Denise Roche

The productivity-wage gap

by Denise Roche

We used to be a country where a fair day’s work gave you a fair day’s pay, but the gap between what workers are earning and how much they are producing is growing larger by the year.

The latest news from the Organisation for Economic Co-operation and Development (the OECD) reported on Radio New Zealand is that New Zealand has one of the largest gaps between productivity and wages.  Productivity overall has increased but wages haven’t kept up and New Zealand workers now have less than half the share of national income.

Amongst other things, the OECD attributes the reduction in unionism as a factor in the disproportionate sharing of the economic pie.

Max Rashbrooke has recently been touring the country speaking about the book he has edited Inequality: A New Zealand Crisis which describes the growing problem.

In chapter three, Dr Robert Wade from the London School of Economics says that in order to address growing inequality of income we need to look at what he calls ‘the pre-distribution of wealth’ – that is we need to find ways that ensure low income earners are paid better – and he identifies collective bargaining for unions as a way to ensure it.

This of course is completely opposite to what we are seeing with the Government set on discouraging unions from bargaining collectively for workers and this is demonstrated clearly with the Employment Relations Amendment Bill that will be reported back to the House shortly.

Currently only about 9% of the private sector workforce is unionised and pay rates are hardly increasing.  On top of that we still have an unemployment rate of 6.2% and 635,000 people are in insecure or casual jobs.

Meanwhile MPs are getting a pay increase. The contrasts are decidedly alarming. Frankly I’d like to see the wealth of our nation shared more fairly.

Published in Economy, Work, & Welfare by Denise Roche on Fri, November 22nd, 2013   

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