This report examines the National-led Government’s record on the cost of living and real wage growth across a number of different metrics. It is a complement to the Three Years of Pain report on the state of the labour market, and the What Are We Giving Up? report, which detailed the findings of NZCTU’s survey on the cost of living.
The “cost-of-living crisis” is usually framed as a problem of inflation – of broad-based price increases. But it should also be thought of as a problem of insufficient wage growth. Many households’ wages haven’t kept up with rising costs over recent years, which means their standard of living has fallen.
The National-led Government was elected on a mandate to fix the cost-of-living crisis. It has clearly failed to do so. Prices have continued to rise rapidly across many essential goods and services such as food and electricity. And in real terms, wages have barely grown for many households and have fallen steeply for lower-income ones.
In addition, as we covered in our previous report, unemployment has increased, and the social welfare system has been made more punitive and conditional, which has further intensified cost-of-living pressures for many whānau.
Depending on the measure used, real wages have either barely grown or fallen over the last three years. Lower-income households have been particularly hard hit. Over this Government’s term in office, the minimum wage has fallen 4.3% when deflated by consumer inflation. If we use the more accurate household living-costs price index to calculate the change in the real minimum wage, it has fallen by between 5.5-6.7%.
To put an end to the cost-of-living crisis, we need a broad-based policy response. This includes intervention in monopolistic sectors like energy, supermarkets, and banking. It includes tax reform to redistribute wealth. It includes reforms to the welfare system to ensure a dignified standard of living for benefit recipients. Above all, though, it requires reforms that ensure higher wages. The next Government needs to substantially reform our employment relations settings to enable stronger wage growth across the economy.
