Economy growing – but who’s getting it?
CTU economist Bill Rosenberg
Council of Trade Unions media release:
“Who’s benefiting from the growth in the economy? This is an important question after another three months of GDP statistics showing economic growth getting closer to the levels in the 2000s before the Global Financial Crisis,” says CTU Economist Bill Rosenberg.
An analysis by the CTU of the very highest incomes shows that an unfair proportion of the benefits are going to the top 1%. Income data recently released by Inland Revenue shows that in the two years to March 2013 (the latest available data) there was a sharp rise in inequality due to rapid rises in high incomes.
“The average income of the top 1% rose steeply from 2011”, says Rosenberg. “Their average income rose from $298,000 in the year to March 2011 to $382,000 in the year to March 2013. “This is an increase from 8.5 times the average income to 9.7 times.”
“Even more starkly, I estimate the average income of the top 0.1% to have risen from $665,000 to $892,000 over the same period, from 19 times the average income to 23 times.”
More of the income generated by the economy is also going to profits of overseas companies, leading to a fall in the resources available to people living in New Zealand, Rosenberg says.
“And with growth in hours worked rising rapidly compared to growth in the economy, productivity will be rising very slowly, if at all. Employers are choosing cheap labour over investment which would raise productivity.”
“Workers are due for a catch-up after several years of low increases which were below what the economy can afford in terms of its productivity. Stronger pay rises would ensure that everyone benefits from growth in the economy”, Rosenberg said.