Question 20: Is the productivity gap the only reason there is such a big wage gap between New Zealand and Australia?

24 Jan

Part of the reason for the wage gap between Australia and New Zealand is the fact the Australian working class and their unions have had greater success in resisting the attacks on their wages and therefore their share of national income

According to another article by Marty G on the blog “The Standard” much of the difference in wages with Australia is accounted for the larger decline in New Zealand in share of GDP going to workers (See Graph 8). In my view that is accounted for by the greater strength on unions in Australia and their ability to resist the attacks on their wages and living standards over recent decades. Marty G wrote

"30 years ago, according to John Key,” wages in Australia and New Zealand were the same. Since then New Zealand wages have stagnated and Australian wages haven grown away from us to the point where they are nearly 40% higher.

“The conventional wisdom is that this is due to faster economic growth in Australia, driven by higher labour productivity. But that’s only part of the story.

“The gap grew as Kiwi workers’ share of GDP fell, and the share going on business profits grew, much more than what happened in Australia. This is due to policy changes in the 1980s and 1990s that advantaged business and weakened workers’ bargaining power.”

Graph 8

Graph 9

(Part of a series of extracts from “Exposing Right Wing Lies” by Mike Treen, Unite National Director)


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