WHAT PRICE LOYALTY, NEW ZEALAND?

Now here’s an interesting article:

“Made in NZ - do you buy into it?” [Nikki MacDonald, Stuff, July 2013]

I de-based myself today.  I went lower than I ever thought it was possible to go.  No, I didn’t buy instant coffee.  Worse; I bought a bottle of Australian wine.  

Now, here in New Zealand, buying Aussie wine is a bit like an American buying an AK-47.  It’s not yet a crime, but it’s pretty bad, eh?

Before you grab your torch and pitchfork, here me out: I bought on price.  The simple fact is that Australian red wines are – by and large – cheaper than our own wines here in Godzone.  As I was looking at the expensive NZ wines, I thought to myself for the first time, “What loyalty do I owe these companies?”

When I was growing up in the UK, I remember the advertising campaign that seemed to run for years; “British goods mean British jobs.”  This was a reflection that cheaper goods were starting to filter in from Taiwan, Japan and China.  The reality was that – to pay British workers a fair wage – British goods were more expensive than those from the Far East.  And we accepted that in good faith.  Indeed, it’s still a wonder today, that Chinese factories can exploit their workforce to the degree that a Chinese worker can roll a car off the production line for the cost of a bowl of rice.  That is the economic reality in China.  But Chinese workers don’t have the same protection ours do; Chinese factories don’t have the rigorous regulation, employment or Health and Safety regimentation that the West does, so their cost of labour is far lower.

So if we consumers are being fed messages to Buy New Zealand-Made, why am I struggling more and more every year - as an earning employee - to afford those New Zealand goods?  Why am I not feeling the love?

Let’s come back to the economic conditions here in NZ – compared with Oz.  Goods bought here - even NZ-made - are often more expensive than abroad, including Australia.  Is it because our wages are too high?  Are we being paid a fair wage?  Well, Australian workers continue to outstrip us in terms of wages, despite their downturn.  Indeed, over the last 30 years, New Zealand wages have hardly risen at all in real terms.  This means that our ability to keep up with the rising cost of goods actually falls shorter every year.  And yet, our productivity continues to soar!  If there is ever a Case Study for exploitation, I think it’s here in New Zealand.  In other words, we are working harder, longer, and for less money.  It's little consolation we're not alone.

If New Zealand wages are so low, why are NZ goods so damned expensive here?  Milk is an obvious one after wine.  Our wines are good - exported around the world - but we’re the international HUB of milk production.  And the reason for that is that it costs less to make milk here; cheaper water, cheaper wages, and relatively cheaper land.  Yet, it’s dearer to buy a litre of milk here than in most European countries!   

I'll tell you why that is.  It’s because price has NOTHING to do with cost-of-production.  Price has everything to do with our willingness to pay.  Yes, yes, yes; basic economic theory tells us that profit = sales – cost, so price depends on that equation.  However, if the customer isn’t willing to pay the price, the theory falls over.  If it costs $100 to make the widget, but the customer will only pay $1, then widgets aren’t made.  However, if a widget costs $1 to make, and the customer is willing to pay $100, then you can bet the customer will be charged $100.  It might not be fair, but that’s capitalism.  So if we are going to be charged more for NZ milk and NZ wine, how far should our loyalty stretch?  Frankly, there are some large and high-profile companies here in New Zealand, pulling on our heartstrings.  They pull out the “Loyal” card – but they ain’t givin’ back.

Let’s look at the theory of NZ goods keeping NZ jobs.  Well broadly, that’s still a truism today – but it’s not quite as “true” as it once was.  NZ corporates focus on “productivity” – "We need to be more productive," they cry.  But, if we are more productive, we actually do ourselves out of jobs!  We HAVE been more productive - and our continued broad increased productivity means less jobs across the NZ economy!  However, the statistics continue to show that we are not seeing the benefits of our productivity.  Not only are New Zealanders being exploited, but the corporate, right-wing spin today, is that we should have some sort of loyalty for our large NZ companies with those limited budgets of ours. We're told that NZ money spent on NZ goods trickles down into the economy, instead of going overseas.  Well I can tell you, the trickle down theory is the biggest bag of shite since Margaret Thatcher filled her rubber underpants.   Despite the right-wing spin doctors CONTINUING to promote “Trickle Down”, the economists and the statistics do not support the fact.  Indeed, money does NOT “trickle down”; money trickles UP.

I’m not saying that every business here in New Zealand is like this.  Indeed, there are some cracking businesses that earn our loyalty by the directors/owners’ hard work, their dedication to their staff, and their exceptional, true respect for the customer.  But there are many NZ businesses that don’t.  

So in summary, there are a lot of businesses in New Zealand that aren't paying their way in our country;

• As employees, businesses in New Zealand aren’t giving us the return for our hard work
• As customers, businesses in New Zealand aren't giving us lower prices for their lower cost-of-production – they can’t have it both ways!
• There are New Zealand businesses who are fleecing the consumer – charging us more than our overseas counterparts, playing on our heartstrings, but not passing that increased revenue component onto New Zealand workers.
• Directors in New Zealand continually award themselves annual pay rises MANY TIMES higher than inflation, but plead poverty when it comes to staff pay rises.
• New Zealand businesses want consumer loyalty from kiwis, but won’t reward staff for their productivity and won’t pass on the lower cost-of production to the consumer, in terms of lower prices.  So why should be loyal?

With all of that said, let’s be choosy about how freely we give our loyalty.  Let us not be blindly sucked into the "Buy NZ" game - until we have the incomes to have that luxury!  Instead, let’s give our loyalty to those great kiwi companies who have earned it, not to those who demand it.

FURTHER READING:

"Real Wages - the Brutal Truth" [ Mike Treen, Unite News, Feb 2014]

https://unitenews.wordpress.com/2014/02/19/real-wages-the-brutal-truth/

“The lag in wages vs. productivity costs you hundreds of dollars per week” [Systemic Disorder, Sept 2014]

https://systemicdisorder.wordpress.com/2014/09/11/wages-lag-vs-productivity/

"Re-run: Unemployment up, productivity up" [Marty G, The Standard, March 2011]

http://thestandard.org.nz/re-run-unemployment-up-productivity-up/

"Does your company give you a $148,000 bonus?" [Sydney Morning Herald, Dec 2015]

http://www.stuff.co.nz/business/world/75001193/Does-your-company-give-you-a-148-000-bonus-No-This-US-firm-does

"Are the fat cats pouring their own milk?" [Nicholas Blumsky-Gibbs, Otago University, Oct 2012]

http://www.otago.ac.nz/law/research/journals/otago043943.pdf http://www.otago.ac.nz/law/research/journals/otago043943.pdf