I thought Key promised us a higher-wage economy. We're going backwards.
One hundred thousand workers on the legal minimum wage of $12.50 an hour get 25 cents added to their hourly wage this week. Thousands of others between the minimum and $12.75 an hour will get a top-up.
Given that we have a recession, many people may think those workers should
be grateful to John Key for giving them anything. As Key said, at least the 25 cents would cover inflation, making them no worse off, and a group of low-paid workers told me this week that "it's better than nothing".
But as with many stories about workers and their relationship with the employment system, all is not as it seems. The fact is that, from today, low-paid workers will be worse off than they were this time last year even after the supposed largesse from our Prime Minister, because their Accident Compensation levies go up this week, too.
The Government hopes workers won't notice, but those on the minimum wage will have an extra 3.75 cents an hour automatically deducted from this week's pay packet.
It's a tax increase, although National pretends it's not. What is galling is that the levy increase is being imposed to ensure ACC can show a big profit and then be flicked off as a cash cow to some multinational after the next election.
This week, someone in my office went to the IRD website and calculated the new tax rates that will apply from this week for workers.
He discovered that, on top of their ACC hike, workers on the minimum wage are in fact getting an increase in their PAYE. But workers on the current minimum wage, according to the IRD pay calculator, have their tax, in the form of PAYE and ACC, increased from $2.27 an hour to $2.36. That's 9 cents or a 4 per cent increase.
But this increased take from workers' pay packets doesn't take into account the fact that the Consumer Price Index - the measure of inflation - is up 2 per cent over the past year.
That alone means someone on the minimum wage has had their net purchasing power reduced by 21 cents for every hour they worked. Add to that the 9-cent levy and PAYE increase and poor workers will be worse off by 30 cents an hour.
Even with the 25-cent government handout, the lowest-paid workers in New Zealand are actually 5 cents worse off than they were last April.
According to Statistics New Zealand, since this Government came into office we have experienced the smallest increase in wages in a decade. After inflation average workers are earning less than a year ago.
I thought Key promised us a higher-wage economy. We're going backwards.
How does this fit into Key's grand strategy of catching up with Australia? Research by accountancy firm Grant Thornton shows the wage gap between Australia and New Zealand is getting wider.
Almost 80 per cent of Australian employers said they were expecting to increase their workers' pay at or above the CPI rate, compared to 55 per cent in our country.
Key would have us believe that raising GST to 15 per cent will enable him to deliver tax cuts to us. He says the balance of tax cuts and GST increases will be neutral. But according to the Government's preferred option, the cuts will be at the top brackets. Even a child can work out the people on the bottom will pay for it.
Key seems to be a decent sort of bloke who gives the impression he genuinely cares about the people on Struggle St. That's why many of them deserted Labour for him.
But the numbers speak for themselves.
The poorest workers will pay more tax this week than they did last week. And in real terms their net hourly pay is worth 5 cents less than it was last April.
April Fool? I think so.
