Labour’s unemployment policy

Labour misnamed the employment policy it announced yesterday – it’s actually a recipe for increasing unemployment:

Labour’s intention to increase the minimum wage to two-thirds of the average wage would hurt business, cost jobs and reduce growth, Labour Minister Simon Bridges says.

“Labour’s policy to immediately increase the minimum wage to $16.25 would cost at least 6,000 jobs, and a wage of $18 would cost around 16,500. If you want to make people unemployed this is a good way to go about it,” Mr Bridges says.

“Setting the minimum wage represents a careful balance between protecting low-paid workers and ensuring jobs are not lost. You cannot legislate your way to higher wages with the stroke of a pen.

“If it’s not based on increased productivity, simply paying people higher wages is a cost that gets passed on to New Zealanders as higher taxes, reduced competitiveness, inflation and fewer jobs.

“Labour’s promise to scrap National’s successful 90-day trial legislation would also cost thousands of jobs. Research showed that a third of employers who used the trial period would not have hired a new employee without it. And an overwhelming majority of employers have kept staff on after the trial period ended.

“As for Labour’s promise to pay all core public service workers at least the Living Wage: why should core government employees — who only represent about two per cent of the workforce — earn more than a private sector employee doing a similar job?

“Labour’s promise to implement industry standard agreements is a return to the 1970s and is a cynical payback to the Unions for their support.

“It would require all regional employers to pay the same pay rates as one in downtown Auckland. That would cause real damage to regional economies.

“This Government is achieving strong job growth by operating flexible labour market policies that encourage employers to take on new workers.

“Flexibility, choice and fairness in the labour market helps create jobs, increase wages and encourages innovation, and it is critical for supporting a stronger and more productive economy,” Mr Bridges says.

Labour is still suffering under the delusion that it can legislate wealth.

It doesn’t understand that increasing wages by diktat isn’t sustainable and anything that adds costs, complexity or risk to employing people will increase unemployment.

2 Responses to Labour’s unemployment policy

  1. Roger Barton says:

    It’s easy to make promises with someone else’s money.

  2. JC says:

    That means the average ordinary time wage will rise which in turn means superannuation must be adjusted to maintain the pension at 66% of after tax average wages.

    Beneficiaries get a cost of living increase soon after that as well to meet inflationary processes.. wage increases not based on productivity are inflationary.

    So in effect the whole country gets an unearned increase in income which has major implications for tax increases which will have to reach much further down the income ladder to pay for the wage increase. Talk about Indian Givers!

    JC

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