High dollar kills jobs

Recently I’ve talked a bit about economic issues. This post is just a bit of an update.

As expected, the Reserve Bank lifted the official interest rate. Within hours of the announcement, appliance maker Fisher & Paykel told 350 workers in Auckland that their jobs were being sent to Thailand. In a cruel blow, the workers—who’d been working overtime to meet production quotas—thought they were being summoned to a meeting to receive bonuses.

Fisher & Paykel, an iconic NZ manufacturer, once pretty much had a monopoly on appliances in New Zealand due to protectionist tariffs that are gone now. That, combined with a dollar rising due to high interest rates has, they say, made it impossible for them to compete if they manufacture their washing machines in New Zealand. About 80 percent of their sales are overseas. The company also says the other 1700-odd jobs in New Zealand aren’t guaranteed, and neither, by extension, are jobs in Australia or the US.

Meanwhile, new figures suggest that due to rising interest rates it will now take a record 15 percent of disposable income in New Zealand to service debt. This, too, is caused by the rising official interest rate.

The government must find another way to restrain inflation than allowing the Reserve Bank to raise interest rates (which may go up again in June). The current policy makes matters worse in the short term, and by shipping jobs overseas will make things worse in the long-run, too.

The politicians of all parties created this mess. It’s up to all parties to fix it—with no sniping, no partisan point-scoring, no games, just action. The economy is still good, but the politicians can easily ruin it for years to come if they only play their political games. Grow up, boys and girls, and do the right thing for New Zealand.