you State mandate something like an increase in the price of labour and that gets applied across the board, business has to increase the costs of their goods and services to meet the new payment regimen..........
This has the effect of putting all costs up across the board so negates any benefits of said increase in fact it creates a worse situation as it requires more money than before to buy the same standards as previous.....so pushes more people into poverty!!
Mr X employs Mr B and pays them $500/wk. Mr X profits from Mr B's work to the tune of $50,000 a year. $20,000 of that profit is used every year by Mr X to go sex holidays in Amsterdam.
Law change requires Mr X to pay Mr B an extra $5,000 a year which he uses to provide a better life for him and his family (income increased from $25k to $30k). Mr X only makes $45k profit from Mr B's work now so has to take a cheaper sex tour from now on (say Thailand).
I see a positive benefit to this pay raise when balancing the improvement to Mr B's family's situation compared with Mr X's and the foreign sex workers' loss.
What am I missing?
"What are you missing" ......Quite a lot.....you seem to think all employers are creaming it off their employees and maybe this is because you don't see all the other transactions involved.
If it is that easy then I am sure Mr B would make the profit for himself and then he'd be the one booking sex holidays to Amsterdam.....
We have gone from one income that could provide a good standard of living for a family to two incomes not being able to provide a good standard of living........I can tell you right now that in the past 30 odd years I have seen the growth of the public sector escalate to out of control levels......unproductive people admnistering unproductive organisations, taking the bread, butter, shoes, heating etc right out of the hands of the poor.......you see the overheads Mr X has to pay and all the other compliance and regulatory costs has whittled any profits down to the point where the only sex Mr X is likely getting is in his dreams!
Your assuming Mr B has the necessary capital to establish a business and acquire the assets needed to generate the income. You only need to look at the wealth that has accumulated in the top 1% to realise your "take pity on the poor rich class" is a straw man (see http://www.radionz.co.nz/news/national/322422/top-1-percent-of-nzers-ow…).
Your living up to your name "notaneconomist".
Never assumed any such thing HeavyG......in fact it is you who ommitted such details in the first place by ommitting the fact that Mr X would have no such costs and this is what I pointed out to you.
....If you have read any of my other posts on this site you will know that I have stated 90 to 95% of the tax take is generated from the SME's........I am in no way responsible for how the 1% make their money......but the reality is we have a plethora of legislation and bureaucrats who's sole role is to ensure NZ has competition so how have these people performed? Not very well, in fact one would think they are as good as not being there!!!
In general I cannot understand why the many in the populace think it is a good idea to keep protecting a system that has failed and is driving larger numbers into poverty while making the public servants fat and wealthy.......as I have also stated there are no poor public servants but many poor people working in private enterprise.......do you not think this is by design or do you think it is down to good luck?
My name adds nothing of value to this conversation so not really sure why you feel it necessary to make such comments.....but I guess that perhaps it has given you some kind of over-arching sense of satisfaction.
That is a fair question. The 2016/7 tax tax from all companies is $13.1 bln. The four Aussie banks paid 13.5% of that (NZ$1.7 bln) and the NZ Super Fund paid $625 mln or 4.8% of all corporate taxes. Together these five enterprises paid over 18% of all corporate tax. So it impossible that SMEs paid "90-95%" of all company taxes. Who pays how much tax is often discussed using myth and made-up numbers. I recall doing some intensive investigation into this a few years ago and I recall the top 50 companies paid about half the corporate tax. But a quick check a few minutes ago did not tuirn up my spreadsheet. When I find it I will update this note with the actiual details.
Update: I found the details (time flies, they were for 2013). But they show that the next 39 largest companies paid $1.1 bln in income taxes back then. Even if there was no rise - and there has been one, but I don't want to recalulate right now - that is another 8%. So 43 companies are paying more than a quarter of all tax revenues. Sure they will be paying indirect taxes like RUC/petrol taxes, etc, but all up they 'only' amount to $3.5 bln/yr and represent just 4% ovedrall of the tax take. So they can never be material in this false claim that "SMEs pay 90-95% of all taxes".
I suspect the 90% figure is correct if you look at it from the point of view of the SME being the tax-collecting agent of PAYE and GST and paying its own Terminal Tax - (Total Payments) plus I don't think NOE was talking about just little registered LTD companies alone
Yes I do. And why is it sneaky? Seems very transparent to me. And easy to calculate. For us, it is an important payment, one of our largest. But we are collecting it from our clients, and paying it to our suppliers. All we are really doing is paying off the net. Other than cash-flow, it is not costing us hardly anything to process. I reckon it is 'efficient'.
We have all been taught to focus on the two areas, GST on income GST paid to suppliers etc and then pay the balance to the IRD......but the sneaky part is the bit between the two (sales and supplies) the chunk of business spending that has no GST apportionment on it, is actually what you are paying GST on....so all those business costs like wages, salaries, interest etc is the balance of what you are paying GST to the IRD on. You have already added GST to your goods and services at point of sale (point of sale price includes the cost of labour)....but when you pay the wage/salary GST is excluded because you pay the GST on the labour content previously collected at point of sale back to the IRD when you do your GST return. The same applies to interest.....if you have interest costs inbuilt into your sales price as an overhead (which you should) you have added GST on top e.g. cost + overheads + margin/profit etc + GST so you are collecting GST on the interest portion along with the wages/salaries portion then paying out your direct costs to the employees and banks and then paying GST on these items to the IRD.....after deducting your qualifying expenses of course!
GST is a very sneaky tax on labour and interest and other non-qualifying deductible costs.
I disagree with you KH....most people aren't registered for collecting the GST for the IRD and actually have no idea of what is involved....in fact I can remember on this site when Cowboy and I brought this issue up and most people couldn't get their heads around the issue that GST is a tax on labour and costs like interest.......ask the people you come into contact with over the next few weeks if they know there is GST on their wages.........without fail people will say no wages don't have GST on them......
For industries like agriculture that are price-takers the owners cannot get paid for collecting GST like other businesses who can add the collection costs onto overheads and this is one of my biggest complaints and why I call the system one of slavery!
Hello David.....taxation is beyond Income taxes and that is why I haven't used that wording.
There is also the GST intake which is heavily weighted to SME's.
SME's are also the high contributors to other tax types like RUC and Fuel taxes.
I think you have put all companies together under the corporate tax take.....while I would draw a clear line between a publicly listed corporate and the majority of smaller companies. Or there is the international method that distinguishes by numbers of employees.
Then there is the corporate welfare issue:
http://www.taxpayers.org.nz/no_more_corporate_welfare
You might like to also read this:
http://www.taxpayers.org.nz/one_tax_law_for_all_apparently_not
Heres the deal.
Inequality - CEO's and other upper upper management boffins pay themselves ridiculous amounts of moolah.
They take a haircut - forgo that armani suit, be gone porsche carrera - and the worker on the factory floor gets paid enough to support their family without working 3 jobs.
Small loss to the upper echelon, big gain to the have nots.
You really believe that?
Lets use Freightways NZ as an example of why the CEO (convenient because of his remuneration of ~1mil) is underpaid relative to his line managers.
He earns ~1mil pa, and has ~5000 employees under him. Thus, he earns $200 pa from the productivity of each of his employees.
He has a line manager earning $120k per year, controlling 50 people. The line manager earns $2.4k pa for every productive worker.
So, what's the basis for arguing that it is high paid executives that need to take a haircut on their remuneration?
NB. Dean Bracewell is substantially overpaid, but due to his level of competence not position.
History.In the 50's a CEO in a fortune 500 company was earning roughly 20 times the amount of a worker. Now it averages at 204 times. Take into account bonuses etc etc. The spread is 1000% more than what it once was. This is all part and parcel of the inequalities we are seeing in society today.
All I was saying from the outset was, paying someone a decent wage doesn't mean the cost of the goods they produce has to increase. There is more than one way to skin a cat.
Yes, and back in the 50s we had much higher tax rates and a lot more homogeneity in labour productivity and skills.
"All I was saying from the outset was, paying someone a decent wage doesn't mean the cost of the goods they produce has to increase."
Okay, so, assume you are competing at a level close to or at marginal cost - how do you still stay in business if you do not raise prices when you raise your labour rates?
I, like many here, would be very interested in how this would be achieved? Or to use your verbage, "skin that cat."
I think most CEOs are overpaid. $200K would be a reasonable upper limit for all government / local government / SOEs etc. If you advertised the job at that level you will still have masses of applicants who could do the job very well.
At the same time there are plenty of people, paid $1 million, $5 million $20 million, or whatever, who have destroyed the complete shareholder value as well as jobs of thousands. Paying millions does not protect you from employing completely incompetent menaces.
Doesn't solve the agency theory problem, no. Unless you have long-term incentives you don't get long term results. Perhaps it's time we take another lesson from the business world and apply it to our politicians, with that in mind - a given percentage of your remuneration is available after X years and depends on the position of the country at that time.
Of course you do. Like everyone who earns less than the completely arbitrary figure of $200k that you mention.
Envy is a terrible thing.
It's called pay on performance. Without it, we'd be in the situation of Cuba or the Soviet Union.
Same old story of being comfortable with the poor being poorer, so long as the rich are less rich.
It's not pure pay on performance. There's an element of that, and there are other elements too.
A professional director told me recently that 20 years ago 95% of board appointments in NZ were pretty much just given to mates. Now it's more like 75-80%.
In addition, underperforming CEOs are often paid huge amounts, including huge golden parachutes.
You missed the point Nymad. It's not pay for performance like you say. There is no connection between between these two things in the group we are talking about. Take DHB CEOs and Local Body CEOs for example, earning between $300K and $500K. Each of those could easily have 20 people working for them at the $200K level or below who could do their job just as well. Paying the big bucks does not ensure you get the best people and the best people are not that rare.
Identifying the best people remains a tricky thing (at any level) and we have heaps of example of the highly paid, carefully selected, who have steered the ship into absolute disaster.
... truth be told ... Labour and the Gnats are just lite versions of each other ...it's 'like looking in a mirror , and seeing your own pock-marked pallid reflection grinning toothlessly & inanely back at you ... dribbling & drooling ... lots of dribble ...
The true alternatives are thin on the ground ... TOP and ACT really ... Gareth Morgan is a top act if ever there was one ...
here we go again ... labour scraping the bottom of the barrel ... stirring the employment swamp again - they are good at that, its the old emotional tool in the rusty box taken out each time to please the trade unions and the 2,9% of workers who are on minimum wage ...Hollow promises "as economic conditions allow" !!! ... re-wording the trial period and imposing referees for dispute , no lawyers , final decisions, and all that sort of dictatorship crap ... Time and again, they have run out of fresh ideas ... the more the reveal the deeper they sink ....
I thought some called tax cuts as bribes? .... What would you call last minute min wage, living wage, and 26 week maternity leaves lolly scrambles ... these are NOT Sugar Hits eh...???
Business confidence is high, and unemployment is down and we are doing well because Labour and the Greens are NOT in government ...
Eco Bird, I totally agree! And furthermore I cannot imagine that Labour has any other agenda than tax increases. Apart from the black budget of Nordmeyer and the innovations of the Lange government, this is what they have always done. The thing iis, under the willing cover of Jim Anderton, Clark & Cullen raised income tax in the face of the GST the previous Labour Govt had introduced but of course, with a compensatory reduction in income tax. If that wasn't a heck of a tax grab I don't think any other since King John could have done better! What Anderton claimed were big greedy earners included in fact ,many thousands of NZ'rs reaching a stage of their lives in terms of seniority and a relative salary. That usually coincided with beating the mortgage and getting to save for retirement. Instead Labour said, we will just help ourselves to that.. At that point it became very clear that Labour could not be trusted with your vote again. Don't believe me? Ask Peter Dunne.
Votes for either Labour or National will merely ensure it will be the same old same old. If many more vote for the minor parties there is substantial hope that issues that truly impact on most voters may finally be addressed. For example, if Aucklanders continue to vote for the two major parties then you deserve unaffordable houses and ever longer commutes. Studies show that two party systems change NOTHING. We voters need to use the power of MMP.
Dige , you are 100% on the money on that comment , there is virtually no difference between National and Labour policy , EXCEPT that Labour cannot be trusted to not increase taxation , either under the demands of the Greens ( for pet projects and banning diesel engines ) or Winston ( for the oldies ) , or under the weight of having to pay for the losses incurred in building tens of thousands of houses to sell at a loss
@ Rick , if you build a house and sell it a loss , someone has to carry the loss ........... and it will be the Kiwi taxpayer.
That's the harsh reality of the world , no matter how worthy you may think that is .
And remember , 2 of my 3 offspring need houses and we will be first in the queue for this largesse of cheap housing , especially if they can be bought where someone else carries the loss
That is true, and don't forget it's exactly how housing was made affordable via these government activities in the first place. Taxpayers contributed to a better overall result and the ultimate resulting high level of home ownership achieved by the 1980s.
We do exactly the same thing with medicine. Some of us need less than others, but by spreading the load all of us get covered for the basics at a reasonable rate.
That's what earlier NZ governments' and societies' efforts achieved. That's why you have a house.
In addition, do not forget the bulk purchasing power a government have. Pharmac gets much better prices for medicines than Kiwis would otherwise get purchasing from a duopoly (for example, if Fletchers sold medicine).
As others have said this really is no different from Nationals increasing of subsidies and benefits. What is needed are policies that deliver affordable house prices, real competition in the food and fuel markets that will lower prices. The other way to increase the real wealth of every one, would be to facilitate meaningful improvements to our flat-lining productivity. A reduction in immigration would have the same effect as increasing wages, but it would also force employers to increase productivity. It would also go some way toward making affordable housing available.
At the moment I am reading some material that described how The Black Death plague lead to working class people enjoying a very long period of increasing wealth. Pretty obvious, because there was plenty of housing an a lack of working class staff, so their wages went up and housing costs dropped. What then happened was that they started spending this new found wealth, so businesses ended up doing very well. This then pushed industry into finding methods of increasing the productivity of their limited and expensive labour force. This lead to the industrial revolution which raised the living standards of all for the centuries that followed.
I am disappointed that labour seems so bereft of any truly creative thinking and seems to be happy to track along in the same old grove that clearly is not working. They would be better than National but surely they should be aiming a lot higher than that.
What is needed is recognition that this time really is different. Productivity and growth are maxed out. Real wealth is being destroyed to create phantom wealth. We have all the living standards we need.
The real issue is highlighted by the PM's recent statement "we have to keep the economy growing before everyone can share the benefits". Exactly where do we see the economy growing to? When do we share the benefits? Why are we continuously wanting more?
Any creative thinking is the responsibility of we the people. Expecting any government to solve any of the current issues is delusional. Note: the solution is not more money, more wealth or economic growth.
So far nobody has mentioned by far the most important of the five points. The first four are worthy of the balanced discussion they are getting from the majority of contributors but it is the 5th that is most essential:-
Doubling the number of Labour Inspectors.
I'd prefer quadruple. Without that the remainder are pie in the sky if we retain our current immigration rules. https://www.auckland.ac.nz/en/about/news-events-and-notices/news/news-2… - note some exploitation probably occurs in every society but the word is "Widespread".
I want an honest workplace for my son who has just started work with enthusiasm but poor educational results.
They know their rights. You or I would just resign or call in the police but they are blackmailed because they will jeopardise their chance of permanent residency. Nobody seems willing to really tackle this issue. I think it is because only 3rd world countries are involved so the public is scared of being accused of racism. However the way I see it is if it was happening to Kiwis in foreign countries the media would explode with rage. So we all look the other way and that is racist.
I was talking to an older gentleman the other day and he - a multiple-time National voter - noted that measures such as the Housing Corporation, low-interest govt. loans, government builds etc. were actually brought about because many Kiwis faced the same sort of reaming they do today in the face of monopoly / duopoly conditions (e.g. for building supplies), highly-limited access to home ownership, and money being sucked out of NZ.
It's many of these measures that then went on to drive the building that created affordable supply and resulted in a high rate of home ownership by the 1980s.
It may just be time that we have more concerted government efforts to fix housing supply (even in public-private), not limited by blind adherence to a free market philosophy but in recognition of how things were achieved the first time around in NZ.
If we abandon the young Kiwis to their own ends and insist it's all about "standing on your feet and doing everything yourselves" (despite not having had to live up to such a philosophy) then at least consider some obligation on both sides...and consider such measures as means testing the pension against the value of one's primary place(s) of residence, or such-like.
Rick the "older gentleman " could have been me , I would love the working mans paradise days that were around 2 generations ago , and which I missed out on .
Quite simply , its not going to happen , even if we went back to hardcore socialist policies of the 60's and 70's
when almost everything was a nationalised industry and we had rent controls , price controls , exchange controls , subsidized bread and milk , and if you were too stupid to find a job the Government would employ you for life in the an SOE or the Army or Navy or railroad or dockyard .
Its gone forever , and Labour are being dishonest telling people they can wind the clock back
Realistic comment & fair enough but nevertheless have some sympathy with Rick as things have gone around in a circle to a degree & emerged in different clothing. For example Fletchers dominate the building industry & the government,under various guises ,is the biggest shareholder. As well the government, thruACC, Super fund other SOEs, has substantial shareholding in insurance companies, Tower for example. So when you get the CHCH EQ situation it can all become a bit incestuous particularly and obviously, when EQC entered the
mix. It's not really a free market when consortiums, corporates, conglomerates can dominate & intershare sectors & dance around with quite some ease, the ineffectual dead hand government bureaucracy we are stuck with, for instance , the insurers.
The ideological bent of "free market" vs "socialist paradise" is not useful at all.
We need to be looking at what is the best way to solve particular problems.
Most Kiwis seem to be aware that doing away with Pharmac and leaving it all to the free market would not deliver cheaper medicine prices to Kiwis. If you conflate government involvement in - for example - delivering more affordable home ownership - with a need for pervasive hardcore socialist policies and everyone being employed by the state, that's a major problem. Likewise if we demonise protectionism we forget that countries often used it - and government participation with industry - to nurture and foster an industry locally prior to opening up their market - e.g. that's why Japan is a major force in vehicle manufacturing.
It's taking us back to the days where people were demonised for being communists even for daring to pay a wage that would allow their workers to purchase the products they made (e.g. some people's reaction to Henry Ford paying $5 a day), if we simply pigeonhole ideologically. The Pharmac model shows that there are some areas where a society is better placed to approach the market with pooled resources.
But the world seems to move in cycles and there's every possibility that populations could look for leaders who work to break the increasingly exploitative powers that companies have over them. When the demographic changes to be majority renters, we may suddenly find that voters are looking for leaders who will rebalance the current intergenerational transfer that has been property.
The real issues I would have thought are the fact we don't have a free market.
Building is highly regulated in fact the number of government entities involved is outrageous.
I'm of the opinion that government interventions from the 50's, 60's and 70's (note 30 year cycle) caused the severe economic meltdown in NZ in the 1980's.
With staff shortages in most sectors, do you really believe that bosses don’t want to pay more for staff? Sure, they do, but why should they pay new staff with no skill or experience more money from the get go? Will more money at the start of a career encourage hunger for success or aspirations of leadership or dedication to ones chosen industry? From my experience, it hasn’t. What I have witnessed in the last 11 years since the minimum wage has almost doubled is that today with more money in their pocket people tend to flip from one industry to the next to easily, the higher minimum wages they get today only enables them to flip from industry to another industry on a whim and not encourage them to complete the trade, internship or skill they started.
In 1986, me and a bunch of other business owners and skilled trades people started our trades on $80 a week when the dole was $94 a week! It made you resourceful I can tell you! And what were interest rates back then? Dunno? Was concentrating on being resourceful and not losing my job!
Do policy makers really understand the cost of training a person, especially in a labour based service industry?
Let’s have a look:
Unqualified new employee let’s say $16.50 per hour + 23% for Leave & entitlements, ACC, Kiwisaver, Annual training, Health checks etc etc = $20.29 per hour cost.
Tradesmen let’s say $34.00 per hour + 23% for Leave & entitlements, ACC, Kiwisaver, Annual training, Health checks etc etc = $41.82 per hour cost.
Let’s say the Tradesmen is billed out at $90.00 per hour + gst.
Let’s say the trainee is billed out at 20% of that $18.00 per hour + gst (what client wants to pay $90 per hour for someone whom is learning)
So, let’s say the tradesmen spends 1 hour per day training a new trainee for 3 months (12 weeks let’s say)
So that one hour a day of training costs:
$20.29 the trainees cost.
$41.82 the tradesmen’s cost.
$90.00 Revenue lost for tradesmen.
$18.00 Revenue lost for trainee.
Total equals $170.11 for one hour of “one on one” training per day for trainee’s first 12 weeks. That’s $10,206.60 cost to employer excluding other offsite courses etc for first 12 weeks. So then a percentage of these people will say “I’m not really feeling it, I’m going to try something else” and leaves. So, if you divide the leavers costs over the staff whom stay through till the end it is actually higher than $10k per employee for the first 12 weeks of induction.
High levels of immigration, particularly at the low or unskilled levels, is why New Zealanders havent seen any increase in wages. Its the same in Australia. And the US. Its not rocket science folks. The Bank of England did a study proving that wages fell in industries where immigrants were employed. This is high school economics - the greater the supply of something, the lower the price you pay for it.
And studies coming out of the US States where they recently raised the minimum wage to $15 is showing that people are worse off, as hours worked and the number of people employed have fallen since the new minimum wage was implemented, and the increase in wages was not enough to offset those lost hours/jobs.
Nothing in Labours package will change anything for the subsistent. I think we need to "balance" the distribution of wages or wealth if you like... also need to look at costs... for example, If two thirds of income is spent on rent and power, they can never win and it will only ever result in poorly spent tax dollars buying larger and larger prisons.
Now if'n we could just hook a Stirling engine and a genny to the heat on this 'ere thread, we could help the Power Statistics out.....
More seriously, Oregon run this lab experiment some time ago and the results are in - the Atlantic has the scoop here https://www.theatlantic.com/business/archive/2017/06/seattle-minimum-wa…
And a second opinion, from that paragon of Real News, CNN, here: http://money.cnn.com/2017/06/26/news/seattle-minimum-wage-15/index.html
A final word from CNBC, from fast-food bosses: the robots make the minimum, wage zero, because you are out of a job...http://www.cnbc.com/2017/04/23/andy-puzder-on-automation-if-robots-take…
Everyone here and in most other discussions I see are fixated on the employer as the person controlling the wages.
We’ll to an extent that’s right but in a country the size of New Zealand it is easy for one or two large companies to stand over an industry with a big stick and say, “this is what we pay, if you don’t like it don’t do our work” there is a number of industries in New Zealand where a small number of companies control a high percentage of the flow down work / business supply market, small to medium business’s supplying these industries are at the mercy of this small number of companies. All too often the companies are from overseas too. Industries affected could be the supermarket suppliers, suppliers to the insurance industry, suppliers to the telecommunication industry and I suspect many more.
This is a major issue for New Zealand, an example is the industry I operate in (employing 25 staff) which is one of the ones described above, in 2005 the companies controlling the industry allowed us to charge $50-60 per hour and the minimum wage then was $8 something from memory, progress 12 years later and only in the last 12 months have some, yep, only some of the work providers (companies controlling the industry) have started to allow us to charge $70 per hour and the minimum wage now is $15.75. Now you economists out there factor in your inflation etc etc and see what our real decrease in revenue per hour has been, then factor in the increased cost of employing people over the same period (ACC, Kiwisaver, extra week holiday, H&S etc). Then ponder why young people don’t want to enter an industry where the qualified rate of pay has been stagnant for years.
If policy makers are going to increase the entry level wages what are they going to do about the activities of large companies that control the other end of the spectrum? Most employers are the meat in the sandwich, but to often are the villain in these discussions. I think most employers would agree that they would prefer to employ young kiwi’s and give them the opportunity to build a career rather than import supposedly skilled labour. Maybe I’m naive but I would think most employers are motivated to build New Zealand not exploit it.
Why does Labour feel that it has to constantly dictate how business should be run?
Same old. Same old. Tax and spend tax and spend.
When will they learn that you can only slice up the pie so many ways? Something has to give.
It would be refreshing to see labour come up with policy that enables the economy to grow. However suspect that is not in their psyche.
Are there any Labour ministers that have actually been in business? Or are they like Goff…academics that have sucked off the teat for their entire life.
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