Economic Bulletin

August 2010

With unions under attack with threats to shackle their access to worksites, it is timely to look at the results of the valuable annual survey of bargaining trends reported by the Industrial Relations Centre (IRC) at Victoria University of Wellington.

July 2010

The Prime Minister made a number of claims when he announced the extension of the 90-day trial provisions to all employees. At time of the announcement, the government made a deliberately delayed release of a Department of Labour research report, apparently to support the law change. The research was unbalanced, surveying only 13 employees, but it does not provide evidence for his claims. Instead it provides cause for concern. If you want to read the full report, details are below, but here are highlights. A longer analysis is available on request.

June 2010

Paul Krugman, a heavyweight among world economists, wrote on 27 June:

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression [of the 19th century] than the much more severe Great Depression [of the 1920s and 30s]. But the cost – to the world economy and, above all, to the millions of lives blighted by the absence of jobs – will nonetheless be immense.

To all appearances here in Australasia we are on the way up. New Zealand is slowly climbing out of a deep hole, unemployment has peaked, manufacturing is starting to find its feet again, exports are increasing and the economy growing. But sustained recovery is very dependent on seeing no more surprises from the world economy. So why is Krugman so pessimistic?

May 2010

Reflecting on the Budget

Some ideas grow on you. The more you think about them the smarter they appear. The 2010 Budget was the opposite. It dies on me. The more I look, the more worried I get. Not only is it likely to worsen inequalities but it does so little for economic growth that we're unlikely ever to notice. Short of improvements in the economy beyond the government's control, such as a greater than expected improvement in world economic conditions or continuing improvements in produce prices, the living standards of the majority of working people will fall behind in the coming year, measured either in real disposable incomes or in prospects.

April 2010

Reading the 2010 Budget tea leaves

The National led government presents its second Budget on 20 May. What might be in store?

March 2010

Many people will be thinking about the effect of GST on the cost of living.

February 2010

Is the recession over? We're on the way, many economists say. The government gives mixed messages - John Key emphasises things are improving; Bill English that the economy is still fragile.

January 2010

Taxes

The Tax Working Group (TWG) report which was made public this month has been widely discussed. There are some positive aspects of its recommendations, and some disappointments.

To begin with the disappointments: it limited its view of the taxation system largely to its revenue gathering purpose. Yet there are other purposes for the taxation system, notably to redistribute income in an unequal society. Given the substantial rise in inequality and poverty in New Zealand, particularly over the 1980's and 90's, this review was an ideal opportunity to look for ways to use the taxation system for this important social purpose - what is called a progressive tax system.

November 2009

There is considerable evidence that union members get better pay than non-unionists because of their coverage by collective agreements.

One survey of over a thousand studies of the economic effects of unions and collective bargaining in 2002 found that "Union members and other workers covered by collective agreements in industrial as well as in developing countries do, on average, get a wage markup over their nonunionized (or uncovered) counterparts." The survey found other benefits as well: for example collective bargaining and high union density reduced income inequality.¹