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The Helen Clark Foundation released a new report in partnership with the New Zealand Institute of Economic Research to call for a boost to improve inclusion and incentives investment in capital and skills which ‘leads’ to a greater ‘productivity’.
NZIER Deputy Chief Executive Todd Krieble says, “minimum wage reviews are too focused on the short-term. Backing people from the get-go with good wages is a form of ‘predistribution’ that means we can be less reliant on ‘tax and transfer’ to smooth out household incomes. This is important because inequality is a drag on growth and well-being.
“With border controls to prevent importing COVID-19, limiting the inflow of migrants, labour will become relatively scarce and costly. Capital has never been cheaper. This is an unheard-of combination of factors and should allow for a more equitable economic model. The recovery allows us to build a more inclusive economy that shares the gains.”
The idea of minimum wage increases can cause more unemployment in advanced countries is not well supported by the evidence according to the Halen Clark Foundation — “In any case, it is a very short-term view if we want a fairer society,” says Todd Krieble.
The report reveals identifying and removing any barriers to skills development and learning for those who are stuck in a low-wage job, social support including childcare accessible transport, supporting entrepreneurship and engagement tools in government for efficiency.
“Our strong response thus far to Covid-19 and the attendant disruptions to the status quo has opened the door to a real, inclusive step-change in Aotearoa New Zealand. This paper aims to explore these possibilities and to generate further constructive discussion in this area,” says Todd Krieble.