Sunday, July 31, 2011

Productivity vs Morality

If I hear one more politician harp on about productivity I'm gonna have to poke their eyes out.

Productivity has become the new catch phrase for anyone wanting to talk economics and it seems that you just can't be taken seriously unless you mention productivity.

The problem seemed to start when National and Act started the '2025 Taskforce' whose aim is to show how we can close the wage gap with Australia by increasing productivity. That's right, not by increasing wages, but by increasing productivity. There is another name for this - Magic.

'Watch as wages increase by the shake of my wand'

Foolishly the opposition parties drew themselves in to the debate to the point where they had to mention productivity increases anytime they mentioned any other means of raising wages - like raising wages for instance. Both the Greens and Labour are guilty of being suckered in to the great productivity debate. Even the Council of Trade Unions is guilty of pandering to the 'productivity' brigade, stating that we need to "lift productivity and ensure the benefits flow on to both jobs and incomes". All this leads to ridiculous situations like Phil Goff stating in a speech "I note the facts on productivity that the CTU has published. These show that since 1980, labour productivity in New Zealand grew by 82 percent. But average ordinary time real wages in that period have grown by only 18%". His solution - increase productivity! Of course only "while making sure working people enjoy a fair share for their labour".

But this is the problem. All this talk of productivity is just a smokescreen to not have to talk about the real issue - low wages. The real reason that we now have a wage gap with Australia is because our unions were essentially destroyed during the 80's and 90's and our Award system, which set minimum pay and employment conditions for each industry, was removed. This did not happen in Australia. As clearly noted above, wages have not increased at the same rate as productivity. Not only that but our productivity over the same period was higher than Australia's. We are now in a situation where people are working harder for longer hours, just to try and get by. Meanwhile large companies are making increased profits every year, by increasing productivity, but not increasing wages. There is also another name for this - robbery.

The new CEO wasn't one for subtlety

The reason all this talk about increasing productivity bothers me so much is that I see the effects of 'increased productivity' every day. I've seen Bank workers break down in tears because they are working under such pressure, meanwhile the Banks are making staff redundant and making record profits. I've seen Hotel cleaners working three jobs just to feed their families. This is the human face of 'increasing productivity'.

Somehow morality and ethics just don't seem to matter when it comes to business. It's as if they are not compatible. What we need is a good dose of 'shock therapy' to set things right.

So here's my solution. Along with GDP we should also record GDM - 'Gross Domestic Morality'. This will be a measurement of all businesses in NZ and whether they are acting morally. Companies would be marked down for the following types of things: Not increasing employees wages to at least match inflation; making staff redundant while being profitable; seeking to remove current terms and conditions of employees etc etc. Each business would be given a positive or negative score and then all the scores compiled in to one. If the overall score is positive, then we can talk further about whether or not there is any room to increase productivity. However if the score is negative, then everyone is banned from using the words 'increase' and 'productivity' in the same sentence. In fact, an automatic go slow will be put in place in every workplace until the GDM returns to positive. Let's see how quickly we close the wage gap with Australia then.

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