Government of the unions, by the unions, and for the unions

I don’t know why, on reflection, but I actually expected Labour’s employment policy to be rather bland. I guess I thought that a poorly-considered populist bribe in the form of a massive increase to the minimum wage would be all they would feel the need to do. What I didn’t consider is the extent to which the once-sensible Phil Goff’s blind pursuit of his caucus ever leftward has delivered his party well and truly back into the union fold.

It’s hard to believe that this policy is seriously being advocated by what was once a mainstream party. It’s so bad that Labour was already on the defensive before the policy even hit the mainstream media, so the first news item that Stuff ran on it was titled “Labour defends jobs policy“.

Labour, in mounting said defence, say that their policy would “bring New Zealand in line with other developed countries”. David Farrar has already pointed out that by abolishing the probationary period and by lifting the minimum wage to 72% of GDP per capita, Labour would in fact be taking New Zealand even further out of line with other developed economies. Amusingly, Labour refer repeatedly to Australia in their policy, and cite our low minimum wage as a reason that New Zealanders emigrating to Australia. Yet Australia’s minimum wage is a paltry 52% of GDP per capita.

Don Brash has pointed out that Labour seem determined to ignore the fact that “the more something costs, the less people buy [and that] employers are no different to their customers in this regard”. This has been proven, at huge cost to young people, in the case of Labour’s misguided abolition of the youth minimum wage. Eric Crampton has shown the effects of this policy about as graphically as one could imagine, and yet still Labour pretend that demand for workers is inelastic and not affected by price increases.

Except when it suits them to do acknowledge the laws of supply and demand are in play in the labour market. In part one of the policy that their union masters drafted for them, Labour claim that low wages provide employers little incentive to lift productivity. So Labour appear to believe that higher wages will encourage employers to invest more in technology to improve productivity so that they require less labour, but that this won’t cause them to use (and therefore hire) less labour. It is worth nothing that the last Labour government’s record on productivity growth was atrocious.

Having recently fought tooth and nail to defend left-wing students’ right to force other students to pay fees to support their left-wing political activism, Labour now acknowledges that “a return to compulsory unionism is not the answer”. Instead, Labour plan to give their affiliated unions a privileged position to negotiate employment conditions on behalf of the more than 80% of workers who have chosen not to join a union. Instead of making people join unions, Labour will simply make irrelevant the decision of 80% of the workforce not to.

Almost every line of Labour’s new policy increases the risk and cost to business of employing staff. That is seldom good policy, but to do so at a time of flat demand for labour is mind-bogglingly stupid. Labour’s policy, if implemented, would increase unemployment, increase net migration to Australia, reduce productivity, reduce GDP growth and make New Zealand poorer and more backward.

If any were needed, the fact that Labour’s policy was released by the unions before the party is proof positive that Phil Goff’s only remaining ambition is to be a figurehead leader of a government of the unions, by the unions and for the unions.


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