On the face of it, the statistics indicate a steady decrease in unemployment – and no doubt John Key’s government will be pitching it in this light.  The headline will be that unemployment has fallen to a 21-month low of 6.3 per cent. But let’s look at what’s really been happening.

In the December 2011 quarter, 7,000 fewer people were unemployed … but only 3,000 more people were employed. How can that be?  Two things have happened. Yes, the unemployment rate has fallen , but let’s look at why.

Firstly, the numbers of unemployed people have decreased – but it’s been on the back of a sharp rise in the number of people picking up part-time work. In the last quarter, the number of people in full-time employment actually decreased by 0.8 per cent – while part time employment increased by 15,000 (3.0 per cent). So, there hasn’t been an increase in people getting the kind of work that pays the bills. There’s been an increase in the number of people doing poorly paid jobs.

There’s a gender aspect to this. The number of men in full-time employment fell 1.6 percent this quarter, while the number of men in part-time employment rose 7.1 percent and the number of underemployed men rose by 6.8 percent. In contrast, the number of women in both full-time and part-time employment rose this quarter, up 0.4 percent and 1.5 percent, respectively. Statistically, it is likely due to the gender pay gap the jobs women are picking up pay less. So what we are seeing is undoubtedly a shift away from higher paid, full-time men’s jobs towards more part time male employment and towards more full and part time women’s jobs, which are more poorly paid.

Regional variations are important too. The Bay of Plenty and Northland had the worst unemployment rate at 8.3 per cent, while in Wellington unemployment rose from 6 to 7.2 per cent, an effect no doubt of ongoing public  sector cuts and their downstream impacts on the local economy.

The second important thing to think about is that the total number of people participating in the workforce has declined; this makes the unemployment rate look better too. In the December quarter participation hit a 12-month low of 68.2 per cent, with the number of people not in the labour force increasing by 11,000 to 1.107 million.  The largest increase was in the 20-24 age group – this rose from 12.4 percent to 13.1 percent. Meanwhile unemployment among 15- to 19-year-olds rose from 23.4 to 24.2 per cent.

With the total number of jobless now at 261,300, we have grave cause for concern.  In the New Zealand Herald this week Simon Collins has been running an excellent series on inequality – today’s feature was on housing. Lack of affordable housing is reaching a crisis point in Auckland and indeed many other parts of New Zealand. There is a direct and pernicious (and completely obvious) link between New Zealand’s low wage economy, the rise in preventable diseases like school sores and rheumatic fever and poor housing/overcrowding. This doesn’t just affect just the unemployed poor – it’s the working poor too. It is becoming a cliché to say that two out of five children living in poverty come from families where one or both parents are in paid work.

We desperately need the Government to make an investment in New Zealand families and communities. It could begin, as the Green Party and many others have campaigned for, by implementing an immediate increase in the minimum wage to $15 an hour and by announcing a proactive job creation programme in Christchurch and elsewhere – to provide meaningful, decently paid work for those who need it.

50c an hour is not going to help the people that need it most – people like the Bradley family who were profiled in the Herald this week, where dad is having to work three jobs just to feed the family. And even so, the parents are having to go without food some days just to feed the kids.

What we need in this country is a living wage – one which pays enough for families to be able to feed and clothe their children, pay the rent or mortgage, pay the power, phone and doctor’s bills, and not slide into debt when something unexpected happens.

The Government will tell you that increasing the minimum wage to a decent level will cost jobs. Indeed, last year John Key claimed that increasing it to $15 an hour would cost 6000 jobs. This has not been shown to be true – in fact the NZ Council of Trade Unions has done an extensive literature review which indicates there is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels. But, despite the evidence not supporting John Key’s claim, Minister Wilkinson is still banging on about the fictional 6000 job losses.

What we do know is that hundreds of thousands of New Zealanders are experiencing poverty and hardship on a daily basis – and on this basis 50c simply doesn’t cut it.

The Green Party wants to see an increase in the minimum wage, first to $15 an hour and eventually to two thirds of the average wage. This will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support.

We need to lift wages across the board. We need a Government that will actually care about families struggling to get by in New Zealand.

I also expect that the Government’s excuse for consigning workers to live on a wage that is completely inadequate to support their families will be the same as it has been over the last three years – a claim that increasing the minimum wage to a liveable level will cost jobs.  Last year, John Key claimed increasing it to $15 an hour would cost 6000 jobs. That claim appears to be an exaggeration of Department of Labour advice.  The Department  provided no methodology for its calculations, but suggested that a minimum wage increase to $15 an hour could slow job growth by between 4100 and 5890 jobs.

I find the purported Government concern about a decline in job growth completely hypocritical, given the number of jobs the Government is itself shedding in the state sector.

What’s more, John Key failed to mention that Government also had advice from Treasury that countered that from the Department of Labour – advice that suggested increasing the minimum wage would most probably not cost any jobs at all.

(It) has not been true in the past, so without new evidence the balance of probabilities is that a higher minimum wage does not generally lead to higher unemployment.

I’m with Treasury on this one.  There has been extensive research into the employment impacts of increases in the minimum wage over the past thirty years, starting with the landmark 1992 paper by US economists David Card and Alan Krueger. The NZ Council of Trade Unions’ submission to the current minimum wage review contains a literature review of that research (Appendix 1, pages 56-73).  What is clear is that things are much more complex than John Key asserts. There is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels, and this has become increasingly evident over the last 30 years.

Increasing the minimum wage, first to $15 an hour and eventually to two thirds of the average wage, will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support. It’s time for Government to listen to the Green Party on this issue, rather than submitters like Federated Farmers and the NZ Retailers’ Association who lobby for low minimum wages out of their own members’ self-interest.

Ms Kelly was part of an Australian and New Zealand delegation looking into allegations that senior Fijian union officials have been arrested and physically assaulted. Over the last few months the Fijian Government has enacted a series of decrees that make it illegal for more than 5 people to meet and union officials have been arrested for undertaking basic organising activities like meeting workers at their jobs. Recent decrees also reduced the freedom of the media, abolished the minimum wage and banned collective bargaining.

These measures are causing grave concern for the International Labour Organisation which has an office in Suva where former Alliance Cabinet Minister Laila Harre is the officer in charge. The ILO is attempting to negotiate with the military government and has called for the government to accept a ‘direct contacts mission’ which would press the government to comply with basic international law.

It’s not just unions that are worried about the breach of human rights in Fiji. On Monday, Business New Zealand backed up the NZCTU’s call for the Fijian government to accept a mission from the ILO to look into the island nation’s labour standards. But the National government has been suspiciously quiet on the matter. It is time for the Government to join with Business NZ and the CTU and stand up for human rights and workers’ rights in Fiji.

Yesterday, the most recent Department of Statistics Household Labour Force survey results were released.  It is mostly pretty grim reading.  Unemployment has gone up, and very few jobs have been created.

But there was a wee bit of good news. Youth unemployment dropped from 27.6% to 23.4%. Maybe that had something to do with the absence of a youth rate for the minimum wage?

I’m not actually suggesting causality on that, but just pointing out that it destroys the National Party’s argument it is relying on to reintroduce youth rates by stealth;  that  the absence of a youth rate for the minimum wage causes more young people to be unemployed.

There are many reasons for the high rate of youth unemployment, but as a Department of Labour analysis suggests, the absence of discriminatory youth rates is not one of them:

The study finds some evidence that the proportion of 16 and 17 year olds unemployed increased in 2009 by 1.4–2.6 percentage points because of the minimum wage increase, but the negative impact on unemployment was not evident a year later in 2010.

The NE minimum wage appears to have encouraged more 16 and 17 year olds to stay at school or continue their education (this effect is in addition to an increase in studying due to the economic downturn). This may explain why the impact on unemployment had disappeared by 2010 and why the minimum wage increase was associated with lowering inactivity among 16 and 17 year olds.

National’s proposal to reintroduce discriminatory pay rates for young workers by stealth has no evidential basis.  It is simply another mechanism to deliver cheaper labour to employers.

So she’s announced an extra $2.8 million for out of school care programmes, while lowering the standards for those programmes so they can fit more kids in without having to worry about “ticking boxes.”

Quality out of school care is critically important for many parents balancing full or part-time work with child rearing, and more funding for the sector is certainly welcome. However, I’m pretty concerned at the moves to reduce standards at the same time.

As a parent, it can be incredibly hard to leave your kids with carers – even the most trustworthy and able carers – without feeling stressed, anxious, or guilty. You want to be certain that your kids are safe and well looked after, and it helps if they’re with carers who will get to know them as individuals.

It’s about more than just knowing your child is physically safe – it’s also about knowing that they are being nurtured and extended and enriched socially and culturally, and cared for with attention and affection. Some people are lucky enough to have family members to help with this care. Others have partners who can care for their kids full time. Sole parents who don’t have this level of family support deserve the same peace of mind, and their kids deserve the same level of care.

All parents should be able to choose to care for their kids rather than be guilt tripped or worse, coerced by WINZ, into working late and long hours, losing precious parenting time with their children.

Lowering standards to allow out of school care programmes to cram more kids in so their parents can work longer hours is an anti-child policy. It’s symptomatic of this Government’s whole approach to issues of work, welfare, and children: an inflexible, ideological fixation on paid work at all costs – costs borne by the children in the end.

Moving off a benefit and into paid work that is flexible, appropriate, pays a living wage and can accommodate your children’s needs and fulfill your own aspirations is a great thing. There is much we can do to encourage this, like providing better study support for sole parents and beneficiaries to upskill and retrain for new jobs, and raising the minimum wage to help working parents provide the basics for their kids.

But this Government has it the wrong way around: force people into low-paid, unskilled jobs (if they’re lucky enough to find one) and lower child care standards to accommodate their kids while they work the long hours required to make ends meet.

It’s a poor policy that will result in poor outcomes for parents and kids.

1. Make Working for Families work for every low-income family

Children have the same needs, whether their parents are in paid work or not. Working for Families helps low-income families make ends meet, but it doesn’t provide the same help to kids whose parents receive a benefit. We’d extend Working for Families to provide an extra $60 per week for 140,000 of the poorest households in New Zealand.

2. Provide better study support for sole parents and beneficiaries

Kids do better when their parents have access to education. There used to be support for sole parents to study at university, and it worked: parents moved off the benefit six months earlier and went into higher paying jobs. We’d reinstate and extend this support to help 10,000 people get a higher education and take better care of their kids.

3. Raise the minimum wage to help working parents

275,000 people work for minimum wage, and many of them take care of dependent children. It’s almost impossible to make ends meet on such low wages. We’d raise the minimum wage to $15 immediately to help working parents provide the basics for their kids. This is worth about $60 more per week for someone working full time on the minimum wage.

4. Make sure rental properties are warm and healthy for kids

375,000 kids live in cold, damp houses which make them sick. Most of these houses are rental properties. We’d create minimum performance standards for rental properties which would ensure warm, healthy, homes for thousands of children.

John Key poured cold water on the Greens’ Working for Families and minimum wage proposals:

“The way the system was designed by Michael Cullen under the previous Labour Government was … to ensure there was a real incentive to work. We wouldn’t want to undercut that.” He also indicated any swift move to a $15 an hour minimum wage was unlikely because it could threaten jobs.

Key is wrong on both counts.

Someone working 40 hours a week on the minimum wage at tax code M would have a take-home pay of $501.61 under the Greens’ proposal.  Compare that with the couple rate of unemployment benefit ($335.66) or single parent rate of DPB ($330.70) and it’s easy to see that the minimum wage increase alone provides a considerable financial advantage in moving off benefit into employment.  Even given the additional $60 a week that beneficiary families would receive from WFF under the Greens’ package, they would be more than $100 a week better off if they were to move into employment.

The financial incentive to move off benefit into work is actually stronger under the Greens’ proposal than under National’s (and Labour’s) current discriminatory WFF approach which provides the least assistance to the children who most need it.  The difference is that the Greens provide the incentive by increasing wages at the lower end of the scale, rather than by providing a lower level of support to children of beneficiaries.

Key is on no stronger ground when he says increasing the minimum wage could cost jobs.  The majority of minimum wage workers work for large corporations – mainly in the hospitality, fast food and retail industries.  Studies such as this one show that large corporations do not respond to increases in the minimum wage by slashing jobs.  Their more likely response will be to improve productivity (which to some extent flows from a better paid workforce anyway) and/or to increase prices slightly.

Few small and medium sized employers hire minimum wage workers.  However, the Greens acknowledge that a significant increase in the minimum wage may have adverse employment effects on employment levels in such businesses that do.  For that reason, the Greens’ proposal includes a $20 million a year targeted subsidy to assist SMEs through the transition.   John Key seems to have conveniently ignored that.

Key maintains Department of Labour advice supports his claim.  So I had a look at the advice, contained in the Department’s 2010 Minimum Wage Review (PDF, 2MB).

At page 15, I found that the Department of Labour calculated that increasing the minimum wage to $15 an hour could result in a “potential loss in job growth” of 4,280 – 5,710 jobs.  That’s very different from putting 6000 people out of work.  A potential loss in job growth can occur without a solitary person being put out of work. It all depends on the wider economic policy settings.

Furthermore, the Department fails to show the methodology it used to arrive at its figures, merely citing “Source – Department of Labour calculations”.  For all we know, and Key presumably knows, the Department could have used the same sort of maths as Harold Camping to arrive at its conclusions.

As the NZ Council of Trade Unions pointed out, citing supportive studies, in its submission (PDF, 58 kB) to the Minimum Wage Review:

…any analysis in a New Zealand context needs to draw on the more recent analysis of the behaviour of the labour market. What this has shown is that it is unlikely that an increase in the minimum wage would have an impact on employment.

And does anyone apart from me find Key’s faux concern for some low paid jobs that may potentially be created a wee bit hypocritical in the context of his government directly presiding over the loss of 2000 real jobs in the public sector over the past two years, with the promise of many more job losses from the latest round of Budget cuts?

The Green Party have put together a package of alternative Budget initiatives this year — initiatives that seek to raise some revenue to address the record deficit and do so in a way that actually transforms the economy in the process. Dr Russel Norman explains a smart green alternative Budget that strives to deliver prosperity while protecting the environment at the same time.

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If you’re having problems with our Flash player, try this alternative site. This podcast series is now available on iTunes.

So far I have met with people in Rotorua, Whangarei, Waihi and Turanga (Gisborne). Many of the people attending the meetings are community workers, and some are on benefits.

Each meeting is unique because I am often sharing the space with presenters from local groups. In Whangarei – where a shocking 49 per cent of children live below the poverty line – I spoke alongside the newly formed Welfare Rights Whangarei group, as well as housing advocates and the community law centre. In Rotorua, the local beneficiary action and advocacy group used my visit as a chance to plan some direct response and protest about the Welfare Working Group report and the imminent budget. In Gisborne, people from Youth Transition, the YWCA Youth Centre, and Barnardos all spoke about their concerns with the current direction of welfare policy, and how to extend the conversation about welfare changes and human dignity into their wider community.

Waihi was interesting, because it’s a supposedly ‘gold plated’ town with a big hole in the middle. People in Waihi got excited about alternative economic ideas like time banking as well as expressing concerns about the proposed welfare cuts. Time banking relies on banked skills and exchanges rather than money for services and it includes vulnerable and marginalised people who have skills to share even if they have no money. Local Greens will host a meeting on time banking in Waihi on 25 May.

My bible on the tour has been the Alternative Welfare Working Group report, which is a response to the Welfare Working Group by welfare activists and experts who believe in a justice-based approach to welfare.

An excellent section of their report outlines our once-proud history of welfare that built on three cornerstones – decent state housing for all who needed it, full employment, and benefits for those in need which actually covered the cost of living. Until the Douglas and Shipley years, our welfare history proudly committed to addressing poverty rather than blaming individuals.

The Welfare Working Group, however, is narrowly focused on the problem of ‘welfare dependency’, rather than solutions like job-creation, addressing housing needs, and ensuring that benefits cover the cost of living. They describe people on benefits like junkies with moral flaws who needed to be ‘helped’ out of their addiction, a framing which is particularly repugnant during a recession, when the labour market is not flexible and jobs are hard to find.

Some of the more draconian ideas in the report seem to have inspired Social Development Minister Paula Bennett’s guest column in the Sunday Star Times yesterday, in which she floats the idea that teen mothers’ benefits should be managed by others. This fits in nicely with the Welfare Working Group’s suggestion of privatising aspects of benefit management, and strongly ‘encouraging’ the use of long-term contraception for young mothers on the DPB if they have more than one child.

Paula makes some stirring statements about Maori parents, but her suggestions – and those of the Welfare Working Group – fail to take the most obvious step to support teen parents to move off the benefit, which would be reinstating the Training Incentive Allowance (TIA) to help young parents get a degree-level education.

The Greens launched two great polices for low income families this week – the reinstatement of the TIA and an increase to the minimum wage. The meetings I have attended are far more interested in positive solutions than the punitive ‘kick in the pants’ rhetoric of the Government, and I am looking forward to talking with more communities about these two solutions.

One consistent theme I am hearing is that food banks and budget services are increasingly stretched. These services are survival strategies in hard times. This Government’s policies will stretch them beyond breaking point.

In the meantime, the Greens are committed to positive welfare support, justice for all and real job creation. In any assessment of the Budget this week, we need to consider who has a fair and positive vision, who is scapegoating whom, and just who benefits?

While National hasn’t yet signed up again to the Brash/Douglas prescription for discrimination against young workers, its No. 1 Cheerleader in the blogosphere, David Farrar, is also trying to push the line that that the abolition of youth rates is the cause of today’s high youth unemployment.

But it is all wrong from those on the right.

I looked up the statistics going back to 1993, the year before a youth minimum wage was first introduced.  Before that, employers could pay workers under 20 whatever they chose, even as little as $1 an hour.

Here’s what I found (youth unemployment figures for the March quarter and youth minimum wage for the annual March – April adjustment) – left-click on graph for better resolution:

If the Douglas/Brash/Farrar line on the youth minimum wage had any credibility, I would have expected the transition in 1994 from no minimum wage for people under 20 to a minimum wage of $3.68 an hour to have caused a spike in youth unemployment.   In fact, the opposite happened – the unemployment rate among those aged under 20 plummeted from 24% to 17.6% from March 1994 to March 1995.

Similarly, the substantial increase (69% for those aged 18 or 19) in the minimum wage for those aged under 20 in 2001 should have caused another spike in youth unemployment according to Douglas/Brash/Farrar.  But it didn’t – youth unemployment rates continued to fall and hit a low for the period I researched in March 2004 of 13.5%.

With the same minimum wage applying to all workers over 16, the current unemployment percentage among people under 20 is in the mid 20’s.  That is similar to what it was in 1993, and in several years before that, when no minimum wage at all applied to workers under 20.

Douglas, Brash and Farrar are misleading us. The evidence does not support their assertion that the removal of age discrimination in setting the minimum wage has had any impact on youth unemployment rates.  They are not concerned about the inability of young people to get work at all.

They are just trying to spin it that way to reduce the wage bills of their political supporters and financiers.

The real cause of today’s youth unemployment is a National Government that ignored the Greens’ proposals and did nothing to stimulate the economy and promote employment in the face of the global financial crisis, just as it was in the early 1990s when there was no minimum wage for workers under 20.

The government should stop dragging this case out and pay the workers what three courts have now said they are entitled to – the minimum wage for each hour of their sleepover shifts. The law is clear and leading constitutional academic Andrew Geddis said the government would be wasting their time appealing the case to the Supreme Court. Despite having no legal leg to stand on the IHC has lodged an appeal in the Supreme Court, but it is unclear if that court will even bother to hear the case.

And all the while disability support workers wait for what is legally theirs – minimum wage payments. Phil Dickson, whose name the case is in, gets paid $3.77 an hour for the 9 sleep over shifts he does a fortnight. The current minimum wage is $12.75. So Phil is missing out on around $650 a fortnight in wages. That is a huge amount for someone on a low income and would make a real difference in his life.

There is no good reason to make him and other support workers wait any longer. We call on the government and their negotiators to reach a speedy settlement that delivers long overdue justice to these workers.

Too many New Zealand workers earn either the minimum wage or something close to it.  They won’t be much happier with this week’s miserly increase from $12.75 an hour to $13.

The procedure for increasing the minimum wage is all wrong. Those on it never know when it might be increased or by how much. It is at the whim of the government of the day.  And the National government is quite scrooge-like.

Why do we have such an arbitrary minimum wage fixing system? The government should look at how its own MPs’ salaries are determined. Every year the Remuneration Authority studies the salaries of private executives and increases MPs’ salaries accordingly.

Surely, ‘relativities’ should also determine the minimum wage. Wouldn’t it be good for the minimum wage to be always  66% of the average wage.  $15 an hour, as asked for by the Greens, Labour and the Maori Party, would get us well on the way to this 66%. Currently the average wage is $25.83 an hour.

The business lobbyists tell John Key that any movement upwards in the minimum wage will cost jobs. Funny, they don’t seem to use that argument when determining their own salaries.

In fact, what is costing jobs at the moment is workers cutting back on spending due to low wages, which aren’t keeping up with inflation.  And Australia seems to be doing ok with a minimum wage of $A15.

Some of the hardest workers in New Zealand – like cleaners and aged care workers – are on the minimum wage. Let’s make sure they get a much better deal.

This is not enough. A sole parent working 40 hours a week on $13 an hour will earn just $520 per week before tax – not much to pay rent, feed kids, and pay the power and phone bills with, let alone pay for school trips and warm clothes.

As many of our colleagues in the union movement have pointed out this afternoon, increasing the minimum wage by just 2 percent when inflation is running at 4 percent is actually a backwards step that will widen the growing chasm between the rich and the rest of us.

We have been a proud partner in Unite’s campaign for a $15 an hour minimum wage, and would legislate to introduce this immediately if we were in Government. In fact, we are probably nearly at the point when $15 an hour is no longer sufficient, thanks to inflation. We’d also ensure that there was a built-in mechanism to increase the minimum wage in line with inflation automatically.

Everyone deserves decent work, a living wage, and to be treated with respect. Today’s announcement is a step away from this goal, not towards it.

It’s a rare piece of good news out of the Beehive, but let’s face it; the bill was a stupid idea to begin with.

A Treasury study in 2004, three years after the legislation removing youth rates was passed, showed increasing youth employment.

It’s kind of funny that the oldest person in parliament is trying to screw over the youth. Imagine a bill that seeks to pay older people a smaller minimum wage or Maori, or women? It would be outrageous.

However, I do have my own positive Private Members Bill which seeks to amend the Human Rights Act. Currently the HRA allows discrimination in pay based on age.

30 (2) Nothing in section 22(1)(b) of this Act shall prevent payment of a person at a lower rate than another person employed in the same or substantially similar circumstances where the lower rate is paid on the basis that the first-mentioned person has not attained a particular age, not exceeding 20 years of age.

By removing this section we also fix a contradiction in our law between the Minimum Wage Act and the Human Rights Act.

This amendment makes it harder to erode the rights of youth workers.

The last place we should see age-based pay discrimination is the Human Rights Act.

Update

A copy of my bill is available here [pdf].

A common claim is that wages are like any other price and as such obey the economic laws that govern supply and demand. Therefore, raising the minimum wage (or having any minimum wage, actually) is a bad idea because it causes some people to be too expensive to employ, leading to unemployment.

As a counter to the conventional argument, consider this:

Historically New Zealand has had no unemployment for many years (till recently) as we were living under a regime that made lowering unemployment to zero a priority. (At zero unemployment there will still be approximately 2% unemployment because of churn.  On average everybody spends one year in fifty looking for a new job whilst not working). When the government ensures that zero unemployment exists, the simple supply-demand model breaks down and raising the minimum wage does not increase unemployment, it simply transfers wealth from the who invest to those who labour.

The idea that raising the minimum wage will shut down businesses is not true in our economy.

Not to say there do not exist examples of businesses that would close – because we aim for zero unemployment that frees up resources for new businesses to start – but we are talking *macro* economics here.  In our economy the people being paid minimum and near minimum wage are doing jobs that must be done.

Subway’s existence does not depend on paying its workers $12.75 an hour.  Same for cleaners, bus drivers etcetera.  Almost as many of those people will be employed at $5 per hour as at $15 per hour, because the roles they fill are not ‘nice to haves’, like landscape architects or interior decorators.

Lastly:

Raising the minimum wage is a transfer of wealth from those who invest to those who labour.  Those who labour tend to spend their income where they live (food and housing making up a much larger proportion of their income) causing a local boost to the economy.

I hope that is enough to demonstrate that economics is hard and often counter intuitive.  It is also beset by conflicts of interest (e.g. economists employed by banks or governments), embedded values and ideology.

I am not an economist and don’t pretend to be able to pass expert judgement on the subject. I present this as an example of an alternative economic theory, to demonstrate that economics is mostly made up of competing theories and ideas, not hard facts and proven mathematical models that apply in every situation.

It’s not like physics or chemistry where fundamental laws are discovered which are eternal and that apply throughout the universe – there are people involved, and people are messy. People change, and economics needs to change with them.

The good Bill is Green MP David Clendon’s Smart Meters (Consumer Choice) Bill.  It gives effect to the Parliamentary Commissioner for the Environment’s recommendations to ensure all electricity meters have functionality that enables them to automatically control loads and to talk to smart appliances. It will also require meter installers to give consumers the choice to have real-time information about their electricity use and variable tariffs so they can make use of this function to minimise their electricity costs.

The bad Bill is National MP Tau Henare’s Employment Relations (Workers’ Secret Ballot for Strikes) Amendment Bill.  I don’t have a problem with the substance of the Bill.  The reason it is bad is because it is a waste of Parliament’s time – it addresses a problem that doesn’t exist, because in practice unions make decisions on strikes by secret ballot already.  Surely Tau could have found a more pressing public issue to make the subject of a Member’s Bill.

The ugly Bill is Roger Douglas’ euphemistically titled Minimum Wage (Mitigation of Youth Unemployment) Amendment Bill.    Not content with the unemployment and suffering he caused back in the late 1980s, Douglas is now proposing to cut the minimum wage for young workers in the misguided belief this will somehow create jobs for them.

Disturbingly, there are indications from the Minister of Labour that National might support Douglas’ Bill.  Let the battle begin on this one.

This year we’re supposedly coming out of a recession.  Even Employers and Manufacturers’ Association (Northern) chief executive Alasdair Thompson, who advocated a nil increase in the minimum wage for 2009, admitted earlier this month that:

…employment will start increasing so I don’t think there’s the same pressure there was as in 2008 and 2009 to keep a lid on it.

Thompson indicated that a 50 cent increase to $13 an hour would be acceptable to the EMA.

That’s what I was quietly expecting, so it came as a shock when Labour Minister Kate Wilkinson announced yesterday that the increase would be only 25 cents an hour to $12.75.

That’s just a 2%, which barely keeps pace with inflation.   So much for Wilkinson’s line that: “The Government is focused on the need to find a balance between protecting jobs and ensuring a fair wage.” Even if you accept the neo-liberal assertion that modest increases to the minimum wage inhibit job creation, which studies such as this refute, there is not balance at all here – other than the “balance” between the extent to which the taxpayer and the employer contribute towards the earning of employees on low incomes.

Take the situation of a couple, one working 40 hours a week for the proposed minimum wage of $12.75 an hour and the other an at-home parent, with two young children, paying the average rent in Auckland of $384 a week.  Their in the hand income is derived from:

The Government seems hell-bent on maintaining huge state subsidisation of low wages. A massive 49% of this family’s in-the-hand income is paid not by the employer, but by the taxpayer.

Isn’t it time the employer, who profits from the work done, contributes a greater share?

A survey undertaken by the NZ Herald has found 61% of New Zealanders support increasing the minimum wage to $15 an hour.  That is the level supported by the Green Party, the Maori Party, the NZ Council of Trade Unions, and (somewhat belatedly) the Labour Party.

Even Employers and Manufacturers’ Association (Northern) chief Executive Alasdair Thompson admits:

But employment will start increasing so I don’t think there’s the same pressure there was as in 2008 and 2009 to keep a lid on it.

However, John Key has poured cold water on the $15 an hour proposal.

Update 27 January 2010:  The Government has announced a paltry increase to $12.75 an hour – barely keeping up with inflation.

I’m somewhat tired of the annual debate about the level of the minimum wage.  When the minimum wage was first introduced in 1946 it was 83% of the average wage.  However, the arbitrary year by year approach taken by successive governments eroded the value of the minimum wage, and despite a recommendation of the 1972 Royal Commission on Social Security that it be indexed to 66% of the average wage, it fell to a record low of 34% in the 1980s under Muldoon.  It currently is 50% of the average wage following last year’s parsimonious increase of 50 cents an hour.

Wouldn’t it be great if the minimum wage were indexed to the average wage, rather than subject to the political whim of the government of the day and the respective lobbying influences of the protagonists in the debate?  That would give low income workers security they would at least maintain relativity with those who earn more.

Last year the Unite! Union launched a Citizens Initiated Referendum petition for an immediate increase in the minimum wage to %15 an hour, followed by indexing it to 66% of the average wage.  The Greens have got behind the referendum petition – it is our policy after all – so give us a hand by downloading the petition form (PDF) and collecting some signatures.

Cabinet will be considering this year’s minimum wage increase sometime in the next couple of weeks.  While John Key has ruled out an increase to $15 an hour, he can surely do better than last year’s 50 cent increase for New Zealand’s lowest paid workers – he doesn’t have the excuse of a recession this time round. Send him an email.

So Kevin Hague decided to ask Smith some Parliamentary questions to ascertain the extent of the cost containment proposed and its impact on ACC claimants.  He asked, for each of the past eleven years, how many vocational independence or capacity for work assessments were undertaken by ACC, and how many claimants lost their weekly compensation as a result.

Smith’s response:

ACC does not capture specific data regarding the number of capacity for work or vocational independence assessments initiated. Data reflecting the outcome of these assessments is also not readily available. To provide the Member this information would involve substantial manual research of individual claim information.

That’s right.  They don’t know some of the most basic statistical information necessary to determine the likely extent of cost containment or the impact on claimants of going back to the 1999 policy.  What’s more, they are not even prepared to do the analysis to find out.

No wonder Treasury commented on the Regulatory Impact Statement for the Bill:

The RIS does not contain the required information and the analysis is incomplete in a number of key areas. For example, some of the proposals to remove ACC entitlements will shift costs onto other government agencies or onto individuals but the RIS does not quantify these costs.

But Smith blunders on with his ill-conceived Bill. What a shambles!