An economist has called on the Government to work on getting more of economy's spoils to the workers who produce them, rather than to those who own capital.
In 1981 New Zealand workers took home almost two-thirds of the country's income, according to a report by the Productivity Commission. That has since fallen to less than half, with more of the country's rising earnings going to owners of capital.
"It gives an idea about relative balance - the economic ledger," economist Cameron Bagrie told The AM Show on Tuesday morning. "The winners between capital and businesses, versus labour."
New Zealand isn't alone, with many of the world's economies shifting to favour owners of shares and capital, rather than those who earn a living through their work.
"Labour income shares have declined in most countries over the last 15 years, particularly in the manufacturing sector," an OECD report from 2019 read.
The Productivity Commission says Kiwi workers' share of the national income fell sharply three times between 1981 and 2000 - firstly in the early- to mid-1980s, before the reforms of the Fourth Labour Government; again in the early- to mid-1990s, when unemployment skyrocketed; and again between 1999 and 2002.
There was some clawback in the economic boom of the 2000s, but most of the losses have never been clawed back.
"If we go back and have a look at the past 20 years, the relative shares between labour and capital have been pretty stable," said Bagrie. "Labour share has been oscillating between 40 and 45 percent of GDP, but that's well down from where it was in the 1970s and early 1980s."
The causes, Bagrie says, are globalisation and technology - the former allowing employers to outsource work to where labour is cheaper, and the latter replacing some formerly well-paying jobs entirely.
"What we're seeing across most countries around the globe across the OECD, is that labour's share of the economic pie, the spoils of GDP, has been trending down for about 40 to 50 years," said Bagrie. "New Zealand's not alone."
New Zealand ranks near the bottom in the OECD for labour compensation as a share of GDP. We're ahead of Turkey, Mexico and Chile, for example, but well behind Australia, Switzerland, Japan, the UK, Germany and Canada, among others. Even the notoriously capitalist United States has more of its income go to workers rather than owners of capital - nearly two-thirds.
This year has seen Kiwis' favourite investment, property, ignore the pandemic and economic shock, values rising nearly 20 percent - good for those who own them, bad for those who don't.
Meanwhile a third of Kiwi households are bringing in less money than they were at the start of the year, according to a large survey by the Commission for Financial Capability, out Tuesday morning.