Friday, January 21, 2005
Hey - when it comes to income, we're footing it with Slovenia
New Zealand is now graded as a low middle-income country in line with Spain, Slovenia, the Czech Republic Greece, Portugal, Israel, South Korea, and Hungary according to an OECD study. The Jobs Letter says that Purchasing Power Parities, based on 2002 data, compared prices of goods as a ratio of gross domestic product per person. The result puts New Zealanders well down the scale of personal purchasing power.
But New Zealanders aren't going without. Bank of New Zealand chief economist Tony Alexander says that New Zealanders, instead of earning enough to afford the lifestyle they want, go into debt in order to buy the luxury items people in richer nations have. As a result, New Zealanders have the worst savings rate (-10%) in the OECD.
Why aren't New Zealand workers paid more? Alexander speculates that New Zealand has a generally "acquiescent" workforce. Alexander: "One explanation for generally low wage growth in the past 10 years is the work force not demanding it — probably because of the memories of really high unemployment. It was pretty bad in the early `90s and late `80s. There's a hangover from that which has made people reluctant to chase after the big money. We have preferred job security." He says this could change with the tightening labour market.
New Zealand is now graded as a low middle-income country in line with Spain, Slovenia, the Czech Republic Greece, Portugal, Israel, South Korea, and Hungary according to an OECD study. The Jobs Letter says that Purchasing Power Parities, based on 2002 data, compared prices of goods as a ratio of gross domestic product per person. The result puts New Zealanders well down the scale of personal purchasing power.
But New Zealanders aren't going without. Bank of New Zealand chief economist Tony Alexander says that New Zealanders, instead of earning enough to afford the lifestyle they want, go into debt in order to buy the luxury items people in richer nations have. As a result, New Zealanders have the worst savings rate (-10%) in the OECD.
Why aren't New Zealand workers paid more? Alexander speculates that New Zealand has a generally "acquiescent" workforce. Alexander: "One explanation for generally low wage growth in the past 10 years is the work force not demanding it — probably because of the memories of really high unemployment. It was pretty bad in the early `90s and late `80s. There's a hangover from that which has made people reluctant to chase after the big money. We have preferred job security." He says this could change with the tightening labour market.
