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Unions must be realistic on wages

Canterbury Manufacturers’ Association.
Media Release.
21 July 2006

In response to a report by Statistics New Zealand on work stoppages, the Canterbury Manufacturers’ Association says that New Zealand Unions must be realistic in their claim for higher wages and understand that inflation and globalisation affects companies as does the individual.

The CMA does not oppose wage and salary increases for employees, but the Association says that these increases should be measured against a company’s performance and financial situation as not to undermine their viability in New Zealand. Inflation increases the cost of living for individuals and those same pressures also reduce the competitiveness of New Zealand companies, adding to a cost base not shared by overseas competitors.

Chief Executive John Walley says that while there are some New Zealand companies who have reported profit increases, many in the manufacturing sector are still feeling the effects of the high Kiwi dollar, the inflow of imports from low cost countries, local inflation which along with oil and the international cost of materials are driving substantial cost increases. Global competition limits the ability to pass on costs to customers. The result is margin pressure and too much of that and the activity will cease.

“Work stoppages add to these costs, productivity falls and customers are unhappy, who wins in the end? Our competitors win. As if they did not enough comparative advantage to begin with, we go and hand them yet more”, says Mr. Walley.

“Stoppages, excess settlement demands by Unions will simply accelerate the loss of manufacturing activity in New Zealand. Is that good for Union members?”

“The recognition we are all in the same boat would be a start. We win or loose together because global competition is fierce and real unrealistic local demands have no place in this landscape.”

“In real terms low wages can only be fixed on a sustainable basis by higher productivity; ultimately all other wages increases are a transient illusion.”


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