Bryan Gould: Key's march toward inequality

Moves that effectively remove the right to collective bargaining reinforce the Government's assault on the wages of working Kiwis. Picture / APN

Policies to benefit those better off foster division and an economy that fails because it serves only their interests.

In his first term as Prime Minister, John Key made a determined effort to be all things to all men - and women. In his second term, however, he hasn't bothered; he has clearly calculated he can still win an election while overtly tipping the balance of advantage further in favour of the better off and against those struggling.

The evidence for this can be seen, for example, in the alacrity and openness with which he meets the demands of big business; but nowhere is it more apparent than in the burdens he is increasingly ready to place on working people.

The ranks of the poor in New Zealand have been increased in recent years by the unemployed and their families. The Key Government's indifference to their plight has been one of the least appealing aspects of its skewed order of priorities. But what has attracted less attention, perhaps, is the pressure now being put on families that depend on the earnings of those in work.

We have come a long way since the heady days of John Key's commitment to close the wages (and living standards) gap with Australia. Far from trying to lift wages, the Government is engaged in an undeclared campaign to depress real wages still further.

And that is from a starting point where low wages were already the central element in the widening income gap in New Zealand. We suffered the fastest widening of inequality of any country in the last two decades of last century, and remain dishonourably in the top group.

The top 10 per cent of income earners enjoy today an income nine times greater than the income of the bottom 10 per cent, up from five times in the 1980s.

As Treasury research shows, New Zealand households in the lower half of the income range had no increase in real incomes between 1988 and 2010; all the increase in national income over that period went, in other words, to those who were already better off. Although labour productivity in the private sector rose by 48 per cent over a similar period (1989 to 2011), the average hourly wage rose in real terms by only 14 per cent.

The price we have paid for this intensification of inequality is not just financial. As workers' rights at work have weakened, our shameful record on health and safety at work has worsened. In industries like forestry, where employees work long hours in a virtually deregulated workplace and labour costs as a proportion of total costs have fallen sharply, the rate of industrial accidents remains unacceptably high.

It is against this background that the Government has intensified its assault on the ability of ordinary people to protect their living standards and safety at work. That assault has taken the form of a whole range of measures, such as maintaining the minimum wage at a level that is inadequate to halt the increase in family and child poverty and introducing a young workers' wage even lower than the minimum wage. Low-paid workers in industries such as aged care are still expected to accept minimal wage increases that mean a further fall in their living standards. The unemployed are forced by benefit cuts and tighter rules about eligibility to try their luck in a labour market where there are few new jobs so that they are forced to try to undercut those in jobs that are already low-paid.

These factors are not accidental. They seem part of a deliberate strategy to remove the floor under wages and force them lower as a means of restimulating the economy. It is an amazingly convenient coincidence, is it not, that our slow recovery from the recession apparently depends on sacrifices made by the poor while we can afford more goodies for the rich.

The Government is still at it. International research shows the most important factor in determining the rate of wage growth is workers' ability to use collective bargaining to negotiate wage rates. This is not surprising; individual workers have little bargaining power in the face of powerful employers and in a labour market weakened by high unemployment. It is only by joining each other they have any hope of protecting their wage levels and working conditions.

It is easy for those whose economic fortunes do not depend on collective bargaining to underestimate its importance, not only to trade union members but also to a properly functioning economy. The right to organise in a trade union is recognised as fundamental in international conventions and the Universal Declaration of Human Rights and is an essential element in ensuring that a market economy operates fairly and in everyone's interest.

But our Government is pressing ahead with so-called "reforms" that, in effect, remove the right to collective bargaining and allow employers to refuse to engage with their workers other than on an individual basis. Sadly, this is just one more step in the campaign to reinforce the disadvantage suffered by ordinary people when faced with the overwhelming power of their employers in an unregulated marketplace.

It turns back the clock to a society disfigured by division and inequality and an economy that fails to fire because it serves an increasingly narrow interest.

Bryan Gould is a former UK Labour MP and former vice-chancellor of Waikato University.

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