Editorial: Not a good sign

Last updated 05:00 20/10/2011

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OPINION: The Labour Party claims its work and wages policy, which it released this week, will boost the country's economic performance and generally provide a better future for workers. That is very unlikely. The policy's strange mish-mash of bureaucratic centralised wage-setting, legislated higher minimum pay and repeal of some of the present Government's liberalising workplace reforms has gruesome echoes of the unlovely 1970s. Far from being a forward-looking policy, as the Labour leader, Phil Goff, has declared it to be, it recalls policies long thought dead and buried.

The policy has been welcomed by unions, as well it might be. It could well have been written by them. The 1970s were the unions' heyday and with this policy they no doubt see some chance of restoring some of their lost glories.

According to Goff, the policy would help stem the flow of people to Australia. Given that the effect of much of it would be to price some jobs out of existence, quite how it would do this is unclear. Labour still does not appear to understand that it cannot legislate its way to prosperity. Introducing impediments to the creation of jobs or raising wages by legislative or administrative order will do nothing to close the wage gap with Australia and will, if anything, see more workers decamping for greener pastures elsewhere.

A centrepiece of the policy would be the establishment of an Independent Workplace Commission to set minimum standards of pay, conditions and union rights across "suitable" industries such as security, supermarket or retail workers. The aim, according to Labour, is to eliminate "unfair" anomalies the party alleges exist whereby people are paid differently for the same job in the same conditions. It is far from clear why ordinary organised unions cannot take care of such anomalies if they exist (that would, of course, depend on the unions making their services sufficiently useful that they attract the apparently disadvantaged workers as members). Nor is it clear how adding a layer of bureaucracy to the free pay negotiation process would produce a better result for the economy as a whole.

Labour also proposes to raise the minimum wage to $15 an hour and to repeal the 90-day law which allows employers to hire workers for a trial period. Neither proposed change would do anything to raise employment. Any lift in the minimum wage has the immediate effect of reducing employment. That has been shown vividly by the increase in youth unemployment since the adult minimum was extended to young people. A large chunk of that increase is almost certainly attributable to the fact that it became uneconomic for employers to take on young people at the higher wage.

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Getting rid of the 90-day trial period will also be counterproductive. There is no reliable evidence the trial-period provision is being misused by employers. Getting rid of it will simply make employers reluctant to give untrained and, at first sight, unpromising workers a chance to show they are worth taking on.

The release of the work and wages policy this week – when practically the whole nation is focused on the run-up to the final of the Rugby World Cup – is perhaps a sign that Labour was not very confident of its impact. Rightly so. This damp squib does not augur well for the other policy announcements yet to come.

- The Press

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