"Fair Pay Agreements: Leaked Cabinet paper reveals Workplace Relations Minister Brooke van Velden at odds with official [Treasury] advice" screamed Newshub, adding van Veldon was soon to undermine the work conditions of "women, Māori and Pasifika and young people". Meanwhile, the NZ Herald hysterically screamed, "Government shaken by leak of Cabinet paper, criticising urgent repeal of law to lift wages, conditions of low-paid workers"
Not true. The NZ Herald and Newshub should have done some work and spoken to the Secretary of the Treasury, Caralee McLiesh, about whether or not her advice has been followed by the ACT Deputy Leader. Caralee is co-author on an economics article called "Private Credit in 129 countries", together with Andrei Shleifer at Harvard University. He states (see reference below), "Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young". There is no way Caralee would have ever unambiguously advised Cabinet that Labour's Fair Pay Agreement regulations would definitely have the opposite effect. Maybe the Herald and Newshub should have done some proper reporting before asserting that the new coalition is out to get the weak.
More generally, any competent Treasury would never advise a government that strengthening sector-wide union power would for sure be beneficial to the economy & low wage groups. Debate has raged across thousands of articles for decades as to whether or not unions - especially the sectoral ones which were empowered by Labour - are good or bad for efficiency and equity. There are a ton of reasons in theory why unions may increase unemployment of low income workers, decrease productivity and increase the cost-of-living. Identifying the real-world effects of unions has been difficult since they are classified in economics as being an institution - and institutions tend to change only slowly over time. Furthermore, measuring the precise characteristics of institutions is fraught. (By contrast, measuring a variable like a stock price is simple by comparison, making empirical work easier).
Sources
https://www.newshub.co.nz/home/politics/2023/12/fair-pay-agreements-leaked-cabinet-paper-reveals-workplace-relations-minister-brooke-van-velden-at-odds-with-official-advice.html
https://scholar.harvard.edu/shleifer/publications/private-credit-129-countries
https://scholar.harvard.edu/shleifer/publications/regulation-labor
Not true. The NZ Herald and Newshub should have done some work and spoken to the Secretary of the Treasury, Caralee McLiesh, about whether or not her advice has been followed by the ACT Deputy Leader. Caralee is co-author on an economics article called "Private Credit in 129 countries", together with Andrei Shleifer at Harvard University. He states (see reference below), "Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young". There is no way Caralee would have ever unambiguously advised Cabinet that Labour's Fair Pay Agreement regulations would definitely have the opposite effect. Maybe the Herald and Newshub should have done some proper reporting before asserting that the new coalition is out to get the weak.
More generally, any competent Treasury would never advise a government that strengthening sector-wide union power would for sure be beneficial to the economy & low wage groups. Debate has raged across thousands of articles for decades as to whether or not unions - especially the sectoral ones which were empowered by Labour - are good or bad for efficiency and equity. There are a ton of reasons in theory why unions may increase unemployment of low income workers, decrease productivity and increase the cost-of-living. Identifying the real-world effects of unions has been difficult since they are classified in economics as being an institution - and institutions tend to change only slowly over time. Furthermore, measuring the precise characteristics of institutions is fraught. (By contrast, measuring a variable like a stock price is simple by comparison, making empirical work easier).
Sources
https://www.newshub.co.nz/home/politics/2023/12/fair-pay-agreements-leaked-cabinet-paper-reveals-workplace-relations-minister-brooke-van-velden-at-odds-with-official-advice.html
https://scholar.harvard.edu/shleifer/publications/private-credit-129-countries
https://scholar.harvard.edu/shleifer/publications/regulation-labor
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
2 comments:
Based on the latest government accounts and the Treasury's terribly erroneous forecasts over the past 3 years, I would automatically avoid their advice. They don't have a clue - just like all other government departments.
should it be Velden instead of Veldon?
fair pay agreement fails the basic principles of justice - same on a parliament that allows such a bill to pass :(
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