The SST has a prominent article exploring the Trans-Tasman pay gap.
As to reasons we quote this section:
The union argument harks back to the Employment Contracts Act of 1991, which decimated union power and collective bargaining. "Before [the ECA] wages in New Zealand and Australia were comparable," says Harre. "But the impact of the ECA was very dramatic in the service sectors."
Lower wages thereafter, she argues, were the result of weak bargaining power.
"Rubbish," says Business NZ chief executive Phil O'Reilly. "The fact of the matter is that in Australia retail workers are not highly unionised and yet they get higher rates of pay."
Every company in the world would pay workers differently depending on which market they were in, he says.
"The story about why Australian wages are often higher is a productivity story."
Productivity refers to output per worker and is closely related to the level of capital investment. Give a man a stool and a bucket and he'll milk a dozen cows give him a modern milking shed and he'll milk 100.
Few would quibble with O'Reilly's view that our productivity has lagged Australia's and that this has widened the wage gap. But the reasons for lower productivity are more controversial.
A 2005 Treasury paper said: "In New Zealand the price of labour relative to Australia was very comparable in the late 1980s. By 2002 it had fallen to about 60% of the level in Australia. With labour relatively cheap in relation to capital than in Australia, it appears that New Zealand firms have opted for a lower level of capital intensity."
O'Reilly concedes the point, but says part of the problem was that businesses could not afford to invest. "Are they saying double the price of labour so employers will invest more capital? They'll all be out of business."
He fingers another culprit. "This is nothing to do with the ECA, this is about poor government policy."
If government taxes have burdened business, they have also burdened employees.
An NZ Institute of Economic Research study by Patrick Nolan found that the tax take from employees had increased in New Zealand relative to Australia since 2000. Even the Working for Families tax rebate was outdone by Australia's Family Tax Benefits.
Fixing the tax system would help, but it wouldn't fix the problem and the reasons for the productivity gap are still not well understood.
"We do scratch our heads over that one," a Treasury spokesman told the Star-Times.
