Economy isn’t serving those who need it most
“Economic growth is faltering with no growth per person in New Zealand over the three months to June”, says CTU economist Bill Rosenberg. Gross Domestic Product (GDP) grew 0.4 percent in the quarter, but population was estimated to have grown by 0.5 percent over the same period according to statistics released today by Statistics New Zealand.
“While there was increased activity in agriculture that was in the face of falling prices for its products which means farmers have less to spend in the rest of the economy. Manufacturing activity fell for the second successive quarter with all subsectors reducing output other than food manufacturing, which is helped by lower agricultural prices. While a falling dollar exchange rate may help to reverse this, it is not good news for many relatively well paid jobs.”
“These are symptoms of an economy where the growth has been unevenly spread. There is still high unemployment in most regions of the North Island. Manufacturing has been struggling. Growth has been in areas like tourism where pay levels are low and jobs are insecure.”
“The Minister of Finance said earlier this week that immigration levels had kept wage rises down. So have other Government policies. Wages haven’t kept up with what the economy and employers can afford. Market sector labour productivity grew 8.5 percent between 2009 and 2014 but real average wages grew only a little more than 2 percent.”
Output per hour worked in the economy grew only 0.4 percent in the last year, indicating weak productivity growth.
“Government policies for the next three years are forecast to detract from growth in the economy. They need to change to ones which produce more broadly based and sustainable growth and raise wages,” Rosenberg said.