As is it wasn't bad enough having the daily newspapers in Aucklnad, Wellington and Christchurch dissing its Work and Wages policy, Labour has taken another hit this morning.
Dunedin is a Labour stronghold; it always has been, and it probably always will be, for reasons that we can't quite fathom. But the good citizens of Dunedin awoke to an editorial from the esteemed Otago Daily Times yesterday that will give Clare Curran (MP for Dunedin South) and Dr David Clark (candidate for Dunedin North) a severe case of dyspepsia. The ODT leader writer opines:
In an ideal world New Zealanders, particularly the lowest paid, would earn more money.
There would be more to spend, too, on hospitals and schools and other worthy services.
But legislating for higher wages - as Labour says it would if it became the next government - is counter- productive.
That is because basic economics means money has to be earned. Printing money, in effect what the United States has been doing of late, or forcing businesses to pay staff more cannot lead, long term, to either more jobs or higher wages.
The bottom line is New Zealand and New Zealand businesses, in a highly competitive world, have to be profitable. It is they and, particularly the taxes paid by the staff they employ, that earn the money to support public servants, benefits and public services.
The leader writer seems to have a pretty good grasp of his/her subject; you can't just make people richer by ordering someone else to pay for it with THEIR money. And it is upon that proposuition that Labour's Work and Wages policy fails.
But wait, as they say in the informercials; there's more and the writer isn't finished, drawing an analogy with Greece:
This fundamental truth has been fudged in the West for years, and we are all beginning to pay the price. Greece exemplifies the fool's paradise.
Inefficiencies and dislocation from economic rules have placed that nation on the brink of defaulting on its debts. In essence, what applies to individuals applies to nations. Everybody and every country has to earn their living.
Thus, the productive sector must be fostered rather than hindered, a matter most obvious in export businesses.
If they are uncompetitive they disappear because no-one buys their products. Likewise, competition in many domestic industries spurs a tough struggle for survival. All these businesses cannot afford profligacy or higher costs and must be effective and efficient.
It is all very well for Government, local government and state-supported organisations to be wasteful or to choose to pay "fairer" higher wages, but they are sheltered from the ultimate pressures of the marketplace.
Of course, that is not to also say there are not poor employers who do abuse or exploit staff, and systems and protections must be in place to ensure reasonable recompense and conditions.
And surely most of us feel unease at the reported salaries - some of which soar into the many millions of dollars a year - of some private enterprise CEOs and associated mandarins.
Labour's work and wages policy released this week, however, is likely only to undermine labour-market flexibility and therefore competitiveness.
Labour would increase the minimum wage to $15 an hour and abolish the 90-day trial period. It would have all holidays - not just most - that sometimes fall on a weekend transferred to Mondays and introduce statutory rights to redundancy and change pay equity legislation.
Every item, in its own way, will add costs to business which will, inevitably, mean higher prices to everyone.
We agree wholeheartedly with the opinions expressed by the leader writer. What Labour is proposing is a Utopian solution to a very complex problem for which there is no quick fix, as I believe that fellow blogger Robert Winter and we have agreed, although we come to that conclusion from perspectives which are poles apart.
Dragging New Zealand kicking and screaming back to the bad old days of the 1970's (when the Cooks and Stewards on the Cook Strait ferries would strike during school holidays because their chocolate biscuits had been withdrawn) is not the answer in our ever-humble opinion. Unions and business owners need to work together collaboratively to icrease the productivity and profitability of the workplace, because that, rather than government decrees is what will increase wages.
And despite that concerns of the trade union movement, there is no convincing evidence of widespread abuse of the 90-day trial period for new employers. If there was, you can bet your shirt that the unions would have been screaming it from the roof-tops. Sure; there are bad employers, but the overwhelming majority of employers are more concerned with making a bob than with renewing their workforce every 90 days. And there is plenty of anecdotal evidence of employers taking on staff who they would NOT have employed prior to the 90-day trial period becoming law.
This policy has the appearance of having been written by unions for the benefit of unions. Given that the unions remain as Labour's only significant financial backers, it's not surprising that Labour has repaid them in kind. But a trip back 35 years in terms of industrial relations is not what the New Zealand economy needs right now.
