Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Workers to pay for Holidays Act election bribe

Workers to pay for Holidays Act election bribe

Every worker will pay for Labour's decision to press ahead with its election bribe of an extra week's annual leave, says National Party Leader Don Brash.

Cabinet papers gained under the Official Information Act confirm National's earlier fears that not only will Labour's Holidays Act cost the country millions, it will ultimately be employees that foot the bill.

"The papers estimate an extra week's annual leave will cost nearly $800 million.

"Treasury and the Department of Labour predict the cost will initially be split 50:50 between employers and workers. But in the long-run employers will transfer most of the cost to workers through lower wage increases.

"That means one week's extra holiday will cost the average worker about $500 per year.

"Most workers would probably prefer the money instead.

"It's also ironic that the extra week's holiday will hurt low income earners the most, when Labour says it's working hard to improve their lot.

"The new Act will effectively cancel out the Government's low income family assistance package flagged for next year.

"With legislation like this planned, it's little wonder the Government had to ditch its election goal of getting us back into the top half of OECD. Unless the Government changes tack, increasing the growth rate will be a near impossible uphill battle," says Dr Brash.

Information from Cabinet Papers on the Holidays Act

“While the initial cost of the extra week of leave falls on employers, over a period of a few years we expect that employers will offset these costs by passing them on to employees through lower wage increases”

“The immediate cost of labour will increase by 2%”

“There will be distributional impacts through salary responses – it is possible that any effects will be unevenly distributed and felt most heavily by vulnerable workers”

“These costs will fall more heavily on smaller employers where a larger proportion of workers currently receive three weeks annual leave”

“Workers who currently receive four weeks’ paid annual holidays may see their additional weeks holiday as “reward” for service…we would expect a majority of these workers to seek to re-establish their relativity”

Costs: (these are estimated as ‘maximum’ costs and also assume 75% all workers with 4 weeks increase their leave to 5 weeks)

Private Sector: $708 million Public Sector: $163 million Total: $778 million

The Department of Labour also estimates a 10% improvement in productivity as employers seek to work more efficiently as a result of the increase in leave entitlements (although they acknowledge evidence of improved productivity due to increasing leave is scarce). This reduces the total cost to $700 million.

In terms of who bears the burden – in the short-run the Department of Labour assumes a 50:50 split between employers and employees – meaning the direct cost to employers is $350 million. Employees are expected to bear more of this cost over time through lower wage increases.

“An increase in annual leave entitlement may lead to a decrease in labour supply which is likely to have an adverse impact on growth.” The long-run output loss is estimated at 0.2% of GDP.

64% of private sector workers currently have annual leave of 3 weeks; 32%, 4 weeks; and 4%, 5+ weeks.

“The proposed policy is likely to have an inflationary impact as higher costs of production feed through into prices and this may also feed through to a higher interest rate”

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>


Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>


General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>


Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>


Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news