Auckland’s Shortland Street is perhaps New Zealand’s equivalent of Wall Street, the financial heart of our market economy. Half way up the street is the towering Vero building which houses some of the big names in merchant banking, accountancy, stock trading and law.
The expansive foyer features a two-storied wall of quirky quotes from a multitude of New Zealanders such as Ernest Rutherford, Janet Frame and James K Baxter. The corporate sector are always adept at tying their credentials to local icons.
On the 38th floor, in an office which commands sweeping views of the Hauraki Gulf and upper Waitemata Harbour is the New Zealand outpost of Goldman Sachs JB Were. This is one of the biggest names in international banking and one of just two of the big five Wall Street banks yet to require a US taxpayer bailout.
It has been at the beating heart of the capitalist economy and it has fought hard against government regulation or any community control on its behaviour. With the other big banks it pumped hard to inflate the bubbles of overvalued financial assets. Rather than subject themselves to government controls the banks worked hard for even greater control of the government. So much so that a former GSJBW chief executive, Henry Paulson, was appointed George Bush’s Secretary of the Treasury. Deregulation of the financial sector undertaken by Bill Clinton was continued under Paulson’s leadership and he was blind to the looming crisis. The dogs had been let loose in the chicken run.
GSJBW is not the sort of place you’d expect to find a union official but I was there late last year in support of a union member because the company had decided to outsource her job. In other words an external company would now employ someone to fill the role she was doing. The bank said it needed to save money as a response to the global financial meltdown.
Outsourcing is opposed by employees and unions because the much-vaunted savings, efficiencies and flexibility for the employer inevitably come from the pay and working conditions of employees. And so it was here. In her role at GSJBW she was earning $21.50 an hour and the bank said they were keen for her to continue under the new employer. However when the outsource company offered her job back to her it was at just $17 an hour. In effect half her 21% pay cut would go back to the bank and the other half would go to pay the outsourcing company as the middleman in the employment relationship. A win for the bank, a win for the outsource company but a 21% loss of income for the worker.
Here she was in the few weeks before Xmas faced with a sudden loss in income. In all likelihood she would have been the lowest paid person at the bank and as a widow almost certainly the least able to absorb the impact of such a dramatic drop in earnings. To cap it off her individual contract provided for no redundancy pay should she not take up the outsourcing offer.
We can all be absolutely sure none of the company’s senior managers will face a 21% cut in pay and if they ever face redundancy a golden parachute will be polished up for them.
What we see here is a microcosm of the world financial crisis. The international bankers and others who brought on this disaster through their greed and stupidity are shielded from its worst effects while those who suffer the greatest are the people on the lowest incomes with the least resources to manage their way through.
GSJBW will report proudly to head office on the savings they’ve achieved. There will be no human faces, just figures on a spreadsheet. The real life drama will be invisible to the Wall Street bankers as they check the numbers.
Back on the street the government has set aside $54 million to assist people to find a new job after being made redundant. It will provide a small amount of help for a short time for the large numbers of people chasing fewer and fewer jobs but compared to the $150 billion in deposit guarantees the government has provided for our foreign-owned banks it’s a pathetically small amount.
Last month International Monetary Fund chief Dominique Strauss-Kahn talked of the financial meltdown causing suffering to the “whole of society”. Perhaps that’s right but the real suffering will be so one-sided as to make his remark particularly pointless.