Why New Zealanders has low wages – believe it or not, it’s not John Key’s fault

New Zealanders do have low wages. Sure, they could be worse, but they aren’t great. And for an average family (5.5 people) on the minimum wage, they aren’t enough. But the answer isn’t to increase the minimum wage. The answer is to change New Zealanders’ outlook on life.

Right now, New Zealand businesses are more than happy to pay the minimum wage because that’s the lowest they can get away with. If we got rid of the minimum wage, I wouldn’t be surprised if half the jobs in the country suddenly became $0.01/hr. But this isn’t because it’s good business practice to keep your labour costs low. And it’s not because “John Key” like some people would have you believe on pretty much everything.

It’s because New Zealanders like to look short term. We don’t look at how our business will be running if 50 years time. We look at how our business is going to be running at the next balance sheet date. If New Zealand businesses were smart, they would increase people’s wages right now. In fact, where possible, they would have increased wages the moment we hit the bottom of the recession. And that’s praying that we’re not heading to a double dipper.

Because people have had no wage increase since 2008 – a lot actually have a wage cut, they can’t spend. If a business was to increase wages, that would mean their staff can afford to buy their goods. If you commercial goods, your staff will be able to go out and buy from your clients, so they can afford to buy your goods. That will increase your profits, not in this reporting period, but maybe the next, or the one after that.

So, rather than saying the solution is getting the Government to force the hands of business, why don’t we try and change this attitude that the end goal is the next checkpoint.

I’m actually going to use a rugby analogy to show this. Ever since New Zealand won the Rugby World Cup in 1987, we’ve been insisting we’re going to win the next one. When we don’t, the coach is sacked, no matter how well that coach has done prior to that loss. Look at John Mitchell – he’d only lost the one game that year, but he was sacked anyway. But when we decided to look past the closest goal, of this Rugby World Cup, and realise that there’s actually one in four years time that we might be able to get, look what happened. In 2007, if we’d followed history, Grahame Henry would have been sacked. But he wasn’t. The NZRU said that it was one loss and gave him another go. He took us through the next four years and won the damned thing. If we look past the current goal and we might see what benefits us long term.


About Daniel Farrell

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Posted on November 1, 2011, in New Zealand Politics and tagged , , , , , , , , . Bookmark the permalink. Leave a comment.

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