CTU Economic Bulletin

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  • October 2011

    The political parties now have most of their employment relations policies out. These policies have great importance for New Zealand’s wage levels, and already there are the predictable allegations by business that Labour’s policies will lead to unaffordable wage demands. Yet it is inescapable that National’s policies which weaken collective bargaining will mean lower wages. This commentary shows that higher wages are affordable, even with current economic output and growth rates. And of course wages could be higher yet, if productivity increased faster – and the results of that were fairly shared with wage and salary earners.

  • September 2011

    It has been almost the perfect storm for New Zealand over this government’s term. From the global financial crisis to the Pike River tragedy, all are beyond our control here in New Zealand – or at least appear to be.

    For any government however, a crisis brings opportunity and licence to do what it always wanted to do (but never dared ask). So bad luck for voters may be good luck for a government. By these standards, the Key government has been extraordinarily lucky.

    Undoubtedly, much was beyond this government’s control, for the better and the worse. But they did have choices in how they reacted. Despite low government debt they talked up its danger. They used it to spin a story of “there is no alternative” to holding, then cutting, government spending when a more generous programme was affordable and could have held down unemployment and prevented its stagnation.  An effective economic stimulus could also have reduced the big income gaps in New Zealand.

  • August 2011

    Youth unemployment is finally getting some traction on the political agenda. It is a big reason for unemployment remaining high: 44 percent of unemployed people are under 25. So far National has announced one policy, which it says is the result of Welfare Working Group recommendations, that would put about 2,600 young people who are receiving a benefit onto an electronic card which tries to limit their spending to necessities, and proposes a privatised form of social welfare to get them into work, education or training. Regardless of its merits, the policy caters for a very small portion of the 65,700 unemployed 15-24 year olds. Meanwhile, ACT is continuing to push youth rates as if it was the silver bullet. This ignores the fundamental starting point: youth unemployment is a complex issue which cannot be reduced to simplistic slogans such as youth rates, or short sharp shocks to “get them on the right path”.


    July 2011

    We often say that low income families are hit harder by rises in the prices of necessities than high income families. That is very topical with the big rises in food prices in the last year – 7.5 percent from June 2010 to June 2011 – and petrol up 20.1 percent between the two June quarters. Why should they be hit differently? Because for low income people, a bigger proportion of their spending goes on necessities, and they spend a greater proportion of their income. People with higher incomes have more income over which they have greater choice. That could include saving, and spending on luxury items such as travel, dining out, and additional or more expensive cars and houses. How much different are these patterns of expenditure and what difference do they make?