Matt McCarten: Home ownership costs will eat up increase in minimum wage

Good news for workers today. The hourly rate for adult minimum wage workers goes up $1 an hour, and for workers under 18, it goes up 80c.

The Minister of Labour, Ruth Dyson had cause to be very pleased with herself last week when she announced the minimum hourly wage was moving from $10.25 to $11.25, and for workers under 18 years to $9 an hour. This is the biggest increase since 1999. Around 120,000 workers will benefit.

In the nine years of a Labour-led government, the minimum wage has increased from $7 an hour to $11.25. That's a total rise of $4.25 an hour or 61 per cent.

Today's wage increase is even more significant when we compare it with the previous nine years when National was in government and raised it less than a derisory $1 an hour during that time.

A debt of gratitude is owed to New Zealand First and the Green Party, who both insisted, in their confidence and supply agreements when this Government was formed, that the adult minimum wage would move to $12 an hour by 2008. The Maori Party also has been a staunch supporter of lifting wages.

National leader John Key said that he does not personally oppose moving the minimum wage, although when his party was last in government they didn't believe that such a move was necessary.

The then Industrial Relations Spokesperson, Wayne Mapp, insisted this matter should be left to the free market to determine. In those days, of course, the National Party and their neo-conservative allies believed that workers and bosses needed to increase the size of their cake so that we could all get a bigger piece of cake.

Of course that was nonsense then and is even bigger nonsense now. Economic growth and profits have soared in recent years, yet wages, in real terms, have been going backwards. It is an indictment that after a decade of record economic growth we should have 120,000 workers on minimum wage who rely on the Government to force employers to pay an even modest wage.

The other big benefit to workers today is a fourth week of annual leave. Finally, New Zealand has caught up with most other OECD countries.

Australia, for example, has had four weeks annual leave for over 30 years, and European countries have between 4 and 8 weeks leave. The New Zealand trade union movement can also pat themselves on the back over their campaign to build support both in workplaces and the community in general for the extra week's holiday. It wasn't so long ago that Max Bradford, a former National Party minister, led a campaign to reduce annual leave to two weeks. It was only mass mobilisation of the trade union movement in the late '90s that made the then-Government back off.

Again, much of the credit for pushing through the final stages of this new legislation can be attributed to the minor parties who have been staunch supporters for increasing the minimum wage and adding an extra week to workers' holidays. On almost all occasions the minor parties are stronger advocates of workers' rights and benefits than the Labour Party. The Green's MP Sue Bradford and NZ First's Peter Brown have played crucial roles when it comes to workers' rights. Both were also pivotal with the Maori Party in overturning Wayne Mapp's 90-day probation bill.

Labour's caution is partly because Clark is naturally cautious. It doesn't do her any harm that she is pushed by the minor parties into making concessions to the workers. This allows her to placate employers by saying that she is personally sympathetic to their resistance but is able to blame the minor parties for having to implement policies which place a cost on employers. When the legislation is implemented, Labour gains the kudos from workers whilst not antagonising employers too much.

The fact is Labour is far too cautious when it comes to pro-worker legislation. The fundamentals of the Employment Contracts Act are still intact. The Act obstructs workers' ability to organise collectively with their employer. This has resulted in a continuing decline of real workers' wages and conditions that is making it harder and harder for many thousands of workers to make ends meet.

And alongside the good news is the continuing bad news for workers hoping one day to own their own home. It is outrageous that a supposedly pro-worker government manages an economic policy that tolerates a situation where workers on the average wage in Auckland would have to pay 90 per cent of their take-home pay on a medium house mortgage. The bank repayments for such a house has moved from $478 to $636 in just four years - an increase of $158 a week, when average wages in Auckland increased by $13 in the same period. No wonder banks are making a killing.

The nonsense that increasing interest rates will bring house prices down continues the ludicrous situation that every few months, interest rates are moved by a quarter of a per cent.

It is not surprising that Statistics NZ reported last week that the use of credit cards is on the rise again. It doesn't take much to work out where people are getting the extra money to pay off their increased mortgages and rents.

So whilst there is positive news for workers today, the situation is that they are still going backwards at speed. The creeping crisis in housing is now turning into a major societal catastrophe. Unless the Government addresses this matter, raising the minimum wage by $1 will be like Nero fiddling while Rome burns.

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