Low-wage econ­omy doubt

The New Zealand Herald - - EDITORIAL & LETTERS -

I am a be­liever in the adage “some­one, some day, has to pay the bills”.

I am also aware some peo­ple strug­gle to make ends meet and have no in­ten­tion of ask­ing why, but I am pretty cer­tain just throw­ing money at an is­sue rarely re­solves it.

Are we a low-wage econ­omy? Min­i­mum hourly wages (in NZ dol­lars) in Ger­many are $15.38, France $15.78, UK $13.65, US $12.61, and so I find it hard to believe NZ is a low-wage econ­omy or can jus­tify a min­i­mum wage of $16+ let alone $20 as promised.

There is lit­tle doubt the Gov­ern­ment is the over­all win­ner. Trea­sury will im­me­di­ately re­gain the in­come tax as PAYE and also the GST, so the em­ployee’s net gain is min­i­mal.

As soon as an un­skilled worker is paid more, all em­ploy­ers are bound to in­crease the re­mu­ner­a­tion of their ex­pe­ri­enced staff in or­der to main­tain that vi­tal mar­gin for skill. This over­all in­crease will in­flate the price of ev­ery­thing em­ploy­ing labour and any ben­e­fit from wage in­creases will rapidly di­min­ish.

Much bet­ter, surely, to re­duce the GST on a lim­ited range of food items which would in­stantly of­fer the low paid worker a net ben­e­fit, but re­tain that vi­tal skill ad­van­tage. Robert Bur­row, Taupo.

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