Welcome to the April 2024 NZCTU Economic Bulletin.
In our monthly feature we look at the link between economic insecurity and support for populist political parties. Populism is typically defined as a political approach that pits an "authentic people" against "the establishment" or "elite". Recent economic research has shown that economic insecurity (such as the experience of unemployment or exposure to deindustrialization) increases support for populist politicians. In turn, populist governments are found to produce worse economic outcomes than non-populist alternatives.
Over the last decade, populist governments and leaders have come to power in many countries - from Donald Trump in the United States to Jair Bolsonaro in Brazil to Viktor Orbán in Hungary. Although New Zealand has so far avoided a populist rupture, we may be increasingly vulnerable to one. The widespread sense of economic insecurity that many New Zealanders experience provides fertile ground for populist politics to flourish. Economic insecurity has been a reality for many New Zealanders for decades, and the recent cost-of-living crisis has only exacerbated this. In this context, there is a pressing need to restore economic security to New Zealanders.
In our regular updates, we look at the latest employment and wage data. Taken together with the poor GDP figures reported on last month, this data shows that the economy is in bad shape. Unemployment is rising, wage growth is slowing, and inflation, while trending down, remains elevated. Real wages have been stagnant or falling for three years now, meaning that workers are, on average, poorer now than they were in 2021.
We examine the latest batch of consumer inflation and household living costs data. This shows that international factors are mostly driving the decline in inflation, rather than the Reserve Bank's interest rate hikes. Working against this are large increases in insurance costs and local body rates, which are keeping domestic inflation elevated. We also summarise the latest migration, trade, consumer confidence, and housing data, and look at the government accounts. For the latest GDP data, please see the March Bulletin.
The government will be releasing its first Budget on 30 May. The CTU will produce a summary analysis of what the Budget means for working New Zealanders on the day and will follow that up with more detailed analysis in the week following.
Finally, on 8 May, the CTU launched Reimagining Aotearoa Together, a long-term project that will set out an alternative vision for Aotearoa that looks beyond the narrow confines of the policy straight jacket adopted by successive governments. The CTU will be reaching out to workers, community allies, NGOs and interested New Zealanders to develop transformative policies that get to the heart of the change that is needed.
