Think Tank Report: Working Harder for Less PDF Print E-mail
Tuesday, 30 November 1999 00:00

Mike Tait

STORM CLOUDS are gathering over the New Zealand economy, and as usual, ordinary Kiwis are being blamed for living beyond our means. But when New Zealand is compared with other industrialised countries it is clear that we are working harder for less, because NZ bosses have failed to plan for the future.

 

What's the Problem?

 

While NZ has enjoyed strong growth for the last 6 years, it has become increasingly clear that this growth will not last, let alone finally filter through to those whose work actually creates the wealth. This is because two thirds of the value of this growth comes from labour market growth (more people working longer), and only one third from productivity growth. Productivity growth comes from introducing up-to-date machinery and more efficient methods. In other OECD countries, closer to two-thirds of growth has come from productivity and only one third from labour market growth.

Blame the VictimReserve Bank Governor, Alan Bollard, must be well aware of these fundamental problems but in public he prefers to blame the victims - the very people who have to shoulder the extra burden of work. According to Bollard, inflated house prices have encouraged us to live beyond our means. In words taken straight from the era of Roger Douglas, Ronald Reagan and Margaret Thatcher, Bollard tells us that we must "tighten our belts". The media has joined in the blame game. In November 2005, the NZ Herald warned: "Hey, big spenders, time to tighten up". "From the glass citadels of the well-heeled to the glass coffins of boy racers, New Zealanders have shares in a debt timebomb," the Herald proclaimed. They even found a woman who admitted it was her fault - "I guess I was careless and a bit naughty," she said. "We're acting like kids - we can't defergratification," one financial planner said.

Debt Slavery

Household debt has grown astronomically in the last few years, to the point that it is now at 143 per cent of disposable income, but not because people have, for unknown reasons, suddenly become greedier. The increase in consumer debt is a structural change common to all industrialised countries. In NZ, the debt culture was pioneered by the government in education. In the 1990s, the government wanted to privatise education as much as possible but faced the problem that only a very few people could afford the new fees. The student loan scheme - which has since spiralled to $8 billion - was their fake solution. Thousands of students will never be able to pay their loans back and will be forced to pay an extra 10 per cent tax for the rest of their lives. Consumer debt works exactly the same way, as working people are forced to borrow to make ends meet.

Lazy Bosses

No country gives business an easier ride than NZ - compliance costs in this country are the lowest in the OECD. The economic reforms rammed through by Labour and National over the last 20 years have given business a low-tax, regulation free environment. Kiwi workers by contrast are relatively underpaid, and pay rises constantly lag behind the inflation rate. A survey in December by employment consultants, Mercer, predicted real wage growth in 2006 will be 0.2 per cent, the lowest in the industrialised world. If the right-wingers were right, this should mean that NZ business should be more competitive - but it is not. For 2 decades, under Labour and National, the rich have reaped a golden harvest from privatisation, benefit cuts, and low wages. But this money has been squandered instead of reinvested in ways that could expand the economy.

Going on Strike is Good for the Economy!

Workers can also learn from comparisons within the OECD - French workers for instance have won a thirty-five hour working week without a loss in pay. French productivity is also top ranked. The lesson is clear - when wages are cheap then there isno incentive for the bosses to invest in labour saving devices. Going on strike is not only good for your family and co-workers - its also good for the economy.