Minimum wage increase on hold

April 1, 2020

The government has come to its senses and put a hold on the minimum wage rise that was supposed to come into effect today.

Employers, business groups and economists have argued that imposing a pay increase on businesses in the current environment would endanger businesses and risk jobs for the people the policy was aiming to help.

“We realised that a steep increase would have been imprudent at the best of times and foolish in the extreme when so many businesses are unable to function and so many people are facing redundancy,” spokesperson for the Ministry of Policy Reversals Ms Fairly Frugal said.

“When the government is asking everyone to unite for health’s sake we realised we had to stand together with employers and wait until the economy picks up before forcing a wage increase on them.

”It was a difficult decision but difficult times require governments to accept that political philosophy has to take a backseat to prudence and common sense.”

Business groups greeted the announcement with muted enthusiasm.

”It’s good to have our concerns acknowledged, but we’re not very happy that the hold on the increase will only be until noon,” BusynessNZ spokesperson Ms Penny Wise said.


Minimum wage hike incentivises mechanisation

March 20, 2018

Case study 1: friend who grows capsicums has gradually been mechanising the processing as technology improves and money allows.

It improves efficiency and lowers costs.

It also requires less labour and he says the minimum wage hike which is being imposed on employers by the government will increase the costs savings and incentivise him to increase mechanisation.

Case study 2: a company which picks and packs fruit has a lot of problems getting enough reliable staff when it needs them, even with the Recognised Seasonal Employment (RSE) scheme.

The hike in the minimum wage provided the incentive to mechanise further. The process which needed 24 workers now needs only 4.

Most employers accept that regular increases to the minimum wage and the flow-on effect on higher wages is the cost of doing business.

Most cope when the increase is modest.

But the jump in the minimum wage to $20 is considerably more than modest and providing an incentive for those who can mechanise their processes to do so.

 

 

 


$NZ minimum wage earners will be near global top 1%

October 28, 2017

The only country with a higher minimum wage than New Zealand is Australia.

Australia’s is $US13.59.

Ours is $US10.96. That’s an annual income, for a 40 hour week, of $US22,796.

The government has determined that the minimum wage will increase to $NZ20 an hour by 2021. That’s about $US14 which would be an annual income for a 40 hour week of $29,120.

New Zealand’s current minimum wage is very high in comparison with that in other countries.

It will probably be the highest in the world when it gets to $NZ20/hour and will put those on the minimum wage close to an annual income of $US32,400 a year which is in the top 1% of earners in the world.

I doubt if anyone on $NZ20 an hour would feel wealthy.

That figure of global income earners is low because in very poor countries a lot of people earn very, very little.

That’s not an argument for paying people here the pitiful amounts many earn elsewhere.

But it does show that the current minimum wage is generous in comparison with that in most other countries.

 

 

 


Automation answer to artificially high wages

August 22, 2017

NZ First wants a minimum wage of $20 an hour. The party also wants less immigration.

A higher minimum wage and fewer migrants are being promoted by other parties on the left too.

The dangers of that can be seen in the UK where British farms are preparing to work with fewer seasonal workers after Brexit:

The production of strawberries, raspberries and other berries has increased from some 60,000 tonnes a year to over 140,000 tonnes, and these are picked almost entirely by migrant workers from the EU. In 2015 about 85,000 seasonal agricultural workers came to Britain, 30,000 or so of them to pick fruit. As a recent report by Andersons Farm Business Consultants concludes, without EU labour the sector’s recent growth “would not have been possible”.

As Britain prepares to leave the EU and probably end the free movement of workers from the continent, farmers are scrambling to find farm hands. But they are also exploring more rigorously the alternatives to a bountiful supply of cheap labour, such as using more automation and increasing existing workers’ productivity. . .

There is no doubt that farmers are struggling to find workers. There are some Brexit-related reasons for this: the pound has fallen precipitately against the euro; and Britain is now often perceived to be “a xenophobic and unfriendly country”, says John Hardman, a director of one recruiting agency, HOPS Labour Solutions.

But the shortfalls also reflect structural shifts in the EU economy, in particular the rising prosperity, and higher wages, of those countries such as Poland and Romania that have historically supplied workers to Britain. . . 

Alison Capper, who chairs the horticultural board of the National Farmers Union, a lobby group, says that some British farmers are now having to make decisions “as to what to pick and what to leave”. But for now there is unlikely to be a lot of fruit left rotting in the fields. And to forestall such an eventuality, many in the industry have been heeding the government’s advice, to recruit more British workers, automate, or become more efficient—but with very mixed results.

Trying to recruit more British workers has, in the words of Mr Hardman, been a “staggering disaster”. He has managed to get only a handful of Britons out of 12,000 recruits sent to 225 farms. Money is not the main problem. Many farms pay above the minimum wage of £7.50 ($9.65) an hour, and fast pickers can earn up to £12 on piecework. But most Britons seem not to want to move to where the farms are, nor to take up jobs that only last for the season and involve getting up at 5am to work outdoors.

This is not confined to the UK. New Zealand horticulturists have the same problems, though ironically some of the migrants who will do the work here are from the UK.

Robots, on the other hand, are perfectly happy with such conditions, and are getting ever more dexterous at picking hard fruit, if not the squishier sort. Machines to pick strawberries and apples are already in use. They can pick at only about one-third the rate of a human, and farmers reckon that they miss about 15% of the crop. But they can make up for that by working 24 hours a day. They are expensive, though: one of the most popular strawberry-pickers costs about $250,000. Most farmers estimate that their large-scale deployment could still be a decade off.

As more businesses use robots and technology improves the cost will come down.

In the interim, farms have been trying to wring more productivity out of their existing operations. Many have invested in metal tabletops to grow strawberries so that workers can pick them more quickly. Farmers now grow particular strains that produce more fruit over a longer season, such as ever-bearing strawberries. Others are spending more time on training their pickers. One farmer, Harry Hall, says that he has been able to improve his workers’ picking speeds by about 15% this year. Valya, a Bulgarian university student working on his farm in Twyford, 50km west of London, says that whereas she started out picking raspberries at 9kg per hour, after training she can pluck 11kg. . . 

Increased productivity is better for workers, businesses and the wider economy.

But artificially boosting wages through an increase in the minimum wage would add costs to businesses which would be passed on to consumers.

And if immigration is cut the problem will not be how much each worker can do, but how to get the workers who are willing and able to do the work.


Pay rise ought to be commended

August 17, 2016

Spark is  introducing a benchmark salary above which its staff are paid.

All non-commission full-time staff will earn at least $40,000 a year, and front-line commission employees who earn a lower base salary will earn an average of $42,000.

If compared to the current living wage of $19.80 an hour, $40,000 a year minimum falls short at $19.23 an hour.

Spark general manager of human resources Danielle George said the company wanted to “do the right thing” for its staff and attract the best talent, as well as contribute to turning New Zealand into a higher wage economy. . . 

“We have revised our entire value proposition, exploring how we can best deliver base pay and meaningful benefits, all designed to meet the needs of a very diverse workforce.”

The new Spark pay policy has benefited more than 250 staff who have received pay increases over the past two years to bring them up to the new level. . . 

That ought to be cause for commendation but the Council of Trade Unions’ Richard Wagstaff doesn’t think so:

“Their $40,000 salary that they’re promoting is actually a little under the living wage which doesn’t really inspire too much in terms of fair pay for people.”

Spark says the pay scheme is a commitment to a higher-wage economy, and once you take into account staff benefits, the overall package is better than the living wage.

“We want to do the right thing for our people and to attract the best people to a career in Spark,” says general manager of human resources Danielle George.

“If that sets a standard that encourages others to follow, that’s got to be a good thing for New Zealand.”

Benefits include credit towards Spark products and services, life and income insurance, flexible working arrangements and interest-free loans to buy company shares. . .

Spark is offering more than $4.00 an hour more than the minimum wage which is $15.25.

Paying that is a legal requirement and it’s reviewed each year, taking into account that increasing it could price some people out of jobs and threaten some businesses. The living wage is an artificial construct which takes no account of what’s affordable.

Another union, the PSA is praising three Wellington mayoral candidates who support the living wage:

The PSA held a forum for candidates which was attended by Justin Lester, Jo Coughlan, Helene Ritchie, Keith Johnson, Andy Foster, Nicola Young and Nick Leggett.

Mr Lester, Ms Ritchie and Mr Leggett confirmed they support the Living Wage for all council workers, including those employed through contractors and council-controlled organisations.

“We’re extremely pleased to hear three candidates plan to build on the good work already done by Wellington City Council towards making this a fairer city”, PSA National Secretary Glenn Barclay says.

“The PSA decided to hold this forum to hear from the candidates first-hand about their vision for Wellington – including their stance on local ownership of local services and privatisation.

“Wellington City Council has already taken great strides towards becoming New Zealand’s first accredited Living Wage council since it voted to do so in 2013.
“We know this has the backing of Wellington’s voters – what’s now needed is a mayor and a council that will deliver on the promises and finish the job.”

Do voters really support that and if they do, are they happy to be rated more to pay for it?

Unlike the minimum wage, the living wage takes no account of the value of work being done or the danger that some businesses couldn’t survive if they were forced to pay it.

It’s also based on what a vicar thinks a family of four needs to participate in society which ignores the fact that not everyone has to support a family of four on their wages, and if they do Working For Families would give them a generous top-up if they were on a low wage.

New Zealand isn’t a high-wage economy and that’s a weakness. But the solution is increased productivity and upskilling, not the job-threatening imposition of the so-called living wage.


The story but not the whole story

April 1, 2016

RNZ asks is the minimum wage increase helpful or hopeless?

. . .  a cleaner who does night shifts at Auckland Council said the rise was still not enough to make it easier to support her family.

Before today, Lupe Funua’s wage was $15.10. That rate would be pushed up 15 cents to match the new minimum wage.

With a three-year-old son at home, a baby due in a few months, and a husband who was also a cleaner on minimum wage, she said every week she worried she was not earning enough. . . 

That’s the story but not the whole story which should include the family’s entitlement to Working for Families and they might also be eligible for housing assistance.

. . . Once the bills were paid, she said she had nothing to send home to her parents in Tonga, which devastated her. . . 

Wanting to help her parents is commendable but an employer can’t take that, or any other wishes however noble they might be, into consideration when determining what wage rates are affordable for the business.

Workplace Relations and Safety Minister Michael Woodhouse said the government first considered a 25-cent rise, but decided to be more generous.

He said lifting the rate any higher would mean some people losing their jobs.

That is a very important part of the story. Increasing the minimum wage can cost jobs and drives the move to more mechanisation. It also has a flow-on affect for people who are paid more the legal minimum.

Federated Farmers dairy chairman Andrew Hoggard said any rise would affect the struggling dairy industry.

“I think the concern for farm employers might be around farmers employed in the roles above those on the minimum wage – farm assistants – who would also get a boost,” he said.

“That’s going to be the discussion that farm employers will have with the employees and for many it’s not going to be an option.” . . 

I don’t know anyone who pays farm workers the minimum wage and most farm staff have non-cash rewards like a rent-free house which takes their annual effective pay well above the minimum.

 

 

 


Labour doesn’t understand business

March 1, 2016

Labour said it’s worried about jobs which will disappear but is complaining the increase in the minimum wage isn’t high enough.

The minimum wage is just that, the minimum. It’s a floor not a ceiling.

Any business which can afford to pay its workers more than that can and many will.

But not all work is worth more than that and imposing higher costs on businesses without lowering other costs or increasing returns will put other jobs and whole businesses at risk.

It will also increase the move to replacing people with machines which is supposedly one of Labour’s big worries.

In another example of Labour’s lamentable lack of understanding of business principles, the party wants to force forests to sell logs to local mills.

Forest owners responded:

Forest owners say they are keen to sell their logs to local mills, so long as the terms of sale match those from export markets.

Forest Owners Association chief executive David Rhodes says there have been cases where local mills have been unwilling to do this.

“It’s not just about price. It’s also about the payment risk, the length of the contract and the quality of the logs on offer. Many modern mills have tight specifications for log supply. Logs that don’t meet those specifications are usually exported. This will always be the case,” he says.

Responding to a call from Labour Party MP Stuart Nash that “foreign forest owners” should be forced to sell logs to local mills, Mr Rhodes says owners of forests – foreign, corporate, private companies, iwi, partnerships or individuals — look for terms and conditions that give them the best overall returns.

“In many cases they get only one chance to do this, having spent 27 years growing their trees. This is crucial – forestry is not a one-way bet. Just ask those forest owners, particularly in Northland, who are not replanting after harvest, because log prices are not high enough to justify re-investment.”

Mr Rhodes says it is unfair to single out overseas owners of large plantations as the reason for mill failures.

“It may appeal to the emotions, but does not advance public understanding one iota. Overseas owned forestry companies are among the leaders of the industry. They make significant investments in jobs, worker safety and the environment.”

 

He says forest owners understand the importance of New Zealand having a viable wood processing industry and are partners in the Wood Council which is committed to having more value added to logs in NZ.

“We are talk regularly with politicians from the various political parties about policies that will assist the forest and wood processing industries remain vibrant, viable industries providing employment in the regions. Mr Nash’s proposed policy is not one of them.”

Forestry is a risky business with a long time between planting and payment.

Forest owners aren’t charities. They’re businesses and need good returns to if they’re going to continue in business and employing their own staff.


Labour’s unemployment policy

July 31, 2014

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.


$16 minimum wage ‘just a start’

July 7, 2014

Labour is planning to lift the minimum wage from $14.25 to $16 an hour in its first year in government – and that’s just the start.

Unions have been lobbying Labour on the issue, but the pressure is still on; they want much more.

Labour leader David Cunliffe is comfortably nestled between Labour’s union affiliates.

“Colleagues, comrades – we are part of a broad labour movement,” says Mr Cunliffe.

The unions are strong within that movement. They are pushing hard for a jump in the minimum wage.

Labour has already indicated two increases in its first year – one before Christmas from $14.25 to $15 an hour, and today came the details of the second.

“Even that’s starting to look a bit stingy, so we’re looking at a further increase within the first year,” says Labour’s labour spokesperson Andrew Little. “I expect it will be up around $16 an hour.”

So $16 an hour by April next year – for the unions leaning on Labour, it’s a pay-off, but just a start.

A pay-off for unions but extra costs for employers, price increases for customers and less job security for workers.

“It needs to be more, above $18, but it certainly would be a big boost,” says president of the Auckland Service and Food Workers Union (SFWU) Jill Ovens.

“I think the second increase needs to be more than $16; it needs to start moving to two-thirds of the average wage over the term of the Government,” says CTU president Helen Kelly. . .

New Zealand does have a problem with low wages.

But if pay increases are to be sustainable without boosting inflation and threatening jobs and the businesses which supply them, they have to be linked to productivity increases and the ability to pay them.

Add other Labour policies which will reduce flexibility and increase regulation and businesses and the jobs which rely on them will be even less secure.

Unions which regard a $16 minimum wage as just a start could find it is also the end to some jobs and some businesses.


Higher wages, lower benefits, higher costs

June 11, 2014

The law of unexpected consequences struck when the minimum wage was increased in the USA city of SeaTac:

. . . Every debate over increasing the minimum wage comes with predictions that the law of unintended consequences will result in the opposite of what a higher wage is designed to accomplish—a better standard of living for low-wage workers.  Employers cannot pay a worker more than the value of their output.  In other words, if an employer must pay a worker $15 per hour, they must ensure the worker produces at least that amount, or they must figure out a way to reduce the cost of that labor.  So forcing employers to pay workers an artificially high wage creates perverse incentives for employers to find other ways to cut labor costs.

One way employers are cutting their labor costs in SeaTac, which recently mandated a $15 per hour minimum wage for certain workers, is by stripping away the benefits they used to offer. 

Northwest Asian Weekly reports that employees earning the new wage in SeaTac have lost benefits such as 401k, paid holidays and paid vacation, free food, free parking and overtime hours.  One hotel waitress said she is earning less because tips have decreased since the high wage has been in effect.  In many cases these benefits plus the lower state minimum wage added more value to workers’ earnings than the new $15 wage.

As one SeaTac worker put it, “It sounds good, but it’s not good.” . . .

But workers aren’t the only ones paying more, consumers are too:

Many SeaTac businesses have tacked on an additional fee to mitigate the increased cost of labor.  On the receipt below, a $6.93 “living wage surchage” was added to a $84.00 parking charge.  That is the equivalent of a 8.25% tax.

Contrary to what supporters claim, increasing the minimum wage does not create jobs and stimulate the economy.  The higher wages are not free money.  The increased cost must either be absorbed by the employer, which is impossible for many who already operate on shoe-string profit margins, or it must be passed on to workers, in the form of reduced hours and benefits, and consumers, in the form of higher prices.  Either way, someone pays.

Another consequence of higher wages is increased mechanisation to reduce the need for staff.

McDonalds recently went on a hiring binge in the U.S., adding 62,000 employees to its roster. The hiring picture doesn’t look quite so rosy for Europe, where the fast food chain is drafting 7,000 touch-screen kiosks to handle cashiering duties.

The move is designed to boost efficiency and make ordering more convenient for customers. In an interview with the Financial Times, McDonald’s Europe President Steve Easterbrook notes that the new system will also open up a goldmine of data. McDonald’s could potentially track every Big Mac, McNugget, and large shake you order. A calorie account tally at the end of the year could be a real shocker. . .

Proponents of the so-called living wage here pay no heed to the fact that money for higher wages has to come from somewhere.

If the wage increases aren’t at least equalled by higher productivity and profits then costs have to be cut or prices increased and it’s the very people the policy is trying to help who will be hurt most by that.


Why business confidence matters

March 7, 2014

First the good news:

Finance Minister Bill English talked up NZ’s economic progress this week, telling Parliament Treasury’s Monthly Economic Indicators for February show the positive momentum in the economy in the September 2013 quarter continued into the December quarter. The number of people employed increased by 66,600 in 2013, unemployment fell to 6%, and total weekly gross earnings were 5.2% higher than a year earlier, reflecting the combined effect of wage and job growth. Labour force participation, the proportion of the adult population available for work, is close to a 28-year high. The rate of building consents is at the highest level since 2008 and has doubled since 2011. Consumer and business confidence are relatively high.

And why it matters:

English says the Govt is focused on a more productive and competitive economy, and that means working to rebalance the economy so more of it is exposed to world trade. “In the long term we need to see less Govt spending and less domestic consumption, and more focus on profitable export sectors that earn a living for NZ from the rest of the world. The importance of business confidence is it tends to drive investment decisions. So when business is confident about the future, it is more likely to borrow the money or raise it from other sources and invest in the plant and equipment and the opportunities for more higher-paying jobs. Without that confidence, we will not get the investment and the better-paying jobs.”

And for those who think the minimum wage is too low:

The ANZ Business Outlook survey shows 71% of firms are optimistic, the highest level since 1994. English says the Govt is focused on locking in gains from this positive outlook where it has a direct role in doing so. The increase in the adult minimum wage to $14.25 an hour, from $13.75 an hour, takes it to a level 19% higher than in 2008. The Govt has sought to balance the needs of workers and businesses to keep the minimum wage at around 50% of the average wage, and this relationship of the minimum wage at 50% of the average wage is the highest in the OECD. . .

Those who complain the minimum wage is still too low forget too things – imposing a minimum wage costs jobs and it’s a floor not a ceiling.

Apropos of which, does anyone know how many people receive the minimum wage, how many of those are full time, permanent employees and what ages they are?


Why stop at $15?

February 25, 2014

Labour Minister Simon Bridges announced the minimum wage will increase from $13.75 an hour to $14.25.

 . . The Starting-Out and training minimum wages will increase from $11 an hour to $11.40 an hour, which is 80 per cent of the adult minimum wage.

“Setting these wage rates represents a careful balance between protecting low paid workers and ensuring jobs are not lost,” says Mr Bridges.

“The increase announced today balances the needs of both businesses and workers and will have minimal impact on the wider labour market and inflationary pressures.

“This increase will keep the minimum wage at around 50 per cent of the average hourly rate, which is the highest rate in the OECD.

“The Government is firmly focussed on growing the economy and boosting incomes. Through our Business Growth Agenda we are creating opportunities to help grow more jobs in New Zealand, for New Zealanders.” . . .

That nearly half those surveyed think that’s not enough goes to show most people don’t understand the issues.

The only sustainable way to increase wages is by economic growth.

Without an increase in productivity and profit, an increase in wage rates will result in a decrease in job numbers.

The Green Party doesn’t understand that.

The Greens would have immediately raised the minimum wage to $15 an hour, Green Party Co-leader Metiria Turei said today. . .

Why stop there?

“Around 125,000 kids live in families where the adults earn less than the living wage. It is in the government’s hands to end poverty for working families and improve the lives of those kids. . .

Those families get Welfare for Families through which those with two children pay no net tax until they earn $50,000. Any increase in their pay will reduce their welfare. That’s less money from public coffers but they’ll be no better off and could be worse off if jobs are lost.

That living wage is an arbitrary figure and last week’s increase in it was based on different methodology from the original figure:

The ‘new’ living wage has shifted the goalposts and appears to be more about politics than public policy, says BusinessNZ.

Last year the living wage campaign said $18.40 should be the living wage, calculated on the basis of the living costs of a family of four.

The promoters now say the living wage for this year should be updated to the higher rate of $18.80.

“But the report shifts the goalposts,” BusinessNZ Chief Executive Phil O’Reilly said.

“The increase from $18.40 to $18.80 is not based on the same methodology as last year.

“Using the same methodology, for the same family of four, would show the new living wage should really be $22.89.

“If last year’s formula said $18.40 was needed for a living wage, and the same calculations now show $22.89 is required, why isn’t the campaign seeking $22.89 an hour?” Mr O’Reilly asked.

“Either the original calculations were flawed, or the campaign is just picking numbers out of thin air.”

Mr O’Reilly said decision makers could not have confidence that the living wage figures were soundly based.

“This switch in the figures used is important for taxpayers and ratepayers who are being asked to pay for the campaign. Wellington ratepayers are now funding the living wage policy for council employees and taxpayers would be funding it for all government employees under Labour Party policy.

“There can be no confidence in a living wage proposal set on an arbitrarily changing basis.”

The whole concept of a living wage which decrees everyone should be paid enough to support a family of four, regardless of what the work they do is worth, is flawed.

For the record, all our staff are paid more than the minimum wage.

That’s a decision we make in negotiation with them taking into account their skills and experience, what they’re required to do, the value of all of that and what the business can afford.


Minimum wage not so low

February 15, 2013

The campaign for a living wage has led to discussion on the minimum wage.

No-one is calling $13.50 high, but it’s not so low in relation to the average wage by world standards.

Hon STEVEN JOYCE: The minimum wage is currently $13.50 an hour in New Zealand, which is half the average hourly wage of $27. The OECD’s database shows that this proportion is, in fact, the highest in the developed world, and that, on this measure, our minimum wage is, therefore, the most generous in the developed world as a proportion of the average hourly wage. In all other countries the minimum wage is under half the average wage—for example, in Canada, it is 40 percent of the average wage; in the UK, it is 38 percent; and in the US, it is 28 percent.

John Hayes: Do any industries stand out as having higher than average wage increases?

Hon STEVEN JOYCE: Yes, a few industries do stand out. One of them is the manufacturing industry, where average weekly wages rose 4.1 percent over the last year, and that is actually not a short-term thing. Over a longer period wages in manufacturing have also grown faster than average. Over the last 4 years average weekly wages in the manufacturing sector have risen 18 percent, compared with 13 percent in the economy as a whole. No doubt, that fact has been brought up and discussed at the Opposition’s manufacturing inquiry. 

Hon David Parker: Has the wage gap between New Zealand and Australia grown larger over the last year; if so, will he be providing milestones for National’s promise to close the wage gap with Australia, given that it is growing rather than closing?

Hon STEVEN JOYCE: I do not have that information to hand, but I do know that the member is very careful to talk about the wage gap, rather than the after-tax wage gap, which people actually experience. But again, if the member wants to talk about the differences between here and Australia, fundamentally, the main difference is the investments made in Australia in the resources sector over the last few years. That is the fundamental difference. If the member would like to reverse his party’s ambivalence towards the investment in the resources sector in the New Zealand economy, I am sure we could have a good discussion. . .

Comparing wage rates between countries isn’t simple.

There are a lot of variables including tax rates but there is no doubt that the mining industry in Australia has a very strong influence on wage rates there and the government’s attempts to encourage mining here are met by little or no enthusiasm from the opposition.

 


Starting-out wage to address youth unemployment

October 9, 2012

Labour Minister Kate Wilkinson has confirmed the introduction of a new starting-out wage.

It will help provide young people, whose employment prospects plummeted after the abolition of the youth minimum wage, with more opportunities to get into the workforce.

“The new starting-out wage will create demand for young people by giving employers a real incentive to take them on,” Ms Wilkinson says.

The Minimum Wage (Starting-out Wage) Amendment Bill provides for eligible 16- to 19-year-olds to be paid no less than 80 per cent of the minimum wage.

“The new starting-out wage will help some of our youngest and most inexperienced workers get a much-needed foot in the door, in what is currently a tight labour market.

“The starting-out wage was one of National’s 2011 campaign promises, and designed to provide 16- to 19-year-olds with the opportunity to earn money, gain skills and get the work experience they need.”

Three groups will be eligible unless they are training or supervising others:

  • 16- and 17-year-olds in their first six months of work with a new employer
  • 18- and 19-year-olds entering the workforce after more than six months on benefit
  • 16- to 19-year-old workers in a recognised industry training course involving at least 40 credits a year.

Those who are training or supervising other staff must be paid at least the adult minimum wage.

The starting-out wage will be simple for employers to implement, and will apply for a blanket six months after starting work with a new employer.

“The youth minimum wage was abolished in 2008 by Labour in a move that resulted in the loss of up to 9000 jobs,” Ms Wilkinson says. . .

Labour ignored the warnings that the abolition of the youth minimum wage would make it more difficult for young people to get work.

The steep increase in youth unemployment, proved those who made the warnings right and young people have paid the price for the misguided policy.

This initiative will address that, making the employment of young, unskilled workers less expensive and therefore offsetting some of the cost and risk of employing them.

 


Missing link on Planet Labour

July 30, 2012

There’s at least a couple of missing links on Planet Labour – the one between action and reaction and the one between productivity and wages.

There’s no better example of this than in Dunedin MP David Clark’s ignorance about the impact on an increase of the minimum wage:

” . . . It will affect a couple of hundred thousand New Zealanders, . . . “

I presume he means there are a couple of hundred people on the minimum wage who would get a pay rise.

But what about the people who employ them and the people who might have got a job had the minimum wage not been increased?

What about the people who have to pay more for goods and services when businesses can’t absorb the extra cost of wages and put up their prices?

What about people who lose jobs because the business can’t afford the flow on increase to other wages.

Keeping Stock explains:

 . . . You see Dr Clark; it’s not just as simple as paying people $15/hour. If the minimum wage goes up, so will everyone else’s. Our wage bill is in the order of $1m per annum, so an arbitrary, across-the-board 15% wage increase would cost us an additional $150,000 per year. That would be totally unsustainable for us; our businesses run at break-even at best. There is little doubt for our businesses that we would have to reduce our staff numbers.
 
So who wins there Dr Clark? We certainly don’t; nor do the staff members whose jobs are lost, and their families. And far from the Wanganui economy receiving a shot in the arm, there are suddenly less people spending. . .

Pay rises as a result of productivity increases or a reduction in costs are sustainable.

Pay rises by decree are not and would affect a lot more than a couple of hundred thousand people.


Who pays for higher minimum wage?

May 24, 2011

Duncan Garner describes Labour’s decision to increase the minimum wage to $15  an hour as good politics but bad policy.

How can any policy which comes at so high a price be good for anything?

Employers pay wages but the costs of forcing a higher minimum wage on them don’t stop there.

Other employees pay because paying more for some leaves less for others unless it is at least matched by an increase in productivity and profit.

All employees pay the price of less security of job tenure when the cost of labour increases without regard for the profitability of the business.

Business owners and shareholders pay the price of less security of income for the same reason.

Prospective employees pay – in particular the young and any others who find it more difficult to get work if employers have to pay them more than their work is worth.

The country pays the price of higher unemployment, more business failures and less tax as a result of that.

Consumers pay more for ggoods and services if the price of producing them icnreases, that fuels inflation and we all pay the price of that.

Politicians can’t make sustainable increases to wages by decree, that can only be done by employers.

Politicians can make sustainable increases to workers’ take-home pay by reducing taxes but Labour wouldn’t do that.


50c more for minimum wage

February 9, 2009

The minimum wage is going up 50c to $12.50 and the minimum wage for young people will rise by 40c to $10 from April 1.

Labour Minister Kate Wilkinson  said the government tried to balance job protection and fair pay.

I have mixed feelings about the minimum wage concept. I accept the need to protect vulnerable workers from exploitation. The counter-point for that is the employers’ right to pay workers what a job, and the way they do it, is worth. 

One of the considerations for that is what the business can afford because while the government sets the minimum wage it’s individual employers who have to find the money to pay it.

Wages are one of the highest costs for many businesses and as the recession bites deeper higher wages could result in fewer jobs or less hours.

The Tiwai Point smelter has already responded to the fall in aluminium prices by asking workers to volunteer for working reduced hours or take unpaid leave.


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