Labour effectively pledging a minimum wage of $18.40

David Cunliffe writes at The Standard:

I’d like to thank Lynn and the authors of the Standard for this opportunity to contribute a post here, where Labour members and the broader left come together online. The Standard is certainly one of the most respected political blogs and I am a regular reader.

I’ve always wondered if David is also an author 🙂

I will introduce a living wage for all employees of Government agencies – and I will extend this policy over time to any business that seeks to win Government contracts.

This pledge goes further than what we had before. This is not saying if you are doing work for the Government, the staff doing that work must be paid the Anglican Church mandated living wage. It it saying that any business that has (or seeks) any contract with the Government must pay $18.40 (for now) an hour.

Now the Government is a massive chunk of the NZ economy. There are few businesses who wouldn’t have at least one contract with a government agency. So if you own a copy centre, and you win the contract to do the copying for say the NZ Transport Agency, then you have to pay all your staff $18.40 an hour or more – even the 16 year old copy assistant.

So the way Cunliffe (and I presume Robertson) have worded their pledge, is in fact a de facto minimum wage for all. The destruction of jobs that will follow would be massive.

Some may argue that it will only apply to those working for the Government through the contractor. But I can’t see that happening. Say you are a cleaning company. Could you pay staff $15 an hour when they clean the ANZ but $18.40 an hour when they clean the Reserve Bank? Of course not. No employment contract would allow you to pay people based on who your clients are. It would inevitably mean you would have to pay all your staff whatever figure Rev Charles Waldegrave proclaims every year to be the new living wage!!

The Herald editorial makes the point:

Everyone agrees that New Zealand needs to lift its incomes overall, to match Australian rates if possible. But the Labour Party seems to think that this can be done at the stroke of its pen. Mr Robertson in particular, is talking as though an economy is simply a job-creation scheme and all that a government needs to do is make its priority “people”.

He is surely insulting the intelligence of Labour Party audiences, most of whom appear to have been around a good deal longer than Mr Robertson and can remember when the economy was largely a job-creation scheme.

Promising to lift wages by stroke of a pen, and that there will be no impact on jobs, is a cruel hoax. If it was that easy, everyone would do it.