Joyce loves low wages | The Jackal

2 Sep 2013

Joyce loves low wages

Today, the NZ Herald reported:

The policies have gone down a treat among those at the meetings, which had a strong union presence. However, they have drawn flak from Economic Development Minister Steven Joyce who said the three were "spending like drunken sailors".

"If there is another fortnight of this, then what is left of their economic credibility will be shot to bits. It's like they went to sleep in 2008 and have woken up not realising the world has changed so they're back to the old borrow and bribe ways."

Steven Joyce is one to talk. Since National gained power in 2008, they've increased government debt by a whopping 380%. A lot of that $65.5 billion increase to $82.8 billion has gone on bribing their supporters for continued support.

Mr Cunliffe said yesterday he believed the cost of extending the living wage across the public sector would be about $20-$30 million in its first year.

Mr Joyce said Mr Cunliffe was pulling numbers out of thin air. "It would be a lot more than that. They're talking about every agency of Government."

Introducing a living wage of $18.40 per hour for government employees is affordable. In fact there is good empirical evidence (PDF) for a $18.40 living wage across the board.

In 2012, the Ministry of Business Innovation and Employment estimated that increasing the minimum wage to $18.40 for all workers would increase annual wage costs by $2.6 billion and increase inflation by 1.27 per cent.

However increasing minimum wage for government sector employees to $18.40 per hour would be a lot more affordable. There's approximately 39,800 state sector employees being paid below $18.40 per hour and contrary to what the right wing have been saying, increasing their incomes will not mean state sector employees on better remuneration packages will need their incomes increased as well.

The MBIE also found that 12.2% of those 2.5 million workers are being paid below $15 an hour. Their number crunching shows that increasing the minimum wage to $15 per hour across the board would increase annual wage costs by $315 million and cost the Government $67.87 million. However they do not factor in Working for Families subsidies, which would be reduced with people receiving higher wages.

There's around 2.5 million people in full time employment in New Zealand and around 298,000 of these are state sector employees. To increase the incomes of 13% of these state sector workers to $18.40 per hour would therefore cost the government (ie taxpayers) $31.2 million per year before you account for any savings in other areas. The increase to inflation from this policy is so ridiculously low as to not be worth mentioning.

$20 to $30 million is chump change when you consider the government has just given $30 million to a privately owned overseas company, Rio Tinto, when there's no evidence of any economic benefit or increased job security for New Zealand workers.

Likewise, increasing the minimum wage to $15 an hour is also affordable and should be one of the first changes a Labour led government initiates to ensure New Zealand's economic recovery. $67.87 million per year is chump change to a government that is borrowing more than $300 + million each week. What exactly are they spending all that money on anyway?