The case for fair pay and the best ways to realise it

Wand having an education and some sort of profession is no longer a ticket to a super-high and ever-rising standard of living – or the right to consume 10 times as much of the Earth’s resources as the global average, and fair enough really. No industrial-relations reform can change that big picture.

But there is also evidence that business owners are grabbing a greater share of wealth created in New Zealand at the expense of their employees.

Total business operating profits jumped 38 per cent to $65 billion between 2009 and last year, according to Statistics NZ.

That far outpaced the increase in the median hourly wage, which rose by just under

20 per cent over the same period. It is hard to understand why employers would negotiate away that gain by voluntarily entering into fair-pay agreements.

So what case is there for intervening in the market?

Full employment and the elimination of age, sex and racial discrimination are the best guarantors of fair wages.

Perhaps it’s time for large employers to report on job applicants’ make-up, putting an onus on the firm to explain any hiring imbalance.

That would only be possible if candidates provided their age and ethnicity, something they’re not currently encouraged to do.

Then there’s the information imbalance. Businesses are more likely to know the going rate for staff than job applicants.

Obliging companies to publish an intended pay band for a job when they advertise a vacancy might address that issue.

It’s also a reform that wouldn’t need a working party.