Tuesday, March 28, 2006

Silver lining in the minimum wage cloud

The way I see it, yesterdays increase in the minimum wage is destined to bring bad things for New Zealand - but on reflection there is one potential positive that could prove me wrong: a vast increase in productivity. One of New Zealand's continuing problems in trying to increase our standard of living is that we are far too dependent on manpower as a way of increasing production - as a nation we are very poor in increasing productivity through the investment of capital. This keeps us idling along - and now that we have also hit the wall in terms of deploying more people with our relatively low levels of unemployment about the only way we can increase our GDP in any meaningful way is encouraging the deployment of capital and machinery. And what better way of doing that than making the cost of labour higher than its productivity / output?

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5 comments:

burt said...

Valid point. When Labour crow on their web site about how great it is that 100,000 people will get an increase you need to wonder. If I were a Govt I would be ashamed of so many people on the minimum wage.

iiq374 said...

I would be willing to be that there will be a lot less on the minimum wage for the next increase...

Of course I'm just hoping that this will be sufficient to push the supermarkets into self scanning technology. Had our first experience of this in Elba in Italy and I can't wait until it becomes widespread!

iiq374 said...

If I were a Govt I would be ashamed of so many people on the minimum wage.

Ah - I missed the obvious dig about Labour having much worse to be ashamed of first! ;-p

burt said...

Just how many people are actually in employment in NZ. Labour for some reason isn't forthcomming on what percentage of the work force work for minimum wage ?

iiq374 said...

Total Employed

December 2005
quarter
2,085,000

September 2005
quarter (R)
2,086,000

(Seasonally adjusted)