The state of the working class in New Zealand (1997)

by Philip Ferguson

(The article below was written in early 1997.  How little has changed in the 15 years since can be seen from the introduction to the article, which stated: “To the extent that there is any recovery at all, it has been at the cost of workers’ wages and living conditions. . . a new working class politics is needed to challenge this state of affairs.”   Low levels of class consciousness and low levels of struggle also continue to characterise workers as a whole in New Zealand.  One of the central concerns of Redline is addressing these realities and their implications for the struggle for human emancipation today.) 

According to leading bourgeois economic commentator Colin James, writing in September 1994, “New Zealanders have seldom had it so good.”  This message has been constantly repeated by the government and by leading figures associated with the Business Roundtable.  Paradoxically, amidst all the ‘positive indicators’, James noted, “Less positively. . . real wages are rising, facilitated by higher corporate profits.”  In other words, James is admitting that the ‘recovery’, to the fairly limited extent it exists at all, is built on holding down workers’ wages and thus workers’ standard of life generally.  Of course, this makes a nonsense of his claim that ‘New Zealanders’ have rarely had it so good.  But then, for the bourgeoisie and their ideologues, ‘New Zealander’ is synonymous with the ruling rich majority and does not refer at all to you and me and the vast majority of the population.

Never had it so bad

While huge private companies like Fletchers and Telecom achieve record profits – a significant factor n these profits being the massive assistance provided by the state! – of a sample of employees covered by more than 2,000 contracts  surveyed in late 1994, only one percent had received pay rises of more than 7% from June 1993-June 1994.  Overall, wages grew by only 0.1 percent from December 1991-December 1992, one percent from Dec 1992-Dec 1993 and one percent between June 1993-June 1994.  As James himself was forced to admit at the end of 1994, “In real terms, wage rates have failed to keep pace with inflation.”  Indeed, over a third of workers received no pay increase at all in the year up to June 1994.  Wage rates movements have ranged from just over one percent (Jan-March 1993) to just under 2.2 percent (Oct-Dec 1996).  In 1996, almost 50% of contracts involved no pay increase at all, with most of the rest containing increases between 0-2%.  Consumer price rises have consistently been higher than wage increases.

Last of the unions

At the same time, industrial action in New Zealand has dropped off enormously.  In 1987, 1.3 million days were lost in strikes; by 1995 days lost had collapsed to a meagre 4% of the 1987 total!  The fall in wages shows that, despite the kinds of ads we were deluged with from the Employers Federation leading up to last October’s election, workers are not better off by refraining from engaging in strikes.

The Employment Contracts Act has played a central role in this process.  As James noted enthusiastically, “Under the Employment Contracts Act, collective bargaining is no longer encouraged, strikes supporting multi-employer contracts are banned and employers and employees are left free to decide their own bargaining arrangements under collective or individual contracts.”  Of course, it is really only the employer who is free in this sense – the workers have to like it or lump it.  James saw the benefits – for the capitalists – clearly: falling union membership, falling numbers of employees covered by collective wage agreements, and the dropping from most contracts of higher rates of overtime.  Two years on, the position of workers has gotten even worse.

Let’s start by looking at union membership.  One of the most important effects of the protracted slump has been a major drop in unionisation.  Since the last Labour government began its full-scale assault on the working class in 1984-85, union membership in New Zealand has dropped by half.  In December 1985, there were 259 trade unions in this country, with a total membership of 686,006, comprising about 43.5% of the total employed workforce.  Over the next few years, a large number of amalgamations took place.  By May 1991, just after the Employment Contracts Act was passed, there were 80 unions with a total membership of 603,118, comprising 41.5 of the employed workforce.  By December 1995, there were 82 unions, but only 362,000 members, a mere 21.7% of the employed workforce.

The most significant decline since 1991 has been in agriculture, fishing and hunting, mining, construction and building, and in the retail wholesale, restaurant and accommodation sector.  But there has also been an important decline – 33% – in manufacturing.  On top of this, it has to be remembered that manufacturing shed around 70,000 jobs during the 1984-1990 Labour government’s blitzkrieg against the working class.  (One encouraging sign, however, is tat many unions no longer affiliate to the Labour Party.  Less than 70,000 workers now belong to unions affiliated to this middle-class pro-capitalist outfit.)

The continuing loss of union membership, not surprisingly, goes hand-in-hand with further declines in workers’ wages and conditions.

Turning back the clock

According to Auckland psychologist John McEwan, labour relations have been turned back 100 years and people are being worked the way they were in the 1800s.  Let’s look at a few trends in specific sectors.

One of the most oppressed groups is women workers in areas such as cleaning and the wider service sector.  A few years ago, in order for her and her sick husband and their four children to survive, Pacific-NZer May worked 21 hours out of 24!  She now works two jobs, about 12 hours a day.  But whereas before the ECA she earned $600-700 per fortnight from these 12 hours a day, now she only earns $517.  The Service Workers Union organises workers on $9 an hour; there is no way that many of these workers can survive unless they work two jobs.  Even among many male workers in this sector there has been a marked worsening of conditions: for instance, many security guards are, since the ECA, working longer hours for $100 per week less.

Handouts to the rich

An interesting example of privatisation in lowering workers’ wages, while the state continues to subsidise private capital, can be seen here in Christchurch with the public transport system.  Bus routes were sold off to private companies, but still subsidised by the city council out of people’s rates.  The companies which could run a service at the cheapest cost got the routes and the subsidies, while bus drivers’ wages were cut by $100 per week.  The elected public transport board was abolished.  The result: people have less say, drivers have less pay and worse conditions, and ‘unprofitable’ routes are cut.

Additionally, many workers who are, in real terms, unemployed have been forced into government-funded or -subsidised schemes.  These can take the form of someone with an MA working somewhere like the museum in Christchurch for $7.50 an hour.  Or it can take the form of working for private capital at a similar rate.

Minimum wage, maximum week

The overall result in New Zealand of the kinds of changes listed above is that in the 1990s the average family need to work 70 hours a week to maintain a standard of living which took 40 hours to sustain in the 1960s.  In New Zealand 150,000 people now work over 60 hours per week.  One third of the workforce works over 40 hours a week, while 340,000 people have a second job.  Meanwhile, the years of the ‘economic revolution’ have also seen a drastic increase in the number of people on benefits.  Thus, while the population has risen by about 10-11 percent since 1980, the number of people on welfare benefits has risen by about 400 percent!  There are now over 300,000 working-age people on welfare benefits.  Taking into account that many of these people have families, with no other source of income, the total number of people dependent on welfare benefits is a very sizeable chunk of the population – at least 25 percent.

Furthermore, a recent study of benefits (ie excluding NZ Super) carried out by the Social Policy Agency shows that around 930,000 individuals were on them at some time in the last four years. Considering that the 1996 labour force is around 1.6 million, this is a massive figure indeed.  It shows that the labour market must be incredibly fragile and in flux, with the majority of the workforce having been out of a job at some time in the past four years.

People might not always be on benefits for a long period, but they are losing their jobs.  It also seems likely – given the statistics on wage movements – that when people eventually find new jobs, no matter how quickly, they are unlikely to be enjoying better wages and conditions than those in the jobs they lost.

These benefit figures also show that the number of people who can be categorised as ‘welfare users/beneficiaries’ is actually much larger than most official figures show.  Because there might be 250,000 people out of work at any one time, we tend to think that only that number are affected when, in fact, during just one four-year period nearly one million people have had to rely on state income support.

Parallel with this has been a significant growth in part-time employment, part-time workers making up 24% of the workforce today, compared to 18.8% in 1991.  Women’s wages are $3.50 an hour less than men’s.  Over 70% of the population live on less than the much-vaunted ‘average wage’ of $28,000 a year.  Even a report commissioned by the government and produced early in 1996 claimed that 30% of the population was living below the poverty level!  And, according to the Reserve Bank, 5 percent unemployment is necessary to sustain the ‘recovery’.

Why?

All of this is essential for the capitalists to increase profitability, so it’s no wonder that the Employers Federation say “Let’s not go back to the 80s”!  Yet even with these attacks on workers’ wages and conditions, the economy lacks any real dynamism.  Productivity output levels are only just returning to what they were in 1984.  GDP growth declined for eight successive quarters from mid-1994 to mid-1996, the rate for March-June 1996 being the lowest level of growth recorded for three years.

While the government-controlled high interest rates attract overseas money, pushing up the NZ dollar to a level well above that which would reflect the real state of the economy, this has the flow-on effect of making NZ exports more expensive and hitting exporters where it hurts.  Furthermore, although the government made much of the fact that in September 1996 it reduced the net public overseas debt held in foreign currencies to zero, this resulted largely from the sale of Forestry Corporation.  As the government runs out of state-owned property to sell off, NZ’s total overseas debt actually continues to rise.  The total overseas debt in June 1996 was $74.7 billion, over $5 billion higher than in June 1995.  (Most debt, of course, is private debt.)

Let’s not go back

Unfortunately, most of the labour movement appears to have little answer.  Having failed to learn that, as Bruce Springsteen put it recently in talking about the worsening conditions of American workers, “This is what happens when you play by the rules”, they do want to go back to the 1980s, indeed to the 1970s.  The labour movement and much of the left cannot understand that it was the problems of capitalism during that period which made necessary the full-scale assault on the working class.  The battles of today and the next century cannot be fought with the same tired old Keynesian economics which failed in the 1970s and 1980s.  Yet the remains of the labour movement tend strongly to romanticise the old, closed and socially conservative/oppressive society which existed in the past.

The pathetic sight of CTU leader Ken Douglas standing with a few other union officials picketing the National Party’s election bandwagon last September simply serves to illustrate how divorced the existing trade union movement is from the working class – and from reality in general.

While much of the drop-off of overall union membership can be attributed to the ECA and the way the Act coerces workers into accepting individual contracts, this is not by any means the whole story.  In the past, many unions were based on a degree of compulsory unionism which was not actually achieved out of working class struggle, but which was part of the policy of the capitalist Labour government of 1935-49.  This mechanism created unions with large paper memberships and low levels of political consciousness; they were relatively easily controlled by conservative union bureaucrats whose primary connections were to the government and the state apparatus rather than to the working class.  These unions could never defend working class interests, let alone become schools for the development of class struggle and revolutionary consciousness.  The ease with which they were battered by Labour and National in the 1980s and early 1990s simply revealed their long-time Achilles heel.

Don’t romanticise    

It is therefore important not to romanticise the old labour movement.  It was defeated because it was never adequate to the tasks of fighting against a system which is based upon the exploitation and oppression of the majority of society.  Its demise is not to be mourned.

Back in the 1800s, Marx noted that the working class is revolutionary or it is nothing.  In other words, the working class cannot get anywhere without being revolutionary.  So far, the politics which have claimed the allegiance of the working class have been labourist and reformist; thus the present disaster.  New politics and new forms of organisation are needed to fight capitalist attacks today.  As capitalism continually reshapes and remakes the working class, in ongoing slump conditions, it is more important (and possible) than ever for Marxists to be a factor in the development of the new political consciousness workers so desperately need.

In place of labourism/reformism in its various manifestations, we need a revolutionary politics which begins from the fact that the requirements of capitalism and the interests of the majority of society are diametrically opposed.

Sources used for this article: Far Eastern Economic Review; Contract; Assignment; NZ Employer; Economist Intelligence Unit Country Reports on New Zealand; Westpac Economic Overview

Further reading:                                                                                                                                            Coming Apart Down Under: the decay of NZ capitalist society, 1970s – 1993                                                             The Key-English government in the context of capital accumulation in New Zealand today