CTU MEDIA RELEASE 24 April 2008
OCR decision: unfair to single out workers to exercise restraint
"Workers are feeling the pinch with rising costs, and the Reserve Bank governor is wrong to single out wages increases as a future inflationary threat," Council of Trade Unions president Helen Kelly said today.
"It is unfair to say that possible wage rises are a reason to maintain interest rates at such a high level. We have had a tight labour market for 7 years, yet the benefits of economic growth have not been shared, and wage growth has been modest to say the least in that period."
"We are concerned that workers are unfairly targeted to show restraint. Businesses have just had a 10% cut in their company tax rate, and we think reasonable wage increases for workers will not cause major inflationary pressures."
"The adjusted Labour Cost Index shows that wages in 2007 went up by 3.3% - this is hardly excessive during a year when inflation was running at 3.2%. The unadjusted Labour Cost Index shows wages were up by 5% over the period, but that is lower than the mid 2004 to mid 2006 period."
"Regular wage increases are needed to attract and retain workers, and these will not add significantly to inflation pressures. Also we note that with more than 500,000 people joining KiwiSaver we are seeing increased funding going into savings which tends to reduce inflationary pressures."
"The CTU position on wages is that we need to see the minimum wage lifted, more industry and multi-employer bargaining, and ongoing investment in skills, technology and best practice in workplaces."
"The fact is that monetary policy is not reacting quickly enough to a slowing economy. The CTU thinks there is a strong case for an immediate reduction in the Official Cash Rate."