A Laugh a Minute

 You have to give credit to the Chairman of Swimming New Zealand, Bruce Cotterill. In the old days we would have called him a “bloody dag”. The tricks he gets up to are beyond belief. He clearly has a double dose of a hide like a rhinoceros and the cheek of Ned Kelly. What has he done this time you may be asking? Well he has just written an opinion piece for the Stuff news website. The title of the article is, “Wages must represent value rather than fairness”: https://www.stuff.co.nz/business/106548113/wages-must-represent-value-rather-than-fairness  

In 824 words Cotterill argues that, “one of the most basic concepts of economics is that we all get paid because of the value we bring to our paymaster. This concept is the fundamental basis of most commercial sector employment relationships or contractual obligations.” Cotterill goes on to give examples of how the level of wages and the income from a business are all related to the value the employee or the value of the products produced by the business. Cotterill calls that principle, “If you don’t kill, you don’t eat,”

Then Cotterill launches into a pretty typical right wing moan. Here is what he says. “However, today’s debate surrounding minimum wages or wages in general, and the resultant cries for higher pay and more strike action, tends to overlook the importance of the value being generated. All too often such cries revolve around a need for everyone to be treated the same irrespective of performance.”

Cotterill concludes in the place occupied by every right wing capitalist since the days when children were employed in coal mines and black workers picked cotton for free. He says, “When it comes to wages, business and government can only fund what the market is prepared to pay for. And that market is looking hard for value more and more.”

There are two things I find interesting about Cotterill’s right wing rant. First, in New Zealand, it’s not true. In 2015, economists Meehan and Parham, wrote a paper on this subject. It was called, “Who benefits from productivity growth? – The labour income share in New Zealand, New Zealand Productivity Commission Working Paper 2015/1.” Their paper reached the following conclusion.

“In the New Zealand “measured sector” – which covers all industries in the primary and goods-producing sectors plus some service industries – the labour income share has fallen by 8.5 percentage points from 1978 to 2010. This indicates a tendency for capital income to grow more quickly than labour income.” Cotterill, it seems is feeding us a line of right wing bull; unsupported by facts, devoid of thought or truth. Wages for New Zealand workers have fallen 8.5% behind their productivity. The fact that Jacinda Ardern is addressing this National Party inspired rip-off is nothing but good.

Mind you, in his role as Chairman of Swimming New Zealand we have come to expect no better. As the Chairman of Swimming New Zealand we have been able to see his management prowess at work. We’ve heard the words, but does the performance match the spin? Not bloody likely is the answer to that question.

Consider the productivity of Swimming New Zealand for the eight years Cotterill has been on their Board. Here are eight indicators of the organization’s productivity.

Item 2011 2017 Change
Competitive Swimmers 6161 5,660 Down By 8.1%
Coaches 543 246 Down By 54.7%
Total Membership 25,467 19,118 Down By 24.9%
Clubs 180 165 Down By 8.3%
Government Funding 1,962,838 1,413,148 Down By 28.0%
Membership Fees 288,712 286,777 Down By 0.7%
Total Funding 4,158,493 3,546,861 Down By 14.7%
Olympic Medals 0 0 No Change
Total % Change     Down By 17.4%

It is impossible to be less productive than that. Cotterill has been quoted in the press as saying he does not understand why High Performance Sport New Zealand has reduced the government’s support of the sport. Well, to find out he should read his own Stuff article. It’s because you are not producing anything, stupid. It is unbelievable that someone can burst into print with all that management speak and can’t see its application under his nose. I’m not sure whether the problem is IQ or his right wing arrogance in his own invincibility has clouded his view of day to day reality.

So we know, at Swimming New Zealand, the productivity of the organization fell by an amazing 17.4%. I wonder what Swimming New Zealand’s wages did in the same period. According to Cotterill’s right wing rant they should have gone down by the same percentage to reflect the organizations performance. The CEO and all members of staff should be paid 17.4% less in 2018 than they were in 2011. But are they? Does Cotterill run his companies the way he talks? No of course not. His Stuff outburst is rubbish.

Information on wages is difficult to determine accurately from the published accounts. We can however make some assumptions. In the table below the annual cost in 2011 and 2018 for two broad categories of administration and education are shown. The bulk of both these cost categories is wages and so we can safely assume this is what happened to the wages costs in the period. The last line in the table shows the cost of the two senior staff members, the CEO and the CFO for the years 2016 and 2017. Unfortunately earlier Reports did not include this information.

Category 2011 2017 % Change
Administration 420,674 548,751 Up By 30.4%
Education 626,487 589,133 Down By 5.9%
Senior Staff 275,000 311,000 Up by 13.1%
Total % Change     Up by 12.5%

So there we have Cotterill’s management at work. While he was glibly writing, “If you don’t kill, you don’t eat,” a company that he actually manages had a productivity decline of 17.4% but paid a wages increase of 12.5%. I doubt there has ever been a better example of do what I say, not what I do. I’ll start believing the guy when he cuts Johns’ pay by 17.4%. That’s what he says should happen. So go on Cotterill, do it. After all it is an accurate measure of what Johns’ productivity is worth.

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