Now job growth is a bad thing

April 19th, 2012 at 3:00 pm by David Farrar

I thing politics has got to a farcical level when the Opposition complain about moving from to New Zealand. The SMH reports:

HUNDREDS of Australian jobs have been shifted to New Zealand as local producers try to avoid the impact of high wages, a soaring Australian dollar and restrictive laws.

Woolworths is the latest to transfer jobs across the Tasman. It transferred 40 contact centre jobs to Auckland this week. Imperial Tobacco has also announced it will move cigarette manufacturing from Sydney to New Zealand.

The companies are following in the footsteps of the food production industry, which has been shifting jobs out of Australia to take advantage of New Zealand’s lower wages.

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Heinz Australia recently scrapped more than 300 jobs across three states in favour of its large plant in Hastings, New Zealand’s largest food processing and food producing centre.

The International Labour Organisation says Australian manufacturing workers earned more than $US35 an hour in 2008. In New Zealand the rate is under $US20 an hour.

Average weekly earnings for manufacturing workers in Australia are higher than those in Canada, Britain, New Zealand and the United States, says a study which put Australian earnings at more than $1000 a week, versus about $700 in NZ.

Now Labour for four years has gone on about jobs. It has said that the number one priority must be more jobs. If you try to discuss welfare reform, they say “what about the jobs”. No matter what the issue, they say “what about the jobs”.

So what do they say to jobs moving from Australia to New Zealand:

“Labour does not want New Zealand to become Australia’s Mexico, yet with lower value jobs such as making cigarettes that is exactly what is happening.

“Bill English has been misdirecting his energy on praising the advantages of low wages to attract Australian jobs rather than coming up with real ideas to grow the economy.

“There are record numbers of Kiwis leaving for Australia. They are not going so they can work in call centres or cigarette-making factories,” David Parker said.

This is just bullshit elitism, that must be unique to the Wellington beltway. Go out to a provincial town with high unemployment and tell them that a job in a call centre is not worth having, and they should remain on welfare.

Anyone who buys into this sort of bullshit is seriously out of touch with reality, and reflects more their elitist views.

They are also economically ignorant also. If you argue against Australian companies creating jobs in New Zealand because our wages are lower, you don’t understand the basics of supply and demand. Remember it is the market which broadly sets wages – not Goverments.

Now if you have more jobs created in New Zealand, it increases the supply of jobs. What does increasing the supply do? It pushes wages up. Just as when the supply of jobs diminishes, then wages drop or at least do not increase in real terms.

Next time Labour complains about unemployment, remember how they think some jobs are not worth having. They’d rather people be on welfare than working in call centres.

As for closing the wage gap with Australia. There is only one sustainable way to do that – greater including labour . The very thing that Labour is fighting against at the Ports of Auckland, where the union is striking rather than accepting a 10% pay increase in return for greater labour .

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19 Responses to “Now job growth is a bad thing”

  1. dubya (200 comments) says:

    So Brownlee gets slammed for mocking Finland, but Shearer can disparage Mexico as he so pleases?

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  2. Keith Ng (22 comments) says:

    You’re confusing cause and effect, David. The bad thing about Australian companies moving their jobs here because of lower wages isn’t the “new jobs” part, but the “lower wages” part. It shows that, despite relatively cheap labour, our firms aren’t moving to take advantage of it, which is keeping wages depressed.

    Yes, foreign firms coming will increase wages, but it doesn’t address the basic problem of why our firms aren’t soaking up the excess labour.

    FYI, China sees low wage labouring jobs moving to Vietnam or Bangladesh as a good thing, as it’s a sign that they’re climbing up the food chain and living standards are improving. Sure, the reverse isn’t quite that straightforward, but there are some compelling reasons to think that getting your neighbour’s shitty jobs is a sign that your economy is slipping backwards.

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  3. PaulL (5,774 comments) says:

    Keith: yes, our economy is slipping backwards vs Australia (but lets be honest, most people are slipping backwards compared to Aus – their exchange rate is overpriced and they’re riding a resources boom).

    But, given that we’re slipping backwards, them shipping jobs to us slows down that rate of slippage. The more jobs they ship to us, the more we catch up. When they stop shipping jobs to us, that’s also good, as it means we get paid enough it no longer makes sense to ship us jobs.

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  4. krazykiwi (9,188 comments) says:

    The root of the problem has little to do with who says what about jobs, it’s that we unwittingly accept that it’s the role of the politicians without power to oppose everthing that happens while they clamber to attain power. Truth, consistency and integrity are of little consequence. 

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  5. Keith Ng (22 comments) says:

    Paul: Nobody is saying “don’t let these new jobs into NZ”. Parker was just saying that this movement of low wage jobs points to deeper problems.

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  6. Nookin (2,887 comments) says:

    “…our firms aren’t moving to take advantage of it, which is keeping wages depressed.”

    I am not sure if I follow your point, Keith. I think one of our problems is the us v them complex which is inhibiting productivity. This is more than adequately illustrated in the Ports of Auckland saga and the petty pointscoring in the AFFCO dispute. New Zealand is very much like a small village in ancient Gaul – home of Asterix. We spend all our time squabbling amongst ourselves and only work together when some outsider comes in and interrupts. We need to stop squabbling over the pie that exists and try to create a bigger pie.

    As far as the new jobs are concerned, they may very well start off at lower wages but if we can focus on increased productivity the situation should change. Slagging Australian employers because they are perceived to be coming here to rip off underpaid workers is not a good start. Shearer should have shown much more sense and welcomed the move.

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  7. Rex Widerstrom (5,124 comments) says:

    Yes, we need these jobs (particularly in provincial NZ) to take people off the unemployment queue. And yes, we need to boost incomes. The two aren’t mutually exclusive, which this debate seems to be painting them as.

    But putting all our high wage strategies into one basket – productivity – is shortsighted. It makes for a good soundbite (and has a nice “blame the lazy worker” ring to it) but I hope the government is looking beyond that: to incentivising start-ups, to attracting mid-size businesses (how many Australian businesses are even aware they’d never have to pay another dollar of hated payroll tax if they came to NZ, for instance?), to fostering investment in R & D, to commercialising the often world-leading research being done at our CRIs…

    And to getting its bureaucratic fingers out of the affairs of NZ businesses. The ratio of people in the front office doing unproductive administration versus those out the back in the factory making stuff has a huge effect on the overall productivity of the firm – and it’s one that harder work in the factory won’t do much to change.

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  8. Ryan Sproull (6,661 comments) says:

    Minimum wage in Mexico is around NZ$5.60.

    Per day.

    I think we’re a fair bit away from becoming Australia’s Mexico.

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  9. Adolf Fiinkensein (2,664 comments) says:

    Kieth Ning Nong

    You really let you slip show there. Since when are these jobs ‘shitty.’?

    Are they ‘shitty’ because left wing socialist Green and Labour wankers don’t want to do them?

    You are so far up yourself you couldn’t find the way out with GPS.

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  10. Rex Widerstrom (5,124 comments) says:

    According to this the average Mexican worker earns the equivalent of $6,143 USD gross, $5,837 USD disposable per year. Assuming 250 working days a year that’s $24.57 / $23.34 a day.

    And according to here Mexico City is ranked 482 out of 780 places in terms of cost of living. New Zealand is currently ranked 62.

    And importantly in Mexico while things like suits, alcohol and tobacco are compartively expensive*, the cost of items including edcuation, groceries, transport and healthcare are ranked “very low”.

    There’s a “Salary Purchasing Power Parity Calculator” on that site which “calculates how much you need to earn in another location to compensate for cost of living, hardship, and exchange rate differences, in order to have the same relative spending power and as a result have a similar standard of living as you have in your current location”.

    It costs $99 a shot to use, though. But if someone’s both wealthy and keen to prove a point, it’d be fascinating to see what you’d need to earn as a Mexican to have the same standard of living as a NZer on the average wage.

    * An immediate benefit of moving to Mexico: Winston will never follow you there :-D

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  11. wreck1080 (3,522 comments) says:

    The jobs are welcome but I think Labour are actually complaining that we are not creating high value jobs .

    This is rich coming from Labour however, with their so called knowledge economy being an absolute disaster.

    Looking at the bigger long term picture, do we want to be a low wage economy or not? If we want better wages we need a longer term vision for boosting education levels which helps facilitate local R&D.

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  12. Rex Widerstrom (5,124 comments) says:

    @Adolf Fiinkensein:

    Since when are these jobs ‘shitty.’?

    Ever worked in a call centre? Right after being dumped on the streets of Australia with $111 in my pocket that’s the first job I could find. I wanted to slit my wrists – and I’ve worked in a factory with no windows, covered in grease; in another factory where all I did all day was fold cartons; in a commercial laundry… I’m not some effete leftist that thinks the world owes me a living, but when I was in that call centre I dreamed of those jobs, where you weren’t called a worthless piece of **** and hung up on every 3 minutes (and if you weren’t doing a call every 3 minutes minimum, watch out).

    Inbound (where the client calls you with a problem, or even considering buying something) can be pleasant. But outbound… if they’d been round when Dante was writing, there’d have been a tenth circle of hell.

    Edit: wreck1080 – spot on, on all counts.

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  13. freethinker (648 comments) says:

    The rationale for moving jobs across the Tasman is the net result which includes wages/productivity per total $1 of cost so rents, taxes etc are all relevant as well. It is difficult as Rex infered to put a value on the disruption caused by excessive regulations be they by government or from union interference and bolshie employees. With some sensible & fair changes to employment law and encouragement for productivity improvements NZ will grow itself out of the current financial mess, with a lower exchange rate ( drop the OCR Alan and burn the speculators ) an export led recovery will close the Tasman pay gap.

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  14. john.bt (170 comments) says:

    Under the previous centre-left gummint (Labour) NZ manufacturers (like Swazi) were told they would be better off moving their businesses overseas. Go figure.

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  15. swan (651 comments) says:

    “Paul: Nobody is saying “don’t let these new jobs into NZ”. Parker was just saying that this movement of low wage jobs points to deeper problems.”

    Is that a fact or are you just making that up. All I can see is Parker trying to pointscore on the back of almost unequivocably good news.

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  16. Alan Wilkinson (1,798 comments) says:

    The bad thing about Australian companies moving their jobs here because of lower wages isn’t the “new jobs” part, but the “lower wages” part.

    Why? We have heaps of unskilled young people leaving school without work – following a decade of socialist heaven in the teaching industry. What on earth is wrong with finding jobs in NZ for them?

    We know the Left are morons, but this just shows they are also unprincipled morons.

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  17. Liberal Minded Kiwi (1,560 comments) says:

    How eye opening to see people like ‘The Ng’ look down on jobs as being “shitty” like call centre jobs or manufacturing jobs (incidentally where Labour like to exploit for union fodder). What sort of elitist bullshit are we next to expect from people like him to describe jobs that people would love to do, and will have more opportunity to do so, thanks to Australian firms choosing us.

    Many call centre jobs pay quite well and offer a host of opportunities for those who work inside them. I have worked in one or two in my past and found them brilliantly abundant of opportunity and good wages. We also kicked out FINSEC who lied and cheated to staff to get access to our call centre and caught them out.

    So we have Labour saying we’re losing people to Aussie for jobs and then when jobs from Aussie come here they reject them. You can’t win. And very rich to try dragging Mexico into this too – a country where the work ethic is far greater than we have in NZ, with a FTA with America and their supermarkets and stores make ours look Soviet era.

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  18. scrubone (2,971 comments) says:

    but when I was in that call centre I dreamed of those jobs, where you weren’t called a worthless piece of **** and hung up on every 3 minutes (and if you weren’t doing a call every 3 minutes minimum, watch out).

    Have you also been long term unemployed?

    Being called worthless is one thing, but being worthless (in that one is doing nothing to feed one’s family) in fact is quite another.

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  19. scrubone (2,971 comments) says:

    But this is Labour’s tatic.

    Back in 99, when the economy was starting to hum again, they described increasing employment in much the same terms. But then they won the election, and with no one to bash the recovery everyone now thinks the prosperity of the time was all thanks to Labour.

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