Wages

Last week Tane at The Standard said:

But in a capitalist system any benefit from productivity increases goes directly into the pockets of business owners. You need a mechanism to translate that into wages. And that mechanism is decent employment protections and a unionised workforce that has the strength to bargain decent wage increases.

I found that statement interesting. In some ways it is not surprising as Tane is employed by a union – of course he would say or think that. But what is revealing is that this seems to be the only way he thinks wages can increase. He over looks:

• Business owners voluntarily give staff pay rises. This is not uncommon in smaller businesses. I have worked in a small business where the owners hated the fact they could not pay the staff more, but once it was more profitable they increased wages.
• Individual staff who perform well get increased wages in recognition of their good performance.
• Staff are paid more to retain them in a competitive market
• Staff get promoted and get paid more for taking on more responsibility
• Staff are shareholders in a business

And so on. Now of course the above do not apply in every case. I am not saying every employer is a good employer who will pay reasonable wages. Unions make a lot of sense for some staff. But that is very different to generalising that a unionised workforce is how you increase wages. I would actually argue that a focus on collective contracts can sometimes hold wages back as employers have to pay bad staff much the same as good staff. The classic example is teaching – I think the best teachers should be on $100,000+ but there is no way that will happen until you have performance pay so that the bad teachers are not paid the same.