Shane Te Pou: Don’t cast workers on the scrapheap

It’s the working class, often in rural communities, who have to live through the hard realities of lower wages, even as inflation rises. Photo / Warren Buckland

OPINION

I can never quite get my head around how the business elite in Aotearoa can speak so casually about needing higher unemployment or that workers need to accept lower wages, even as inflation rises.

We’ve got a habit of speaking about the economy like it’s a machine and people just cogs in it. But when the Reserve Bank Governor says workers need to suppress their wage demands, that’s real families getting poorer. When the National Party pledges to remove the full employment mandate so interest rates go higher, that’s real people losing their jobs and families having to tighten the belt to make mortgage payments.

I’ve been through two big recessions, and a few smaller ones, in my life and I can tell you, it isn’t the well-heeled who suffer. It’s the people who are treated like cogs, to be thrown on the scrapheap when they’re not useful. It’s the working class, often in rural communities, often Māori and Pasifika, who have to live through the hard realities of the “wage constraint” and “greater labour market flexibility”.

Even once the economy bounces back, the impact on those workers and their families lasts. The factories in small towns often don’t reopen, the job opportunities don’t come back. It’s either up sticks to the big city or scrape by. Many workers never recover from a bout of unemployment - they never get back to earning what they were and their chances to progress are gone. I see that in my hometown, Kawerau - the whānau and friends who have struggled to get back on their feet after losing their jobs.

It’s not so easy to talk about cutting 50,000 jobs when you realise that’s 50,000 livelihoods, 50,000 families, eh? No wonder the economic boffins prefer cold, abstract language.

What’s worse is that it’s not the workers’ fault. It’s not the factory worker or the retail staffer who is driving up inflation. It’s international turmoil and destructive storms, not to mention record corporate profits, that are making things more expensive. The average chief executive of a listed company earns as much in a week as a minimum wage worker will in a year. But we only hear complaints about “wage pressure” when the minimum wage goes up, not when the top-end gets bonuses.

The hard truth of it is that higher interest rates and calls for higher unemployment and lower wages have no impact on the causes of inflation and they hurt ordinary families the most.

But let’s not be all doom and gloom because I actually reckon the economy is in pretty good shape underneath it all. Yup, there’s probably going to be a technical recession due to the disruption from Cyclone Gabrielle on top of the storm damage that set the economy back late last year (and that’s how we’re going to feel the hurt from climate change more and more unless we get on top of it). But there are still some strong drivers of growth and job creation out there.

Tourism and immigration have bounced back very strongly, bringing more money and more talent into the country. Our creative industries and tech companies are breaking new ground and attracting international customers. The iwi businesses are becoming more and more the cornerstone of regional economies, investing in high-tech innovation as well as sustainability.

Rather than complaining about the cost to business when wages go up, let’s celebrate that whānau have more to live on. And let’s realise that we’re not going to be a prosperous country if we have low wages. Higher wages drive productivity as businesses look to get more out of less labour.

We need to be backing high-wage industries that are generating wealth for the nation, not trying to find more workers for low-wage ones.

We’ve got to remember that the economy exists for us, not the other way around. Everyone who wants a job that pays enough to live a decent life - the economists call that a problem but it should be the goal.

Shane Te Pou (Ngāi Tūhoe) is a commentator, blogger and former Labour party activist.