Hand Over Another Denarius
I was reading an opinion article in the Mercantile Gazette (yeah, I know, business geek!) that talked about wage rates. It was somewhat timely, as just recently Cullen challenged employers to help close the wage gap by paying their staff more. I imagine that went down in some quarters like a bucket of cold sick, but that raises the question of why? And one other thing – how did we get to such a position.
Now sure, some of the gap can be attributed to various technical explanations regarding minerals and such, but I wonder whether there is a simpler historical argument that may help explain it? As far as my reasoning carries me (and this is based purely on some historical information I've picked up in NZ history books and some anecdotal evidence) it seems that the simplest reason for understanding why Australians get paid more than Kiwis is because until 25 years ago our economy was far less diversified than theirs (and still may be, does anybody know?). Much of our employment seemed to revolve around primary export industries – farms, and the infrastructure to support it (rail, meatworks, farm service industries, etc). Plenty of this stuff doesn't require much of a qualification or portable skill base to work in it, but that didn't matter since employment laws were extremely strict and for a while things were still okay (if not as great as they were in the 1950s). Then the Lange government came to power, and removed a lot of the artificial supports that had been constructed to support an economy that couldn't be supported.
So what happens? Lots of unskilled people (low potential wage pulling ability) are left chasing fewer jobs (because of a recession and high inflation, and the structural upheaval as the economy begins to react to market signals and diversifies). Wage rates stagnate, or even drop. The opening up of the labour market to market signals in 1991 reinforces this trend. Eventually the economy turns the corner and starts growing again, but half the problem still remains – unskilled labour. Not having the skills to demand a higher pay rate, they are forced to accept lower wages than if they were skilled. Of course one would expect this to correct over time as people gained qualifications and experience, and new entrants into the labour market should be better prepared to compete in it. But this can only be ever part of the story – after all, it takes two to tango in the employment dance.
To be honest, the other reason I think that wages are lower here than in Australia is because we have some selfish bosses who want to treat their staff like their personal property rather than a human being. They're only thinking about Number 1, rather than about the wider impact that their business has on society. Of course, there are plenty who don't fit this mould, but I've heard some pretty impressive stories (like the guy who left his casual job because he was rostered on to work one day a fortnight, as his boss could pay him the minimum wage or some 14 year-old $7 an hour to do the same job). And it may be possible that some of this is a reaction to the way in which unions behaved prior to the Employment Contracts Act (and that some still do, unfortunately), and so is a bit of payback (which hardly excuses the behaviour). Why on earth would you want to pay your staff more? Well for a start, if they get more from their work they'll feel more loyalty. Pay isn't the only thing (I'd quit a highly paid job if I was not appreciated and treated poorly, and make sure the whole world knew why), but part of letting an employee know that you care for their well-being and value their contribution to your business is paying them properly. Perhaps a few of our business owners and managers need to learn to pay their staff a little more and treat them properly. It may mean a cut in profits, but in the long run it will be worth it.
It's possible that I have committed some sort of right-wing heresy by daring voice this, but to be honest I don't care. While the restructuring of the economy has done a world of good and there is still some way to go, one of the biggest downsides to it and the way our society has been progressing is that we have over-emphasised the individual over the family and society. We need to get that balance back, and that starts with a healthy dose of compassion for those who aren't quite as fortunate as we are. The best time to start is now.
