21 July 2002

Wages And Jobs Record Stronger Under Labour

“Workers and households have done significantly better in real terms under the Labour-Alliance government than under National,” Finance Minister Michael Cullen said today.

Dr Cullen was responding to a Sunday Star Times article stating that average hourly earnings had risen against prices almost 6 percent from March 1997 to March 2000 when National was in power and only 0.1 percent from March 2001 to March 2003.

“A more meaningful measure of how the labour market is performing for workers is total gross earnings because they tell us how many people are working, the hours they are working and the wages they are earning,” Dr Cullen said.

Average hourly earnings failed to tell the full story. If, for example, half the workers in a factory were laid off and the other half were given a pay increase, the average hourly earnings indicator would pick up only the pay increase not the lost jobs or the lost earnings to those who were laid off.

“Neither do they pick up off-wage payments or conditions. This is relevant to the era of the Employment Contracts Act when many workers sought to protect their hourly rate by trading off allowances.

“And they say nothing about distribution. Paradoxically the faster the rate of job growth, the slower the rate of increase in average hourly earnings. This is because the jobs which tend to get added first, or shed first, tend to be lower paid jobs.

“Job growth has been much faster under Labour than in the previous three years. From March, 1997 to March, 2000; employment grew by 31,300 jobs. From March 2000 to March, last year; it grew by 104,400 jobs – more than three times as much,” Dr Cullen said.

“All these factors are picked up in the total gross earnings indicator which shows real earnings rose by more in two years under this government than in three years under the last National government.

“Gross earnings rose by 10.7 percent and consumer prices by 2.7 percent yielding a real increase of 7.9 percent between March 1997 and March 2000. Between March 2000 and March 2002, gross earnings rose by 14.5 percent and the CPI by 5.7 percent, yielding a real increase of 8.3 percent. And that was achieved in two years, rather than three,” Dr Cullen said.

“At the same time, the government has invested heavily in industry training and has worked to improve the protections available to workers. We have replaced the ECA with fairer and more balanced legislation, introduced paid parental leave, restored the value of the minimum wage and strengthened workplace health and safety provisions.”

Ends

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