Union goes to Bollard over pay

A key union official behind a drive for a 5 per cent wage rise, Andrew Little, briefs Reserve Bank Governor Alan Bollard today on the campaign just ahead of an announcement on interest rates.

At the same time the Government has come under fire from National for tax changes that will mean the take-home pay resulting from a 5 per cent pay rise could be as little as $5.20 a week.

Mr Little, Engineering, Printing and Manufacturing Union national secretary, last month launched the "Fair Share 5 in '05" drive for a 5 per cent pay rise for members. It follows a huge 20 to 30 per cent pay deal for nurses and midwives.

And this week the Public Service Association announced a separate drive for a "significant" pay rise.

The Reserve Bank is charged with controlling inflation and Dr Bollard tomorrow releases the next Monetary Policy Statement.

Economists are divided on whether he will raise interest rates to try to subdue the booming economy and keep inflation in check.

Mr Little said the meeting, at his request, was about the Reserve Bank's long-term thinking on interest rates.

"Obviously they are about to make an announcement on interest rates ... [I'm] keen to know what their thinking is around a sudden push on wages.

"I've had one conversation with him already this year about it and that was without any figures attached, and I undertook then that I would contact him when things had progressed."

He said the meeting was not unusual and he has had meetings with the previous governor and now National Party leader, Don Brash.

Dr Brash said he held such meetings when he was governor, and there was nothing unusual in it.

"It's important that the union understands the implication of their wage demand for monetary policy."

Mr Little said interest rate rises added costs to mortgages. There had not been enough wage rises of the order the union was wanting for them to have an effect yet.

"But we want to know what the risks might be ... the risks the Reserve Bank might be perceiving."

Meanwhile, National finance spokesman John Key said a 5 per cent wage rise would not go far in the "high tax" climate and unions should ask Labour for tax cuts.
A 5 per cent rise for a teacher on $50,000 with two kids, and getting help through the income-boosting Working for Families package, would only increase take-home pay by $5.20 a week.

That was because of effective marginal tax rates - the amount of additional tax paid for every dollar earned - of 90 per cent.

Mr Key asked Associate Finance Minister Trevor Mallard in Parliament if a $5.20 pay rise was what the union had in mind when it launched the pay drive.

Mr Mallard replied: "I'm sure that's not what they wanted."

But Mr Little said effective marginal tax rates were not a reason not to lift real wages.

Wage pressures

* The Engineering, Printing and Manufacturing Union has launched a 5 per cent pay drive for members.

* It follows a huge pay deal for nurses and midwives that saw pay rises of 20 to 30 per cent.

* This week the PSA launched its own drive for a "significant" pay rise and other improvements in conditions.