New years resolution: fix low wages to help stem migration to Australia
“New Zealand now has a structural problem of low wages, and the 30% wage gap with Australia will only be closed through more widespread industry wide collective bargaining, supported by ongoing improvements in productivity,” said CTU economist Peter Conway.
The government today released the Economic Development Indicators report. The report showed wages were lower in New Zealand than anywhere in Australia, and noted this as being a driver for migration to Australia.
“Keeping up the momentum on investment in skills, technology and strategies to lift productivity on a continuous basis are needed to close the wage gap with Australia.”
Leaving it to the market alone hasn’t worked, Peter Conway said, and the low investment route chosen by employers in the 1990s, encouraged by the Employment Contracts Act, led to low wages and capital investment falling off, which we are now attempting to catch up on.
“Wages were broadly comparable with Australia until the late 1980s, but then fell to 60% by 2002, according to Treasury analysis.”
“Similarly, in 1978 New Zealand and Australian workers had about the same amount of capital per hour worked but by 2002, capital intensity in Australia was over 50 percent greater than in New Zealand.”
“The report shows that progress has been made in recent years. The CTU agrees that lifting productivity is essential to lift incomes on a sustainable basis. However this must be accompanied by effective measures to ensure the benefits are shared, with a strong minimum code and effective industry bargaining.”