Matt McCarten: Labour's wage restraint warning to workers underlines political hypocrisy

This week the Labour Finance Minister warned wage and salary workers that New Zealand couldn't afford for them to get a big wage rise. Apparently a big pay rise in Michael Cullen's opinion was any increase to workers close to or beyond the inflation rate.

In fact Cullen went further and claimed that it wasn't reasonable that workers should expect to receive wage increases either to compensate for inflation or "major shifts in relative prices of which we ourselves have no control". By that he meant petrol prices. In addition to their chauffeur-driven cars, our Cabinet Ministers get a taxpayer funded brand new car for their private use and never have to pay a cent themselves to fill up the tank.

Members of Parliament really must live in a surreal world where they see no connection between their own salary increases each year and those for the rest of us. Surely Cullen can see how workers must feel when he accepts $20,000 more pay this year - which equals an 8.1 per cent increase - and at the same time preach that it is irresponsible for workers to ask for half of the percentage increase he accepted. I'm sure he didn't tell his boss Helen Clark that her annual salary surging up by $100,000 four years ago was possibly a bad example to the rest of New Zealand.

To be fair, Cullen was only backing up Alan Bollard, who is Don Brash's replacement as the Reserve Bank Governor. Bollard was warning us that wage increases will put further pressure on inflation, which he is predicting to rise to 3.9 per cent this year.

Do you remember when Brash was Governor? Brash would solemnly intone that if inflation exceeded 2 per cent in any one year he would lose his job. Of course when it did jump over this limit he kept his job. His successor, Bollard, is now presiding over inflation of nearly 4 per cent. Instead of Cullen giving Bollard the boot or at least docking his pay he in fact rewarded his Governor with a whopping 7 per cent wage increase. This has taken Bollard up to a tidy $480,000.

Of course you probably put this down to the usual hypocrisy we get about wage restraint from our rulers who never seem to apply their advice to themselves. Cullen is refreshingly honest when he tells us straight: "We cannot afford large wage and salary increases across the board. Equally we can't afford to lose highly skilled staff which are necessary for the maintenance of economic development." What this means is that winners should get all the loot and the rest get zilch. I presume he puts his parliamentary colleagues (that includes all the other parties) and senior state mandarins in this winners' category.

The employers' union, the EMA, can always be relied on to suddenly become great supporters of the Government whenever Labour puts the slipper into workers. A spokesperson this week said wage increases without growth would create stagflation and that wouldn't be good for anyone. The EMA was adamant union leaders must show constraint to help the economy.

The EMA fails to point out that the reputable Spicers Household Survey Report said that wealth was up an average 16 per cent for those who owned a home, commercial properties, shares and investments. Financial investments were up after costs by 7.8 per cent - the highest in 12 years. Nor did it mention productivity in recent years is up by an average 2.6 per cent. Profits between 2001 and 2004 went up 44 per cent and are still tracking upwards while wages in real terms barely moved.

Funnily enough, the EMA was also silent when a couple of weeks ago it was reported that the top CEOs awarded themselves a gluttonous 25 per cent increase in their take-home pay this year. There wasn't much talk from other business and political leaders about this corporate greed setting a bad example for the rest of us. In fact these corporate captains are put up on pedestals as idols for the rest of New Zealand to emulate. How hypocritical is that?

The only defence I heard was from an anonymous business leader who claimed it was important for CEOs in New Zealand to match the remuneration packages of their Australian counterparts. I'd like to hear this source's response to the fact that New Zealand workers are now paid 35 per cent less than the same job earns in Australia.

Unsurprisingly, the biggest increases in the workforce this year were human resources managers with an average hike of 18 per cent tucked neatly into their salary package. This shouldn't come as a surprise, given many of these people are employed to work out ways to get workers to work harder and cheaper.

New Zealand workers generally work their butts off for their employers. They work longer and longer hours for less and less. Real wages are down, profits are way up and the surplus is going into the pockets of passive owners and their senior managers.

I was negotiating a wage agreement for union members at a hotel recently. The room occupancy is at a record high, but the hotel is run on one third less staff than they used to. The other example is a well-known burger chain that operated on a 30-32 per cent wage cost a decade ago. Today, wage costs are between 21 and 22 per cent.

It's just so disappointing that a senior member of the Labour Party can tell workers, without a twinge of guilt or embarrassment that they are not entitled to ask for a modest increase that even keeps up with inflation.

It doesn't take much to imagine what the founders of the Labour Party would feel if they awaken from their graves to witness this statement by one of their favourite sons.