Dividends should drop to zero before anyone loses a job

The first small waves of the economic crisis have reached us. Redundancies are rising, unemployment is growing and mortgagee sales have reached frightening levels compared to this time last year.

Last week a food-bank in the Waikato had its largest ever weekly demand for food parcels and similar stories abound around the country.

We all know the pain is going to get worse and who will suffer the most. Workers on low incomes, who are disproportionately Maori and Pacific workers, will be hit hardest. The only argument is how deep and long the recession will be and how much taxpayer money will be needed to save capitalism from itself.

On the surface the public discussion has focused on how to keep people in work and prevent unemployment rising. Bringing forward infrastructure projects and other tinkering has been announced and the Prime Minister has called an employment summit for later this month. He tells us the focus will be to retain as many people in jobs as possible.

The undeniable undercurrent however is that the purpose of these measures is more to protect the incomes of company shareholders than protect the livelihoods of working New Zealanders. In a particularly cynical decision stock exchange chief executive Mark Weldon has been chosen by the PM to head the employment seminar. Weldon’s day-job is to increase shareholder value and boost sharemarket prices. How can he make the transition from representing a system which sees workers as a resource to be used by shareholders to one where workers are part of a civil society of inter-dependent people?

In Weldon’s world workers add value to businesses in good times only to become the responsibility of taxpayers via the dole queue when there is a business downturn. Choosing Weldon to lead the summit is like asking weasels to guard kiwi eggs.

Instead of workers being expected to shoulder the heaviest burden what about expecting management and shareholders to do the same? Why has there been only the most muted calls for these wealthier groups to take cuts in the interest of preserving the dignity of everyone in employment?

Will the summit call on Telecom to put on hold its plans to send 450 call-centre jobs overseas through outsourcing to the Philippines? Will it call on Air New Zealand to retain engineering jobs in New Zealand and abandon plans for further redundancies during the downturn?

It’s not as though any of these companies can’t afford to keep New Zealanders on. In Telecom’s case it has bled from New Zealanders over $14 billion in profit since it was privatised in 1990. When times get tougher surely it’s time to give something back?

Rio-Tinto is another good example. This company has also bled New Zealanders for a long time, using 15% of our electricity supply and paying just a fraction of the price paid by New Zealand families.

It has called for workers at its aluminium smelter in Bluff to take unpaid leave or work shortened weeks to help the company weather the financial storm. By all accounts they have plenty of people volunteering to get a better work-life balance but the important point is why should any company pressure workers onto reduced hours or reduced pay while their shareholders continue to receive dividends?

I can hear the chorus of wailing from big investors. Shareholders have already taken big hits they say and the capital value of their shares in the likes of Telecom and other companies has dropped dramatically over the past year. Many have also experienced significant losses as up to half our finance companies have fallen over or gotten into financial strife. This is all true enough but aside from the finance company collapses the rest are paper losses which will disappear in the longer term once governments rescue capitalism once more.

In the meantime why should any worker lose their job while a single cent remains in profit for shareholders? If this system works for everyone then profits should be used to maintain people in employment before any excess value flows to non-working shareholders.

I can hear another chorus claiming requirements like this would “distort the markets”. This is no time to keep following failed economist Milton Friedman whose edict that the social responsibility of business is to increase profits has no place in a civil society. Buggar the markets. Every breadwinner thrown out of work has their family life distorted with our whole of society deformed even further in the process.

Dividends should drop to zero before anyone loses a job.