The Opportunities Party has released its first two policy priorities – making New Zealand fair again and boosting incomes by limiting immigration and increasing its quality. Here’s the logic for you to contemplate over Christmas.
We could import heaps of workers from abroad prepared to work for well below the minimum wage just for the privilege of being here. In essence the numbers prepared to do that are infinite. So should we?
Secondly, tourists on their OE with working visas are happy to work for minimal wages, minimal conditions because the job is temporary & they're just moving through. Often these people are University student types and so highly intelligent and what you'd call high quality labour. These folk have proved to be hugely popular amongst employers - who can't believe their luck that there's a steady supply of such temporary talent.
So how many of both types of foreign labour should we admit? Should we throw the doors open & let them drive wage rates down to the minimum wage (or less)? The serious question here is where do you draw the line if at all? Unemployment is around 5%. We do not require the unemployed to up stakes and move to where work might be (imagine the cost of that for families), so clearly there is scope for forcing these folk to move – if that’s what we choose to do. But that approach aside, we find there are pockets of labour shortages around the regions.
Now let’s look at our reality in terms of how an economy is supposed to function. As it grows, not all the benefit is supposed to flow to profits. Wages are supposed to rise as well – that’s how the spoils are shared, distributed. But since Rogernomics and globalisation hit, wage rates have been set more by the balance of demand and supply – rather than any link to the rising overall income of the country. That is thanks to labour having less and less bargaining power – achieved not just by deregulation but also by increasing the supply (via immigration).
(Value of 100 means all income in economy earned by 1 person, value 0 means everyone’s income identical)
So to me that implies a number of things
- only suckers work for wages, the supply of labour via migration will ensure wage rates never rise, especially but not exclusively wages of the lower paid. Go and ask average white collar workers how their real income has been doing over the last decade.
- we are building a low wage economy where the only way to become prosperous is via enterprise or by participating in the still-protected game of property speculation
- the demand on the Government to be the primary vehicle for redistributing income via mechanisms like Working for Families will increase as working families find they fall further and further behind any semblance of a living wage. So our welfare bill will rise inexorably even though unemployment is low. It will rise because we have to boost the income of people in work. Expect the social costs of so many people trapped in low incomes to rise as well.
Of course the above has been the situation for some years now and as we all know, measures of inequality verify an explosion in the differences across society in income and wealth. We can keep this going by simply keeping the immigration spigot open – the supply of foreign labour is infinite, without end.
It comes down to the type of society New Zealanders want – and we’re choosing one where wages are just a cost of production. As a source of income and material well-being we care less and less about wages. Or is it that we feel helpless here, that we’re on this treadmill of international competition that’s forcing our incomes down because if we pay our labour more we’ll just lose the business. And we can all agree on one thing – if there are no profits then certainly there’ll be no wages.
Our perspective at TOP is
- that we have opened the migration spigot too far in low wage industries, that this inflow is keeping wages down, and simply forcing the government to boost the incomes of working families via more and more welfare payments.
- that the governments of these Establishment parties just refuse to confront the tax loophole that is driving property prices up year in, year out. As a result the share of people’s incomes devoted to keeping a roof over their head is rising so fast their other needs can’t be met; quality food, transport, child care, health services, education etc.
So at TOP our approach is to:
- change immigration policy back to what it used to be; if a migrant cannot boost the incomes of New Zealanders we simply do not want them.
- address this open sore that is the tax loophole that enables owners of capital to escape their fair share of tax; this loophole is seeing money flood into property speculation while starving businesses of the investment funding they need.
Now will this make New Zealand less competitive and shrink the economy? We would argue no, what it will do is make the businesses that depend on low cost labour struggle, and those whose bottom lines are driven by talent and innovation will thrive thanks to (a) increased focus on creating wealth via business rather than property speculation and (b) higher average incomes as the demand for trained, skilled and talented New Zealanders rises.
We either strive to be a nation of productive, skilled workers or we stay in this race to the bottom where the only game in town is to hire low cost labour and churn out higher volumes of low value product.
That choice is yours. Enjoy the discussion over the Christmas BBQ.