The above chart shows – in red – the annual percentage increase (since 1988) in numbers employed of women aged 65-69, based on Household Labour Force Survey employment data. (And it shows, for comparison, males aged 30-34; in blue, their percentages are shown on the right-hand side of the chart. I explain below why I contrast older women with younger men.)

The employment growth of older women is particularly variable. But there are some clearly discernible patterns. To help show these, I have used “vertical gridlines” 33 months apart; 2¾ years is the persistent period of New Zealand’s trade cycle.

There are several reasons why employment may go up or down. First is simply the growth of the population for the demographic portrayed. For the latest data, the most recent women portrayed (the 2025 data point) were born around 1957 (ie born in 1957±2). Birth numbers in New Zealand peaked in the decade from 1955 to 1964; so, there will be many more women still alive in this birth cohort than in previous cohorts, and recent international migration will be low for that age group. Especially as life expectancy has been rising, population growth is a major reason for an increase in women aged 65-69 who are employed. So, growth of employment in this demographic should be well above the zero showing for the last two years.

Another reason for higher employment numbers is ‘labour force participation rates’. Charts that I posted recently from the same dataset show participation rates for women aged 65-69 having risen to 44% in 2022, the last peak of the cycle. (See my Employment in New Zealand – especially of women – at the Age Margins.) It’s unlikely that the actual participation rate has fallen since 2022; more likely it has risen in line with the trend this century (participation up from 10% to 44% of the available population); although the official participation rate has fallen. The difference between the actual and official participation rates is known as ‘hidden unemployment’)

The third reason for changing employment for ‘retirement-age women’ is the ‘added-worker effect’. This effect, highly apparent for this demographic, means that employment and actual labour force participation move essentially counter to the economic cycles (including the 33-month trade cycle). This countercyclical effect, similar to the enrolment patterns for tertiary education, is particularly apparent from 1988 to 1997. And it’s understated by the employment data, because the times when more older women want to be employed will be times of generally high unemployment. The data peaks here – eg in late 1988 and mid-1991 – reflect both the increased desire for paid work, and the reduced ability to secure paid work.

The ‘added-worker effect’ operates when other sources of household income are reduced, or when major costs such as mortgage interest or rent are high and/or rising. For this demographic there is also a ‘subtracted worker effect’, meaning that these women choose to retire whenever they can afford to retire.

It is apparent that, for the most part, the peak increases in the employment of older women follow the 33-month trade cycle. The red peaks are on or close to the charts’ vertical gridlines. There were however disruptions to the cycle caused by the 2008/09 Global Financial Crisis, and in the 2020s thanks to the Covid19 pandemic.

Males aged 30-34

The blue graph for males aged 30-34 shows the economic cycle as we would expect. This is a demographic with a very high and stable labour force participation rate. As is apparent, the blue plot is to an extent countercyclical to the red plot. The main male employment cyclical peaks were in the mid-1990s, the mid-2000s, the late 2010s, and in 2023.

We particularly note that employment growth for youngish men was weak in the late 1990s and the late 2000s. Rising young-male employment was particularly strong between 2024 and 2018, reflecting strong immigration for this demographic.

Since the present government has been in power – ie from November 2023 – employment growth for youngish men has plummeted, despite high levels of net immigration, and despite this being the baby-blip generation born in the early 1990s. Basically, the economy ‘tanked’ in 2024 and 2025.

Female birth cohorts

The second chart shows women’s employment/participation for different ‘generations’. For women born around 1957, employment peaked at just under 80% of the available population, when they were aged about 47. For the next generation, that peak is even higher, at about 83% of available women; and this is despite more women having babies later in life.

Generally, younger generations of women have had markedly higher participation rates, especially between ages 25 to 40.

Finally

Once upon a time ago we ‘worked to live’. Since the neoliberal and feminist revolutions, we have ‘lived to work’. I am not convinced that this is progress. Progress is supposed to be productivity growth; more outputs per unit of (labour and other) inputs. What we have seen is much more input – with labour inputs being shown here – yet economic growth if anything seems to have slowed.

To have a sustainable future, we should be stabilising output, while contracting inputs. Employment counts, as defined by the HLFS, are crude measures of inputs. It is perfectly possible to have more people employed, wanting and getting fewer hours per week on average. That’s not what we have here. Rather, we have more and more people desperate for employment to pay the bills, and a substantial decline in time committed to the other non-income-focused aspects of life. Women have been on the frontline of this seek-more-work play-less zeitgeist.

*******

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Analysis by Dr Bryce Edwards: Democracy Project (https://democracyproject.nz)

The Labour Party’s fortunes go from bad to worse. Ever since the party was turfed out of power in October, incurring its biggest-ever loss, the party has shown no real sign of learning any lessons from its defeat, nor does it show any capacity to revive itself.

Last week is being labelled its “worst week yet” by commentators. One of them, Vernon Small, who until recently was the senior adviser to David Parker, wrote yesterday in the Sunday Star Times that Labour appears to have finally hit rock bottom last week, with another poor opinion poll result of 28 per cent support, Grant Robertson abandoning ship, and a new report out showing that in government Labour had failed on child poverty – see: Was that Labour’s worst week yet? (paywalled)

Not only is Robertson a major loss of talent for the party in opposition, Small points out that most of the other stars have been departing: “As well as Robertson and Ardern, Kelvin Davis, Nanaia Mahuta, Andrew Little, Michael Wood and Kiritapu Allan have all jumped ship or been thrown overboard. Third-ranked Megan Woods is being equivocal about her long-term plans.” Meanwhile, Small points out that Chris Hipkins has demoted other solid talent, such as Damien O’Connor and David Parker, leaving Labour’s front bench “looking decidedly callow.”

Small suggests that Labour views tax reform as a recurrent campaign nightmare” to avoid rather than “an opportunity to define itself, and fund its policy platform”. And he says that in keeping Parker away from the revenue and economic portfolios, he’s signalling that a wealth tax is off the agenda. Instead, Hipkins has put the rather dry Deborah Russell in charge of tax, and she says that wealth taxes are “largely unknown” and too complicated to explain.

And in the weekend another Labour insider wrote an analysis on the Labour-aligned blogsite The Standard about how Hipkins is more interested in preserving his leadership than giving MPs like Parker a chance to innovate on tax policy: “Hipkins is also using the elevation of Edmonds and Russell to shank David Parker. Parker is the only guy left with that combination of progressive chops, huge track record, and the merest mote of charisma to be an alternative leader to Hipkins. Hipkins has sent yet another signal to Parker to retire. This leaves Hipkins free to turn the entire Labour effort into an even more ineffectual Wellington-circling wankathon taking two terms to recover from the smashing he got it in 2023” – see: What’s Left?

Labour failed on poverty and inequality

It’s last week’s Statistics New Zealand report on child poverty that is truly eviscerating for Labour. As Small argues, Labour MPs and activists now need to acknowledge their government “didn’t adequately protect the most vulnerable being hit hard by the cost-of-living crisis.”

This is why many on the political left have been so disappointed by the last government. Arguably things got much worse for the poor and working class, while the rich got richer under Hipkins, Jacinda Ardern and Grant Robertson. Hence, some of the farewell commentaries for Robertson have been less than positive.

Some of the most scathing are from those on the political left. For example, activist Steven Cowan sums up what a lot of those on the left think: “The unvarnished truth is that, despite Prime Minister Jacinda Ardern promising to lead a government focused on economic transformation, very little changed. The Labour Government, supported by the Greens, merely tinkered. Working people were, again, like Oliver Twist, left pleading for more. The new child poverty figures only serve to underline the fact that the Labour Government continued to deliver out thin gruel for the working class its so-called ‘socialist’ MPs claimed to represent. And, presiding over it all, was Finance Minister Grant Robertson. While he wrote, in a nod to New Zealand’s myth of egalitarianism, that he wanted to give everyone ‘a fair suck of the sav’, in reality he was a resolute defender of the neoliberal status quo” – see: A loyal lieutenant of capital

Robertson’s end of an error

The toughest column on Robertson’s time in power has been written by Newstalk’s Heather du Plessis-Allan who says that his departure is not being accurately evaluated by the commentariat and press gallery because he’s the sort of politician that they like having a beer with. She rightly reckons that Robertson won’t be willing to have any more beers with her once he’s read her column: Grant Robertson is a great bloke, but he was a terrible Finance Minister (paywalled)

Robertson is praised by du Plessis-Allan for many of his talents, but she says he should be ranked as New Zealand’s worst finance minister on record – even worse than Robert Muldoon. This is mainly because he took the public’s debt from “$5 billion in 2019 to a projected $93b this year” without producing anything much to show for it. She says at least when Muldoon wasted money on building dams and energy infrastructure the country was left with some assets as a result – but in Robertson’s case, he seemed to blow all those billions without anyone really knowing where it went. She poses the question: “What can we point to and say ‘Grant paid for that’?”

Here’s one good example she gives of Robertson’s propensity to spend very poorly: “He said yes to Michael Wood’s bike bridge, which is the perfect example of wasteful spending. It was a stupid idea. It cost us more than $51m in consultants and rented office space. Then it was canned. We spent money and we have nothing to show for it. The implications are serious. We now don’t have enough money to pay the nurses their backpay or the police the pay rise they’re due. Or the GPs.”

Robertson also failed to advance any real economic reform. And despite lots of talk about how unfair the tax system is, Robertson mostly retained the status quo: “If he really believed the tax system needed to be fairer, he had his chance. He had the ear of Jacinda Ardern. He is one of her best friends. And he either couldn’t convince her or didn’t really try.”

Should Hipkins be replaced as Labour leader?

The worst part of the 1News poll for Labour last week was Hipkins’ plummeting numbers for preferred prime minister. Falling by ten percentage points revived speculation about whether Hipkins had to go. The NBR’s political editor Brent Edwards argued in the weekend that Hipkins is safe for the moment: “the knives will not be out now. It is surely too early in the electoral cycle to consider a change of leader, but the question might arise closer to the election if Labour is unable to lift its support and bridge the gap between it and National” – see: Tragedy, polls, retirement, forced apology and a grim scorecard

Herald political editor Claire Trevett also says that Hipkins is currently safe: “He does have some time up his sleeve. There are no signs as yet that any other credible leadership contender is ready to put their hand up. Once regular speculation starts around one or two names, that will become a more present danger for him. But until there are proper contenders to be a new leader, there is no point in rolling the old one. That gives him a window of opportunity to make sure that those names do not emerge, and that he is the one still standing in 2026” – see: Ginny Andersen’s attack on Mark Mitchell does Chris Hipkins no favours (paywalled)

Trevett also points to another low point in Labour’s past week, with another rising star in the party displaying questionable judgment, and making HIpkins’ job harder: “Ginny Andersen has done no favours for him with her bizarre attack on Police Minister Mark Mitchell on Newstalk ZB about his past as a security contractor in the Middle East. Mitchell quite rightly described it as a character assassination. Hipkins has said it went too far. Andersen has apologised to Mitchell personally, but not publicly and clearly not satisfactorily. She is now refusing to front on it.”

Nonetheless, Anderson is still talked about as the “running mate” for Kieran McAnulty in any attempt to replace the current leadership with a new generation of leaders that might be more able to connect with working class voters.

Labour is still the party of the Professional Managerial Class

The Labour’s progressive agenda and identity is very much their strongest sales pitch. And with the departure of Grant Robertson, the party’s reputation as a feminist force has become stronger – 70 per cent of its front bench is now female.

Also, by appointing Barbara Edmonds to replace Robertson as finance spokesperson, she creates a record as the party’s first female in that role and the first the Pasifika person as well.

This achievement is saluted in yesterday’s Herald with an editorial that says “The once impossibly high glass ceiling has been smashed”, with Edmonds creating “a new pathway not only for herself but one for other Pacific politicians and those aspiring to be so one day. She also represents something that was not always evident in New Zealand and overseas – brown women in leadership roles. Brown women in politics” – see: Barbara Edmonds’ new appointment another step forward for Pasifika (paywalled)

However, as to whether the party still represents working people is more in question these days. In recent years it’s become more apparent the party has been captured by the Wellington “professional managerial class”, pushing the party away from its traditional working class politics towards a middle class social liberalism.

This was discussed in the weekend by political commentator Janet Wilson: “October’s election result proved Labour has a problem of Democrat-sized proportions; they’ve become disenfranchised from their base while other left-wing parties enjoy the benefits. Which is how the Greens managed to snaffle the red strongholds of Rongotai and Wellington Central, and Te Pāti Māori grabbed six of the seven Maori seats. That’s what happens when there’s a divide between the professional managerial class running the party and the supposed blue-collar workers they’re meant to represent” – see: As Robertson heads for the exit, Labour’s reset becomes critical (paywalled)

Wilson explains that Hipkins epitomises that professional managerial class, and continues to hamper any tax reform that might threaten the interests of his own wealthy milieu: “As a paid-up member of that managerial class, having worn the well-trampled path from student politics directly to Parliament, the question must be, is Chris Hipkins the man to represent the workers in an age when AI threatens to disrupt all jobs? Can a leader who scuttled the tax work of his peers in one election hope to stop increasing dissension in the ranks if its polling numbers continue to slide and party irrelevancy beckons?”

There’s a hollowness to a party that continually refuses to implement reforms that would benefit Labour’s traditional base. Wilson says the party has therefore “lost its ideological compass and is adrift in the wilderness of what-it-doesn’t-stand-for. All while applying the magical thinking of all opposition parties – that the government of the day will only last for a term before they are ushered back into power.”

The hollowness has been recently discussed by Matthew Hooton, who has argued that Labour (along with National) has become a “mere empty vessel” for “the personal ambitions and brands of whoever gets control” of the party. Therefore, in lacking any real connection with social forces apart the Liberal Establishment of places like Grey Lynn, Hooton says the party can’t enthuse working people anymore.

In his recent column, What Labour must do to reclaim its core support (paywalled) Hooton says that Labour was “supposed to be about redistributing at least some power and wealth, from capital to labour and from the ruling establishment to ordinary people.” But looking through Labour’s last two times in office, Hooton suggests that the party has given up on its traditional constituency in favour of conservatism, and this will need to change if it is to be re-elected: “Labour will never win back the working-class and middle-income voters who switched to National in 2023 until it offers more change than Ardern and Hipkins were comfortable with. If there is to be a do-nothing Government, former Labour voters may as well stick with National, which is historically so good at it, but isn’t seen to pander to the woke, Wellington, pounamu- and David Jones-wearing, yet mainly Pākehā elites.”

A similar argument was made two weeks ago by Andrea Vance, writing in The Post, saying that Labour’s “existential crisis” relates to its inability to relate to working people, and the fact that it has evolved “into a clique of career-driven politicians who marketed themselves at the progressive middle class”. In lieu of an interest in working class politics, Labour now specialises in “futile culture wars and identity politics” – see: What’s left for the left? (paywalled)

To find a way forward, Vance argues “Labour should be asking: who does it now represent?” And “this requires a more fundamental reshaping of how the party thinks about workers.”

Is there anyone in Labour that can at least pretend to be in touch with working people rather than the professional managerial class? Hooton wrote a column for the Herald at the start of the year that singled out who the best replacement for Hipkins might be – see: Apologies needed for Labour to be taken seriously (paywalled)

Here’s his conclusion: “Thirty-eight-year-old list MP Kieran McAnulty is on manoeuvres, with speculation list MP Ginny Andersen would make a good running mate. Both served briefly as ministers in the last year of the defeated regime. McAnulty, while assuring Labour activists he is well to the left of Ardern on economics and tax, has built a blokey non-woke brand based on driving a ute and liking a beer and a bet. He’s certainly more in tune with today’s post-Covid, recessionary New Zealand than anyone from Grey Lynn.”

Dr Bryce Edwards

Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington

This article can be republished for free under a Creative Commons copyright-free license. Attributions should include a link to the Democracy Project (https://democracyproject.nz)

The received wisdom is that they represent the ‘time‑value of money’, and therefore should always be positive. Low interest rates are supposed to indicate a high willingness to postpone consumer pleasures. Interest income is also understood as an entitlement, a reward for hoarding rather than spending money.

In macroeconomics, we are told that low interest rates indicate ‘loose money’, which in turn means higher inflation. And we are told that we must engineer interest rates upwards as a means of curbing both residential land prices (‘house prices’ in common parlance) and consumer prices. Recessions are known to be collateral damage of upwardly‑engineered interest rates; but recessions pass, we are also told.

Much of our evidence is from individual nations’ statistics. The problem here is the way countries’ currency exchange rates confuse the picture. By looking here at G7 data, we have the worlds predominant capitalist countries taken together rather than individually. The exchange rate movements between their currencies largely cancel out.

On its own, the charts shows an ambiguous relationship between interest rates and inflation. We should note however, that conventional wisdom suggests it takes around two years for rising interest rates to curb inflation, and for falling interest rates to raise inflation.

The chart shows interest and inflation rates, using the percentage rates on the left‑side axis of the chart. Unemployment rates are read using the right‑side chart axis.

There are certainly instances where falling interest rates are followed by rising inflation – eg early 2000s. And falling interest rates (2009, 2012) followed by rising inflation. We might note that the rising inflation in 2010 and 2011 was mainly due to fiscal stimulus (rather than due to low interest rates); governments choosing to run the very high budget deficits that enabled recovery from the Global Financial Crisis.

In recent years, falling interest rates since 2011 have not been able to raise inflation above the annual two‑percent that is optimal to keep the wheels of capitalism spinning. And interest rates sure have come down. The key global interbank rate – the LIBOR – has been below zero since 2015.

We see that the relationship between interest rates and unemployment is rather more compelling than that between interest and inflation. Rising interest rates clearly bring‑about higher unemployment. Further, it is the rising unemployment that typically – but not always – induces lower inflation. In the chart, falling interest rates were followed by falling unemployment. Unemployment rates, our most critical indicator of recession, show that recessions have been the critical instigator of low inflation.

Indeed, it is fair to say that rising interest rates only curb inflation by creating contractionary conditions; creating recessions or near‑recessions. There is no direct connection between ‘loose money’ (indicated by low interest rates) and ‘high inflation’; or between ‘tight money’ and low inflation’.

By pre-2015 conventions, the developed world liberal‑capitalist economy is now in a sweet spot; low inflation, low unemployment. Annual economic growth is at potentially sustainable levels (eg 2% rather than 3%+). Yet there is much anxiety. Much of the anxiety among the richest 10% is because there were other motives – other than disinflation – for past high interest rate policies. It was through these monetary policies that the 1980 to 2008 ‘class‑war’ between capital and labour was waged. High and compounding interest was understood then as a free lunch by the rich, a means of transferring wealth directly from the poor to the rich.

The 2020s will bring new economic challenges; the challenge of low inflation and negative interest rates as the new norm. This happy state of affairs will not last though, so long as we have economic policy frameworks rooted in the 20th century. Labour shortages are now the big challenge of global capitalism. If policymakers fail to see this – and persevere with fiscal austerity policies (as we see in New Zealand) – then in the late 2020s we should expect a new form of stagflation; high inflation and structural unemployment.

Have the political left and supporters of the Labour-led Government been conned again? Big changes were promised in welfare reform, but with the response to the just-released working group report on the welfare system, it looks like very little is actually going to be delivered.

Of course, the left has already been feeling shocked and disillusioned by Jacinda Ardern’s capitulation over the capital gains tax proposals, which is raising serious questions about the Government’s promised “Year of Delivery”. And now the weak response to the Welfare Experts Advisory Group report is essentially “Capitulation Number Two”.

Once again, the Government has opted for caution and conservatism instead of making bold reforms recommended by experts. Leftwing supporters and those who care about a properly functioning welfare system are outraged.

The report released on Friday was radical, with a solid critique of the state of the welfare system, and 42 recommendations for fixing it. But the Government response has fallen vastly short. The Minister of Social Development, Carmel Sepuloni, has come out to say that only three of those recommendations will be taken up. Of course, she’s suggesting that more reforms might happen in the future, but few observers appear to have confidence in that eventuating.

One of the best explanations of the Government’s response is Henry Cooke’s column yesterday Greens fail to win major change with welfare review.

In terms of the three working group proposals chosen by the Government, Cooke explains these are hardily bold: “Given the sweep of the report, these changes seem pretty small. Labour and the Greens have been campaigning on removing the sanction since before the election, and have delayed doing it until this report has come back. The change won’t go into effect until April 1, 2020. The sensible abatement rate changes track with minimum wage hikes and are so non-controversial that National agree with them. New staff are hired all of the time. You can even quantify the smallness. The changes as a whole will cost $286.8m over four years. The working group estimated its full suite of changes would cost $5.2b a year – more than the Government’s entire operating allowance.”

Activist and former Green Party MP, Sue Bradford isn’t mincing her words, saying the Government’s “dismal” response to the report recommendations indicates it’s “neoliberal”, by which she means economically-rightwing and still clinging to Establishment and punitive approaches of the last few decades – see: No hope for progressive welfare reform from this government.

Bradford includes the Green Party in this critique. She says the Greens are good at saying the right thing on welfare but, when it counts, the party is wedded to neoliberal practice. Bradford concludes that for the political left, this latest capitulation proves that a new leftwing political party is necessary.

Other commentators are also acknowledging the Greens’ failure to secure welfare reform. Henry Cooke points out that the party had increased its reputation with the left and the poor on the basis of their 2017 election campaign on reforming the welfare system, but says “The Greens are not living up to Metiria Turei’s promise of transformation.” Given that they promised so much, but are delivering so little, he suggests they now “need to be asking questions of themselves”.

Disappointment with the Greens on this appears widespread amongst activists. Leftwing blogger Steve Cowan says that it’s a failure of Green Party leadership, and especially of co-leader Marama Davidson, who he says “has proven to be yet another routine establishment politician betraying the interests of the very people she claims to represent” – see: Why is Marama Davidson in Parliament?

His disillusionment is clear: “We’ve been shafted again. Watching Marama Davidson blandly smiling as Sepuloni denied beneficiaries and the poor a better and more secure future reminded me that in 2017 Davidson was making speeches at South Auckland rallies, lambasting the National Government’s failure to address growing poverty and inequality. All that passion has faded away to bland smiles and empty words trotted out about she knows about the hardship that many people are enduring and that she will continue to work hard for them.”

And for Cowan it’s not just a case of Davidson and her caucus lacking courage, but that they have essentially revealed their true colours now that they are in power: “But her ‘radicalism’, if it was ever there in the first place, has gone missing in the impenetrable centrist fog that now clings to the Green Party like a wet blanket. She displays exactly the same kind of reverence for ‘politics as usual’ centrist politics displayed by the Labour-led government and her fellow Green MPs”.

On the report and the Government response in general, Cowan is highly sceptical, suggesting there’s been an attempt to bury this embarrassing capitulation: “Was it just a coincidence that Jacinda Ardern’s engagement to Clarke Gayford was announced on the very same day that the Labour-led government announced its shocking response to the Whakamana Tangata: Restoring Dignity to Social Security in New Zealand report? If the motive really was to deflect attention that Jacinda Ardern and her government have shafted ordinary people once again, it kinda worked. The engagement news was the leading item on one of the six o’clock news bulletins (TV3’s Newshub) while it was trending number one on Twitter for most of the day, with the welfare report nowhere to be seen” – see: Government response to welfare report is a shocker.

Others have also expressed scepticism about the Government’s handling of the release of the report. Some have noted that the timing for the release and response from the Government was late on a Friday, and at a similar time to the long-anticipated (but thwarted) Pike River Mine re-entry attempt.

Auckland University economist and welfare expert Susan St John declared her suspicion: “Releasing the Welfare Expert Advisory Group report at 2pm Friday (3rd May) just before the weekend at a far-flung West Auckland venue miles from the train station was a masterstroke of political strategy”, and she complained that the actual launch that she attended was strangely uninformative – see: I am not a conspiracy theorist but….

St John suggests that the whole working group approach lacked transparency and public engagement: “For 11 months no one breathed a whisper of what the WEAG was concocting. All consultation was one way to the WEAG with no outsider trusted to respond to any of the development of ideas. In stark contrast with the Tax Working Group process, no background papers and no interim report were released. There were no public forums preceding the report, and no interviews were given”.

She reports from the launch that the audience were less than impressed with the proposals being adopted, and the timeframes involved: “The Minister’s pre-Budget announcements were breath-taking in their superficiality. There were audible gasps of disbelief when she announced that the sanction applied to sole parents who do not name the father of their children would not come in until 2020.  Another lowlight was very minor changes to the abatement thresholds that are to be phased in over 4 years.”

St John is also highly critical of the “lost opportunity” to fix many different elements of the welfare system such as Working For Families. And she suggests Labour is incapable of facing these problems with the welfare system because the party is complicit in creating many of them.

There are so many important recommendations in the report that the Government appear to be ignoring, but the biggest is benefit levels. Henry Cooke explains this best: “The report presents a coherent argument for greatly increasing benefit rates, indexing them to inflation, and reforming the way relationships are treated by the Ministry of Social Development (MSD). It makes the point that relative to wages, benefit rates have fallen an extremely long way since reforms in the 1980s and 1990s. If implemented, this report would truly represent an ‘overhaul’ of the benefit system, and this Government could make a pretty good claim to being ‘transformational’.”

The issue of benefit levels is discussed by Tim Watkin in his excellent column, Another chance to be transformational rejected… Labour’s cautious welfare response. He says the report “recommended a massive 47 percent increase in current benefit levels. Those would be hugely controversial reforms… or, you could say, transformational. Because the report says if its recommendations were adopted it would lift 40 percent of children in poverty out of that plight. And that it could be done in two years.”

Watkin explains one of the reasons for the proposed increase is the increasing gap between beneficiary incomes and others: “What people seldom consider though is that since then wages and salaries have continued to grow. Super, linked to wages, has grown to. But other benefits – with any increases linked to inflation, not wage growth – have not been increased nearly as much. Until, that is, John Key and Bill English famously raised them in 2015. So the gap between work and welfare has grown since the 1990s”.

Therefore, on this rejected recommendation and many others, Watkin says Labour and the Greens are showing their real colours: “Sepuloni agrees the welfare system is not working. Greens co-leader Marama Davidson agrees the welfare system is not working. And then they commit to ignore the report’s big recommendations. They say no to up to 47 percent benefit increases, preferring ‘a staged implementation’. The call for ‘urgent change’ is rejected. Remarkably, Davidson has put her quotes into the same press release with Sepuloni, tying the Greens to this approach when they could have been dissenting from the rafters. The political and institutional reality is that no government can make these changes overnight. But the cold water thrown on this report underlines what we’ve learnt about this government in its handling of tax, its debt level, labour reform and more. It is not just incremental, it looks timid. There is certainly no sign of it being transformational.”

Once again, therefore, as with other potentially-transformative change in key areas for the political left, the Government has lost its political values and courage: “Ardern has political capital to burn after the Christchurch attacks and twice in three weeks she has chosen not to spend it. She has the political cover of National having increased benefits under Key (so just how critical could Bridges be?)… Yet Labour has chosen not to go to the wall for something it believes in. Again.”

But not all is lost. The report is going to have an ongoing impact. Max Rashbrooke writes about how the report represents a major change in thinking about beneficiaries. Previous and existing models saw “welfare recipients as akin to naughty children, needing a harsh overseer”, whereas “the experts’ report is an attempt to put a nurturing, caring assistant at the heart of the welfare system” which sees beneficiaries as needing support – see: At last welfare emphasis will move from punishment to support.

Also, although Chris Trotter bemoans that the fiscal conservatism of Finance Minister Grant Robertson is behind the Government’s rejection of progressive welfare reforms, he thinks there is still a good chance that Robertson and Sepuloni might yet be able to create a new world “of ‘active’ labour market management and planning” – see: The State and welfare: Opportunity or cost?

Finally, for a first-hand account of how well the welfare system works (or doesn’t), and how life on a benefit could be improved, see Hannah McGowan’s The dehumanising reality of life on a benefit in New Zealand.

May 1st is International Workers Day, which is a good time to reflect on what’s happening with workers’ rights and industrial action under the Labour-led Government.

Of course, in New Zealand we don’t have a strong culture of celebrating May Day. You’ll barely find a mention of it in the media and the day goes unmarked by leftwing politicians and even most trade unions. May Day has become even more of an anachronism in recent years, with the decline of unions and the labour movement in general. Overt working class politics went out of fashion a long time ago.

This is discussed today by John Moore in May Day and working class politics. He says: “Is May Day an archaic event? This working-class day came to prominence at a time when class-centred politics was at the fore. During a large part of the early to mid-twentieth century, a mass working class movement existed, in the form of trade unions, labour parties, and a wider socialist and communist movement. However, in the later part of the twentieth century, working class politics was declared effectively moribund.”

Class politics is, however, currently enjoying a revival Moore says: “Even in places such as New Zealand, strikes and unions have become cool again. And even socialism and communism are becoming increasingly trendy amongst politicised youth.”

Certainly, a revival of working class politics can be clearly seen in the significant increase in strikes over the last year. For a pro-worker analysis of a current dispute, see Gordon Campbell’s Why we should support the junior doctors.

How to explain this revival of industrial action? Earlier in the year, Debrin Foxcroft took on this question, asking: In 2018 unions took to the streets to make their demands heard, but were they?

Former prime minister Jim Bolger is quoted suggesting that the rise of industrial action is reasonable and in fact just part of a global reaction to increased inequality: “I think what we have in New Zealand, mainly from white-collar groups, is significantly different than back in the 1970s and 1980s. What we have, in my judgement is a moderate, in fact very moderate version of what is happening across Europe where the people going on to the streets.”

University of Waikato labour and union specialist, Michael Law, is also quoted explaining that frustration with pay and conditions had been mounting for a while: “For younger people the frustration over wages has been compounded by the frustration over galloping house prices. If people are working long hours, not getting any increases in pay and the price of houses is galloping away from them and every week they are further behind then, you get a frustration and anger that either manifests itself by immigrating or leaving the industry.”

And CTU president, Richard Wagstaff also explains that an increase in industrial action was due regardless of the 2017 change of government, saying simply that “the largest collective agreements have come up for bargaining – the teachers, nurses and other healthcare workers”, and that “unions had been planning for the last two or three years to address the grievances being expressed by members”.

For a very good examination of the revival of worker militancy, see Massey University academic Toby Boraman’s recent article, Overworked and underpaid: the revival of strikes in New Zealand. Boraman points to a variety of economic and political factors that have produced what he says is “the highest number of people involved in strikes since the late 1980s, and possibly the most working days not worked due to stoppages since 1992.”

Boraman agrees with some analysis coming out of the National Party that “that government has raised expectations that wages will increase”, leading to workers being readier to strike in the belief that they deserve and can achieve better conditions and pay.

But he says that this is a minor factor compared with the reality of the economic squeeze employees have been feeling for a long time: “The [suppressed] level of government spending is a significant factor in causing the strikes simply because the government employs most workers who have gone on strike. Long-term neoliberal austerity has caused public sector workers’ wages to fall well behind those of most others.” Therefore, “it seems this is a ‘catch-up’ strike wave to reverse decades of stagnant or declining real wages.”

Despite assumptions to the contrary, Boraman also points out that this class struggle has a strong female component in New Zealand recently: “women have led the strike wave. Women made up the majority of participants in most strikes, and female union delegates were often at the forefront of disputes. Indeed, stoppages have mostly occurred in majority female occupations such as teaching, nursing and government sector work in general.”

But he doesn’t believe the current wave of unrest is in any way a return to “the alleged ‘bad old days’ of the 1970s”. Instead, “legal restrictions that outlaw most forms of strikes” and the fact that most industrial action is in white-collar industries, means there’s less likelihood of the country coming to any sort of standstill.

For a similar analysis, Ross Webb writes that “the strikes are a positive sign that organised labour can and will pressure governments when they promise transformational change” – see: The Strike Returns to New Zealand. This article puts the current wave of actions in an historic context, and details the variety of different industrial struggles that have been taking place.

Webb discusses the role of the Labour-led Government in dealing with the demands for pro-worker reforms, pointing to some of the progress: “increases in the minimum wage and the establishment of ‘Fair Pay Agreements’ across entire industries to prevent the “race to the bottom” and improve the ability of unions to bargain collectively”. But, questions remain about the extent of pro-worker changes, with Webb pointing to Labour’s broken promise “to repeal the “Hobbit law” introduced by the previous government, which scrapped a number of workplace rights for film workers in order to appease Warner Bros”.

In addition, “wider existential issues remain: precarious work, the continuing issue of technology and its impact on workers, climate justice and the ‘just transition,’ and the exploitation of unorganised workers (especially migrant workers) who remain largely out of the reach to organised labour.”

This issue of the “gig economy” and what it means for workers’ rights and conditions is dealt with very well by David Cormack in his January column, The crappiest gig. He says we shouldn’t be fooled by how wonderful this new style of working might sound: “We’re getting screwed and it’s so that those with power and money can entrench their power and money while at the same time reduce protections, stability and security for those actually doing the work. It’s called the “gig economy”, a name to make it sound cool and accessible.”

In many ways the “future of work” is looking rather scary, and perhaps something the labour movement needs to get to grips with: “The more we believe the ‘gig economy’ is just a new cool, convenient way for us to work on our own terms and not a concession of our rights as workers, the worse it will become. We have no bargaining power if we are competing against each other. If we come together as workers, cooperate as larger groups, then we can get better working conditions, better pay and consequently a better life for everyone.”

Union membership is still incredibly low – having fallen most recently from about 20 per cent of workers in 2012 to about 17 per cent in 2017. Could this Government help turn this around, and address its goal of ameliorating inequality? That’s the upshot of a recent piece by four New Zealand and Australian academics – including former Labour Minister, Margaret Wilson – who make the case that high levels of union membership leads to lower levels of inequality – see: How a default union membership could help reduce income inequality.

Here’s their main point about increasing union membership: “In our research we propose an innovative solution, drawing on insights from behavioural economics, which involves defaulting employees to union membership in workplaces where unions already have some members or a collective agreement. Once employed, employees would be automatically enrolled in the on-site union, but retain the freedom to opt out at least after some time.”

This Government is making two other important employment changes that are worth noting on May Day. The shift towards a minimum wage of $20/hour is being slowly-but-surely implemented. For one of the most interesting commentaries on this, see First Union general secretary Dennis Maga’s The minimum and living wage gap in closing, but not fast enough. He says: “New Zealand wages adjusted for the cost of living have fallen from sitting in the middle out of 23 OECD countries in 1990 to the fifth lowest out of the 36 countries in the OECD. We are also amongst the lowest for labour income share – this is the share that working people get of the nation’s total income, or the wealth their work produces.”

Maga has also written positively about the Government’s proposed new industry-wide bargaining model, saying that this offers “a potential opportunity to turn around our low-wage economy and regulate our lowest-paying industries” – see: Fair pay agreements: We can turn around our low wage economy.

And for an interesting discussion of the extent of the current low-wage economy, see Richard Wagstaff’s It’s not enough to grow the pie, workers need a bigger share. Here’s his main point: “work done by our economist Dr Bill Rosenberg shows that if working New Zealanders’ wages had grown with the pie since 1981 we’d all be $11,500 a year better off on average. In other words, while improving productivity is crucially important, sharing these gains and giving working Kiwis’ a fair slice of a growing pie is fundamentally important. And therein lies the key to the real problem. Even as we have grown our wealth as a nation there has been a systematic decline in the share of that wealth that goes to wage and salary earners.”

Even those at the bottom who were supposed to be getting a better deal from the historic pay equity settlement aren’t quite getting the progress that many expected – see Katherine Ravenswood and Julie Douglas’ Historic pay equity settlement for NZ care workers delivers mixed results.

Finally, May Day is supposed to be a celebration of international workers’ rights, but many foreign workers are still terribly exploited in this country. Newshub’s Michael Morrah has been doing excellent work in recent months to expose some of this – see: ‘Treated like slaves’: Overseas students claim they’re underpaid, overworked, threatened, and Chinese workers in New Zealand allegedly left without passports, food, toilet paper.

As the public (and many economists) see it, economic growth (growth of Real GDP; marketed economic output) is the principal economic goal of a nation state. Some economists hold a (slightly) more nuanced view – for them it is productivity growth that matters – but when pressed they cannot conceive of productivity growth without economic growth.

This nuance is important. Inputs are costs – including labour inputs – and outputs are benefits. This is true, by definition. And it is the central axiom of economics. Thus labour productivity growth is beneficial, by definition, because benefits (outputs) are growing faster than costs (labour inputs).

Labour productivity growth can come about according to five scenarios. Before considering these, however, we need to note that both measures of labour inputs and economic outputs are contested. It is good to have contested measures, preferably sitting alongside each other. One measure should not displace others.

Contested output concepts:

• Real GDP, a measure of marketed outputs, reflecting purchased goods and services.
• A wider measure, that includes outputs that are not for sale, and that deducts for harm created in the production or consumption of those outputs.

Contested labour input measures:

• Hours of available labour, where labour means paid work.
• Hours of labour worked, again where labour means paid work.
• Hours of work performed, where work means any hour that contributes to the wider measure of output.

This month’s chart uses the underlined output and input measures: Real GDP and Hours of Labour Worked.

Using these measures, labour productivity growth may mean either of the following scenarios (or types):

1. Real GDP increasing, and Hours of Labour Worked increasing; GDP increasing faster.
2. Real GDP increasing, and Hours of Labour Worked static.
3. Real GDP increasing, and Hours of Labour Worked decreasing.
4. Real GDP static, and Hours of Labour Worked decreasing.
5. Real GDP decreasing, and Hours of Labour Worked decreasing; Labour decreasing faster.

All five of these productivity growth types represent successful economic outcomes, to an economist. Although, as noted, economists struggle with type 5, which is very much a leisure-preference version.

Most of the public – and most economists – and most elected politicians – strongly favour only the first of these five productivity possibilities. The reason for this is that most of us – possibly even most economists (despite their disciplinary training) – think of Hours of Labour Worked as a benefit rather than as a cost. It’s even enshrined in the Reserve Bank Act – through the most recent Policy Targets Agreement – that it is an economic goal to maximise employment. (Maximising employment is quite different from minimising unemployment, though some people assume that the two are the same.)

Looking at our chart, we see that, for the most part, outputs (dark blue) have been growing faster than labour inputs (light red),with both growing. That’s the productivity growth most economists expect to see. All the periods of negative growth of worked labour are periods of recession or near-recession, when the problem was largely unemployment; high levels of unutilised but available labour.

The public is used to thinking that economic times are good when both blue and red are growing faster than two‑percent per year. Indeed some even think that employment growth (costs) is more important than output growth (benefits). Indeed, this decade, this new unproductivity phenomenon has emerged.

For about half the time the rate of increase of paid labour has exceeded the rate of real GDP growth. In the popular view – that Hours of Labour Worked is a benefit rather than a cost – this looks peculiarly successful. To most economists (with their economist hats on), it’s appalling; since 2012 average productivity growth looks negative.

There are two important messages here to take with us into the 2020s. First – in conventional terms – we are entering unfamiliar territory. This is the non‑productivity growth variant of Productivity Type 1. The last decade of low growth, low inflation and low unemployment was the 1920s; it’s time we learned more about that decade. That’s one message.

The second message is for us to ask how we can move from Productivity Type 1 to any of the other more sustainable productivity scenarios. There are only two ways we can do it without unacceptable levels of inequality.

First, there’s the Japanese way, which is to use debt to fund consumption of the output that is growing when the labour inputs are shrinking. Inequality – and systemic bankruptcies – can be avoided if the government becomes the indebted spending sector, and the government’s creditors are domestic rather than foreign.

Second, societies may distribute capital income – social profit – to all, so that people can spend in excess of their labour wages without incurring excessive household debt. That means a Universal Basic Income (UBI), or at least a system of Public Equity Dividends. A UBI is compatible with all five productivity types.

A sustainable economic future means enabling the possibility of switching away from Productivity Scenario 1 (and its emerging non‑productivity counterpart, as seen from 2012 in the chart). This future can only exist with increasing public debt or increasing public equity or both. The most acceptable future – think Productivity Scenario 4 – requires a full acknowledgement of public equity to be incorporated into capitalist economic thought.

The solution is not to replace traditional measures; GDP will always be an important economic measure, sitting alongside measures that focus on wellbeing rather than marketed output. My conclusion that public equity is a prerequisite to sustainable wellbeing applies, whatever measures we adopt for economic output, and labour input.