Saturday, 8 August 2009

Economic crisis: A union plan to get out of the recession

Robert Reid, who recently became National Secretary of the National Distrabution Union (NDU), presented the following paper as part of a workshop at Kotare Trust Research & Education Centre. Kotare was founded by Green Party MP Sue Bradford, and the Greens have their own ideas about how to get out of the recession, which call the “Green New Deal”. This, they say will take on “the economic crisis, the environmental crisis and the climate crisis at the same time.” UNITYblog invites readers not only to comment on Reid’s ideas, and the Green’s proposals, but to offer your thoughts on how the labour movement should respond to the economic (and ecological) crisis. Longer contributions can be emailed to editor(at) A union plan to get out of the recession Robert Reid NDU National Secretary There is a global financial and economic crisis. New Zealand and many other counties are in an economic recession. This global economic crisis was caused mostly by the financial crisis in the United States and some European countries that allowed their banks and financial institutions to lend billions of dollars (most for housing) where there was no chance of repayment. These loans were then repackaged and bought by other bank, financial institutions and individuals as secure loans. The crisis was not caused by workers demanding too higher wages. It was caused by those on multi-million dollar salaries who made their money selling debt to others that could never be repaid. In NZ we had our own “bubble” in the housing market and a few finance companies collapsing but nowhere near the economic carnage generated in the USA. However in a globalised world, as the saying goes, “if the US sneezes, the world catches a cold”. NZ, like the rest of the world is suffering from the financial crisis which has generated a general economic crisis which means many of the commodities and products that NZ exported have either dropped in price or are not being bought at all. In New Zealand we are told every day by economists that more firms will lay-off workers and that unemployment will double this year. However the economy, financial institutions, businesses, unemployment and the crisis itself are human creations. We do not have to accept that more jobs will be lost and unemployment will double. If these things happen it is because those with power let them happen. The new National Government is in a bind. On one hand it has the philosophy that the Government should not “interfere” in the economy. On the other hand it knows if it does nothing, more people will suffer, more people will be laid off, more people will be unemployed. It would then lose the next election. It is for this reason that John Key and Bill English are talking about how Government can reduce the effect of the global recession on New Zealand. The Government held a Jobs Summit at the end of February. Late last year, the Minister of Social Development, Paula Bennett invited the NDU to a discussion on the Government’s response to redundancy. We work closely with Paula Bennett’s office on redundancy issues however there seems to be a reluctance within Government to support union organised redundancy support initiatives that were common in the last recession. The NDU needs to be clear on its plan to deal with the recession. We should not expect the CEO of the stock exchange (who chaired the Jobs Summit) or the Government to come up with pro-worker solutions. That is our job. The best ideas to deal with the economic crisis in a pro-worker way will come from workers and their unions. Below we put forward some “worker solutions” to the crisis. Unions and progressive politicians in other countries are coming up with clean / green /social “new deal programmes; programmes that both address the economic crisis but also deal with the environmental (global warming) and social (poverty) crisis that the world and each country faces. Last week the Green Party came out with its Green new Deal plan that we should also give consideration to. Here are some ideas that the NDU is working on: Identify those companies that are proposing to lay workers off. All companies proposing to lay off workers should be required to report to the Government which, in turn should investigate if it is possible to save some or all of the jobs at risk. Stimulate the economy by providing more income to those who are the lowest paid. If lower paid workers receive significant wage increases this both stimulates the economy by increasing consumption and also ensures that this the lowest paid are able to buy the necessities of life. Better if the economy is stimulated by the poor able to spend more money on food and housing than the rich building luxury yachts. Make redundancy pay compulsory. Some workers get redundancy pay if they are laid off, many get nothing. There needs to be a compulsory minimum redundancy pay that is paid by the Government if the employer goes into receivership. Bring forward infrastructure projects, but the type of projects that will benefit all new Zealanders and create the most jobs. The Government has said it will bring forward infrastructure projects such as broadband and roading. It also need to look at those projects that will have a greater multiplier effect for job creation eg school and house building (using NZ timber and carpets), more energy efficient transportation ( rail and shipping), Develop new clean / green energy technologies and manufacture and install these technologies in New Zealand. The Government should re-introduce and expand the home insulation programme New Zealand should develop its own development and manufacturing capacity for green energy sources such as wind and wave turbines, solar energy, bio-fuel from waste and geothermal. It should also develop and manufacture technology for reducing carbon emissions in coal and fossil fuel energy generation. Unleash to job creation potential of the Maori economy and Community Sector. There is so much socially and environmentally useful activity that needs to be done in NZ / Aotearoa. This can be organised within the Iwi, hapu and community organisations into good and productive jobs. There should be no talk of the demeaning “work for the dole” concept, rather genuine jobs should be created in the non-government sector to provide permanent and temporary job opportunities.

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