How to earn a living wage

03:13, Feb 14 2013

A union-led campaign to pay every Kiwi a fair "living wage" is gathering steam. It's a fine initiative, but the only way it will ever actually happen is if we first tackle the scourge of unemployment.

It used to be said that the prime minister knew every person on the unemployment benefit by name.

I don't know which prime minister, and I think it's probably apocryphal. The sentiment, though, is unarguable: not even Rain Man himself could remember the names of the 163,000 people currently registered as unemployed and looking for work.

Think about that number for a moment. One hundred and sixty thousand people. Grouped together, job-hunters would form the seventh-largest city in New Zealand, falling between North Shore and Hamilton.

Is it any wonder wages in this country are so poor? If you think about it, of course they're low. It's the economy, stupid, as some president once said.

It isn't economically rational for employers to pay any more than they have to. They only have to meet the market they operate in. And it's a buyers' market.


A large pool of readily-available labour works perfectly for employers. If you don't like what you're being paid, take a hike – there's plenty of other people willing to take your place. 

The Campaign for a Living Wage, run by unions, church groups, and social services agencies, is arguing it costs an average of $19 an hour for a 40 hour week in order for a worker to "live with dignity" and participate in society.

I'm not going to argue with that figure. Having recently returned from Australia, I've found the cost of most everyday items to be astronomical and wages considerably lower than over the Ditch.

Campbell Live on TV3 has done some excellent work comparing the cost of a basket of groceries in New Zealand to both Britiain and Australia. I don't need to tell you whose was the most expensive. 

Not that I'm regretting moving back here for a moment. I don't resile from anything I wrote in my blog, Ten reasons why we're better than Australia.

But alert readers will have noticed I did not include wage rates in those reasons. It's not a flattering comparison.

The Living Wage campaign's use of the word "dignity" is an important one for me. It recalls the days when New Zealand could genuinely claim that Jack was as good as his master. When a fair day's work was rewarded with a fair day's pay.

I promise to stop saying "in Australia" soon, but, well, in Australia a trade or blue-collar worker is properly rewarded for the work they do and can afford the necessities of a reasonable standard of life.

Why? Certainly a more unionised workforce helps, but mostly it's healthy competition for skilled workers.  

The two-speed nature of New Zealand's economy has been brought home to me sharply since my return. My (rented) house in Auckland's eastern suburbs sits on the dividing line between the fabulously wealthy suburbs of St Heliers and Mission Bay and the battlers' suburbs of Glen Innes and Panmure.

We can sip lattes with the drivers of late-model European cars on Tamaki Drive and then shop at GI Pak'n'Save less than 2km away, where desperately poor families weigh the cost of everything going into their trolley.

It didn't surprise me when researching this article that while I was away overseas the OECD found that the gap between the rich and poor had grown faster in New Zealand than in any other country in the developed world during the last 20 years.

If what the wage campaigners are saying is correct, then something like 740,000 Kiwis are not really living - they're subsisting.

In a country the size of New Zealand, that is an utter disgrace.

One solution would be to force employers to pay higher wages by law.

I don't agree with this.

Compulsion rarely works, and would probably force more jobs offshore.

But I do believe employers  have a moral imperative to be fair. And it seems to me that they are not always being fair. Large companies in particular - banks, hotels, multi-national food and beverage companies - are frankly taking the proverbial and repatriating big profits offshore. 

We're becoming the China of the South Pacific.

I'm not going to hold my breath for these employers to develop a social conscience however. So what to do in the meantime?

Well, how about evening the playing field in our favour? One way of raising living standards in this country is surely to take drastic steps to wipe out our shameful unemployment. That would have the additional effect of removing employers' access to cheap and plentiful labour, pushing up wages in turn.

And this can only be done with very bold thinking by the Government. 

I'm not talking about any more productivity taskforces. No-one wants to see the usual suspects paid $1000 a day to come up with the same tired old formula – slash welfare, cut public spending, sack civil servants, etc.

I'd love to hear what you think, but here are my top five ideas: 

1. Reintroduce public works schemes. A dirty word since the 90s, but as a short-term measure to mop up unemployment, why not? Real jobs at market wages, not the dole. Christchurch is crying out for labour. Why are we importing workers from Ireland?

2. Overhaul Work and Income New Zealand. WINZ isn't, er, working. Everyone knows it's a dysfunctional government agency. It seems to me this organisation doesn't help people back into the workforce it actually traps them in a cycle of dependency. Why not fund private recruitment companies who actually know the market, and get them to do it properly.

3. More apprenticeships and training: I know, National has rediscovered this just recently. But take the current number of promised apprentices and double it. No, triple it. 

4. Phase out Working for Familes income top-ups. They simply allow employers to get away with paying third-world wages 

5.  Lead by example: Pay all government workers and those who work in government offices a minimum of $19 an hour.

Disagree with me? Well what would you do?

I accept there's many different solutions. But can we at least agree that nothing nothing will reverse the appalling disparity between rich and poor or the slow decline in living standards unless we eradicate mass unemployment.