Thursday, October 27, 2022

Mike Hosking: Fair Pay Agreements confirm Govt doesn't understand simple economics

The fair pay law is another of those ideas that has come to fruition that in and of itself won't swing a vote.

It's sort of like the media merger. You might not think much of it but you are not going to protest or swap your vote because of it. It's no Three Waters.

And to be fair to the government, it is the sort of thing you would expect them to do. They're promoting unions and unionisation is a very Labour pastime.

It also comes, ironically, at a time when it's never been less needed. The labour market is a complete shambles and anyone who wants work has a vast array of choice.

And wages have gone up ludicrous amounts. So much so, that inflation is still way higher than anyone expected, and the downstream consequences are going to be ugly.

That perhaps is the ultimate irony. Even Grant Robertson, one of the biggest fans of things like Fair Pay Agreements and the jobs tax, is already warning about the economic mess next year.

And the economic mess is a direct result of wage rises that have come about for no other reason than the cost of living having gone skywards.

The part Labour have never quite got their head around is that each job has a value, and when you pay more for that job than its value, the way we are at the moment, a couple of things happen, you pass the price on to the punter, who either pays it, which leads to inflation.

Or they don’t pay it which means you then layoff the workers because you can't afford them anymore.

That's essentially what unionism is. It's an annual "we are ripped off, it's not fair, we are on strike" sort of fiesta for more money for the sake of more money.

Under this latest guise of Fair Pay Agreements, if 10% want an industry wide deal, they get it.

Who cares about the 90%? You can't afford the rise at your particular factory, warehouse, or office? Stiff cheese.

You can't agree on the deal they’ve forced upon you? Stiff cheese again. You're off to compulsory mediation and they’ll tell you what you're doing with your money and your business.

The greatest sadness of all is we used to do it this way. We did this decades back and it didn't work. And when the Employment Contracts Act came along and people got choice, they chose what we've had ever since, until now. For many, that choice has once again been taken away from them.

In essence, we are revisiting past mistakes because those driven by ideology, don’t understand economics, and they never learn.

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.

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