CTU media release
15 July 2009

Saving is hard on low incomes

Reducing debt and saving is hard for workers with reduced household incomes, says CTU Economist Bill Rosenberg. “While I agree in general with Reserve Bank Governor Alan Bollard that people should be reducing their debt levels and saving more, it is important to remember how difficult this will be for many workers at this time through no fault of their own,” said Rosenberg.

“Households are being hit by increasing unemployment and reductions in paid work hours. Redundancies are forcing many of those affected to eat into their savings.”

“We need a balanced approach which combines job security and continuing wage increases so that workers can both save and meet the needs of their households. It is important that people continue to spend at the present time in order to keep the economy moving.”

The CTU was reacting to a speech yesterday by Dr Bollard in which he said that “household savings, investment in the tradable sector, and deeper funding markets are the key to New Zealand's economic recovery”.

The CTU agrees with this approach, but workers need a greater degree of income certainty and job security in order to contribute in this way.

www.union.org.nz

ENDS

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