New job cuts hit New Zealand universities and polytechnics

John Braddock

The University of Otago, one of New Zealand’s principal tertiary institutions, announced on April 20 that several hundred academic and professional staff will be made redundant amid sweeping spending cuts as it grapples with a slump in enrolments.

University of Otago, Dunedin, New Zealand, Clocktower Building. [Photo by Ulrich Lange / CC BY-SA 3.0]

Acting vice-chancellor Professor Helen Nicholson told students in an email that the university had to make “hard decisions” to ensure it was sustainable into the future. In a media release, she said the university started the year in a “challenging financial position” that required substantial savings.

Nicholson told staff this had been “signaled for a long time” but, as with other universities, “we are facing an accelerating situation that needs an immediate response.” With a $NZ60 million budget shortfall, the university was investigating “a range” of ways to save money, including asset sales and fewer courses.

The cost-cutting agenda will, the vice-chancellor warned, “result in changes across the entire university.” With staff accounting for 60 percent of the university’s expenses, swingeing job cuts top the list. Voluntary redundancy applications opened immediately, with compulsory sackings to follow later in the year.

Otago’s enrolments are down by 0.9 percent on last year, but the school had budgeted for 4.9 percent more students than were enrolled. The university had 19,174 equivalent full-time students in 2022 and expects to end 2023 with 18,993. While full fee-paying international students are up by about 495, domestic students are down by nearly 700 compared to last year.

Otago staff were shocked by the news, one telling Stuff that many who had been through previous staff cuts were “distraught.” A PhD student said the plans made their “heart sink.” Continued cuts over recent years had already taken “very real tolls.” “Academic staff are noticeably struggling, mentally and emotionally. It makes me sick,” the student declared.

A drop in enrolments of 3 percent has hit the country’s eight universities this year. Enrolments are up at three—Waikato, Canterbury and Lincoln—but down at five, meaning a significant loss of income. The pro-business agenda of successive governments, including Labour, has seen a long-term decline in per-pupil funding and a turn to commercial operations.

The current drop in students is attributed to the cumulative impact of COVID-19 disruptions, the rising cost of study and financial pressures forcing many school leavers to go directly into work. Reflecting the intensifying social crisis facing young people, fewer students gained university entrance last year.

The situation is part of the attack on education by governments around the globe, including in Australia, Portugal, France and the UK, under the impact of the deepening capitalist crisis. In the United States, strikes on university campuses encompass some 11,000 graduate student instructors, lecturers and custodians, over demands involving wage increases, better health care, improved working conditions and job security.

Otago is not the only institution looking to impose cuts. Massey University has recently released a restructure proposal for its three campuses which will affect roles in general and academic administration and finance. Some 178 jobs will be cut and 144 new roles created, leaving 31 vacant.

Wellington’s Victoria University (VUW) is also not ruling out redundancies. In a major cost-cutting exercise in 2021, VUW warned staff that significant job cuts were required to reduce a multi-million dollar deficit. Large-scale compulsory redundancies were only avoided when a “voluntary” redundancy scheme, which around 60 staff took up, was used to reduce debt.

VUW has now seen enrolments drop 12.1 percent​ on last year, leaving a $15 million hole in revenue. Vice-chancellor Nic Smith said management was looking into a range of options to save costs and no decision had yet been made about jobs. However, the future of the Institute for Governance and Policy Studies is uncertain.

The largest job shedding program is looming in the polytechnic sector. The government last year restructured the country’s trades training system, merging 16 polytechnics and nine Industry Training Organisations into a single entity.

The new national body, Te Pūkenga, with 260,000 students and over 8,000 staff, was initially targeted with saving $52 million per annum from 2023. In March, CEO Peter Winder declared that “brutal reality” required between 200 and 1,000 job losses and asset sales to rein in a $63 million deficit.

Radio NZ reported that a survey of Te Pūkenga staff found one in three did not believe they have a future with the new polytech, and the vast majority would not recommend working there. The survey was responded to by over 4,300 staff with many reporting feeling anxiety and fatigue over change, frustration over under-staffing and lack of faith in management.

The Tertiary Education Union (TEU) will do nothing to fight the new assault. Otago TEU branch organiser Philip Edwards told the Otago Daily Times the union was currently in a “holding pattern.” “Yes, we will want to save every job that we possibly can and yes, we will engage in some kind of action—but we don’t know what that action is yet because we are still in the early stages of understanding what the process forward is,” he declared.

Edwards added that during pay bargaining in the COVID lockdown, members had voted to take a zero pay increase to “protect” the university. “Now they’re being repaid with redundancy as a result of that,” he said.

The TEU national office is due to meet with branch presidents “to discuss a coordinated national approach to fight the cuts.” However, it immediately repeated previous calls for “all the Vice Chancellors to work with us and the government in a tripartite forum to argue for the university sector”—in other words begging for a seat at the table to collaborate with the impending assault.

Throughout years of funding cuts and attacks on jobs and wages, the TEU has collaborated in imposing the dictates of university administrations, governments and big business. Like all the unions, its perspective has been to isolate staff between institutions, suppress industrial action and call for “consultation” over how cuts are to be carried through.

With the onset of the COVID pandemic in early 2020, border closures saw international student enrolments cut by more than half. Over 1,000 university jobs were shed during the next two years without any coordinated fight to unite staff in a nationwide campaign to defend jobs.

Workers have attempted to fight back. Last October, 7,000 university staff held a nationwide one-day strike over frozen pay and attacks on conditions. The movement was subsequently broken up by the TEU, which has imposed below-inflation pay deals at VUW, Otago, Canterbury and Massey Universities.

Last year, the TEU took a legal case in the Employment Relations Authority over a decision by Auckland University of Technology (AUT) to sack 270 staff. The TEU trumpeted a decisive “victory” after the authority found that AUT had not followed procedures laid out in the employment contract and ordered that the termination notices be withdrawn.

The legal challenge, however, was a bogus operation, designed to suppress any industrial action while the TEU sought discussions over how best to organise the sackings. Ninety jobs were finally lost to voluntary redundancies, while the remainder were deferred for six months. AUT management declared it would then “engage constructively with the TEU to effect the changes we need.”

More than 330,000 Australian workers face “significant rental stress”

John Harris & Martin Scott

The “State of the Nation’s Housing 2022‒23” report, released last month by the National Housing Finance and Investment Corporation (NHFIC), a federal government body, details a sharp decline in housing affordability and availability across the country.

State-owned housing in inner-Sydney suburb. [Photo: WSWS]

Soaring housing expenses come on top of the broader rise in the cost-of-living, with the official inflation rate at 7 percent and prices of basic items, such as food and utilities, rising even more rapidly. Wages, on the other hand, increased just 3.3 percent in 2022.

The NHFIC report estimates that around 377,600 households are in “housing need.” That includes 46,500 homeless and 331,100 in “significant rental stress,” defined in this case as households in the lowest income quintile who are spending more than 30 percent of their income on rent.

Rental stress is most common among the lowest income earners, with 80 percent of households earning less than $20,800 likely to be paying more than 30 percent of their income in rent.

But most households in the second and third income quintiles are also at high risk of rental stress—around 70 percent of households earning $20,800–$41,599 and half of those earning $41,600–$78,000.

Advertised rents for non-detached homes soared in cities across the country in 2022. The most rapid rises were in Brisbane (18 percent), Sydney (17 percent), Adelaide (16 percent), Perth and Melbourne (both 14 percent), while listed prices in other state and territory capitals increased by around 10 percent.

While prices for ongoing tenants have not increased as rapidly, the Australian Bureau of Statistics (ABS) found that rents rose 4.9 percent across the country in 2022, the sharpest increase since 2010.

In part, these surging rents are the product of demand for housing outstripping supply. Vacancy rates in most capital cities fell last year and are now at record lows of around 1 percent.

For low-income earners, finding an affordable place to rent is virtually impossible. Anglicare’s 2023 Rental Affordability Snapshot found that, of the 45,895 rental properties advertised on March 17, just 345 were affordable for a single person earning minimum wage, less than half the 2022 figure. For a minimum-wage earning single parent with two children, only 336 suitable properties were affordable.

The survey found no homes that a single person on youth allowance could afford, just four within the budget of a single person on JobSeeker, and only 99 that a couple (both receiving JobSeeker) with two young children could afford. Only 508 rental properties were affordable for a couple on the age pension and a mere 66 homes—0.1 percent of those advertised—were in the price range for a single adult receiving the disability support pension.

The situation is little better for home buyers. According to the NHFIC, virtually no properties were affordable (mortgage repayments 30 percent of income or less) for potential first home buyers with income in the lowest 40 percent.

Ten interest rate hikes in 11 months by the Reserve Bank of Australia have increased the cash rate from 0.1 percent to 3.6 percent and in response, banks have pushed retail home loan rates above 6 percent. This means borrowers face monthly repayments of more than $4,100, based on the median capital city dwelling price of $765,000 and a 10 percent deposit.

The vast majority of Australian home buyers have variable-rate mortgages, so interest rate rises have an immediate impact. But with interest rates at record lows in recent years, many borrowers took out loans with short fixed-rate periods, meaning this year some 800,000 households are facing a sudden lurch from around 3 percent interest to more than 6 percent.

While home prices are substantially higher than pre-pandemic levels, property values fell by 8 percent across the country in the year to April, according to CoreLogic. The combination of this downturn with soaring interest rates means tens of thousands of recent buyers are at risk of being unable to afford repayments, while still owing the bank more than their home is worth.

On Sunday, the federal Labor government announced an expansion of eligibility for its Home Guarantee Scheme, under which the government serves as guarantor for as much as 15–18 percent of a home loan. This means buyers can secure a loan with a 2–5 percent deposit without taking out lenders mortgage insurance.

The scheme does little to make homes more affordable for workers and in fact puts more upward pressure on housing prices, by allowing banks to lend more without risk.

This is in line with the Labor government’s other housing policies, which will do nothing to address the crisis.

In its “housing accord,” released last October, Labor vowed to work with state governments and property developers to build 1 million new homes between July 2024 and June 2029. In fact, this would barely be an increase on the historical rate. In the five years ending March 2022, 985,000 homes were constructed, according to the Australian Financial Review.

As with any so-called “market solution,” this scheme will proceed only to the extent that it boosts the profits of the wealthy elite, in this case the big property developers and the major banks.

The NHFIC report notes that the details of this plan remain unclear and cautiously predicts that it “may help to increase supply.” The NHFIC predicts that 106,300 fewer new homes will be built over the next five years than are needed.

The critical shortfall is not in the overall housing market, but in public housing and affordable homes. Labor has floated plans for a $10 billion “future fund,” which would provide funding for just 20,000 public housing dwellings over the next five years, with another 10,000 “affordable” homes for “frontline workers.”

Even if this plan goes ahead, it is a fraction of what is required. A 2021 Australian government-funded review found that “around $290 billion will be required over the next two decades to meet the shortfall in social and affordable housing dwellings.”

A November 2022 paper prepared for the Community Housing Industry Association found that 640,000 households were “not in appropriate housing” and estimated that this will increase to more than 940,000 by 2041.

In order to meet this need, the report says, 47,000 new social and affordable homes are needed each year for the next two decades. But over the past 15 years, just 2,000 such dwellings have been constructed each year, according to the NHFIC.

Australia’s housing crisis is the product of decades of harsh cuts to public housing expenditure by successive Labor and Liberal-National governments.

The current federal Labor government, having narrowly won office last year promising a “better future,” is in fact carrying out an assault on social spending and wages, in line with the profit demands of big business and the banks. This harsh austerity agenda is also motivated by the need to vastly increase military expenditure in preparation for a US-led war against China.

Government backing crucial for JPMorgan takeover of First Republic Bank

Nick Beams

In a deal struck in the early hours of yesterday morning, pushed through before Wall Street opened for the day, the failed First Republic Bank has been bought by JPMorgan Chase after it had been taken over by the Federal Deposit Insurance Corporation (FDIC).

Regulators seized troubled First Republic Bank early Monday and sold all of its deposits and most of its assets to JPMorgan Chase Bank. [AP Photo/Richard Drew]

Regulations governing competition in the banking sector were pushed aside to get the deal done. Under normal circumstances, JPMorgan, which is already America’s largest bank, would not have been allowed to buy First Republic under regulations that stipulate that no bank can hold more than 10 percent of insured deposits in the US.

The go-ahead to bypass the regulations was taken by the Office of the Comptroller of the Currency that operates in the US Treasury Department.

In the words of one unnamed person briefed on the situation, cited by the Financial Times (FT), JPMorgan “received a waiver because it was by far the best deal.”

The takeover is being presented as a “private sector” solution to try to avoid giving the impression that this is yet another government bailout. But large amounts of public money are being outlaid.

JPMorgan chief executive Jamie Dimon only agreed to go ahead with the takeover—after he said the government had asked him to “step up”—when he received an agreement from the FDIC that it would take a hit.

Under the deal, JPMorgan will buy most of the company assets, including $173 billion in loans and $30 billion in securities as well as taking over $93 billion in deposits.

The FDIC will take a loss of $13 billion, adding to the losses of more than $20 billion it has already taken because of the failures of SVB and Signature. In addition, JPMorgan will receive a $50 billion line in financing from FDIC and will share any losses with it.

Government assistance has been crucial. According to a JP Morgan statement, it expected to make an immediate gain on the deal but, without government backing, it would have had to recognise losses running into billions of dollars as soon as it was completed.

The failure of First Republic, the 14th largest bank in the country, is the second largest in monetary terms in US financial history, a position previously occupied by the Silicon Valley Bank (SVB). It collapsed in March and was taken over after a bank run following the withdrawal of $40 billion in a single day with a further $100 billion lined up to be withdrawn.

Its demise, followed by the failure of the Signature Bank, set off the crisis in First Republic which had rapidly grown in recent years by making ultra-low interest rate mortgage loans to very wealthy individuals, in return for receiving their business accounts. But this model became unviable when interest rates rose.

In the first quarter, First Republic reported it was earning an average of 3.73 percent on its loans. But it was forced to borrow money from the Federal Reserve at the rate of 4.5 percent to maintain liquidity which meant it was receiving less money in terms of interest payments than it was paying out.

After it disclosed on Monday of last week that $100 billion had been withdrawn in the first quarter of the year, its share price plunged, reaching a low of $3.51 after trading at $147 earlier in the year and $115 at the beginning of March.

The FDIC then moved in to organise the takeover in which it sought to avoid declaring another “systemic exception,” as it had with SVB and Signature, under which it would have to guarantee all uninsured deposits over the $250,000 limit. It managed to do this under the deal with JPMorgan in which it will take over all the deposits with First Republic.

Throughout the crisis the theme of official pronouncements, from Federal Reserve chair Jerome Powell and Treasury Secretary Janet Yellen down, has been that the US banking system is “sound” and the rescue operations reveal it is “resilient.”

But, as the saying goes, facts are stubborn things, and they are speaking loudly. The fact is that three of the four largest-ever US bank failures in history have taken place over the past two months. The three latest failures are only eclipsed by the 2008 collapse of Washington Mutual.

The entire experience demonstrates that no official statements can be accepted as good coin. In mid-March, Yellen and Dimon launched a rescue package for First Republic under which 11 major banks, organised by JPMorgan, deposited $30 billion with it.

A group of regulators, led by Yellen, said, “This show of support by a group of large banks demonstrates the resilience of the banking system.”

It failed almost immediately as it became clear that First Republic was heading for bankruptcy. However, some insiders had already seen the writing on the wall.

As the Wall Street Journal reported: “Top executives of First Republic sold millions of dollars of company stock in the two months before the bank’s shares plummeted.”

In addition, the bank paid millions of dollars to family members of its founder, James Herbert, for, among things, “consulting services related to interest rates and risk.” The bank failed not least because its business model assumed the ultra-low interest rate regime of the Fed was going to continue indefinitely and collapsed when rates rose sharply.

This stage of the financial crisis has taken the form of problems associated with uninsured depositors—those holding more than $250,000 not covered by a legislated FDIC guarantee. There are moves to change this situation.

In a report to Congress yesterday, the FDIC recommended that it be given the power to expand the present insurance system to cover businesses. FDIC chairman Martin Gruenberg said in a statement accompanying the report that “growth in uninsured deposits” and large concentrations of them “increase the potential for bank runs and can threaten financial stability.”

The FDIC said it favoured a system in which the deposits to be protected would be those used by businesses to pay employees.

But such a change would be the thin end of the wedge for broader measures, as the report implicitly acknowledged when it noted that such a system would bring greater complexity and investors would try to “game” it to gain greater protection.

Uninsured deposits are by no means the only danger. Another is the fall in the value of property and commercial real estate loans that have been hit by the interest rate rises and the fall in demand for office space because of COVID.

The same small and middle-sized banks at the centre of the present storm could be heavily impacted here as well because they account for more than two-thirds of all US commercial real estate lending.

In an interview with the FT published on Monday, Charlie Munger, the longtime associate of finance mogul Warren Buffet, said American banks were “full of” bad loans in commercial property.

In an article last week, the FT said senior executives at US banks were “becoming increasingly worried about falling commercial property valuations and the risks they pose to lenders’ balance sheets.”

In a conference call, Morgan Stanley chief executive James Gorman said, “In my view we are not in a banking crisis, but we have had, and may still have, a crisis among some banks.”

Such a statement is meant to sound reassuring. However, it ignores the dynamic of a crisis which does not start with the failure all at once of all banks.

It develops, as the events of the past two months have shown, with a crisis at several or even a single bank which then threatens to spread via contagion to pose a “systemic risk” requiring a government-organised bailout.

That is, virtually any bank can become “too big to fail” because its collapse threatens to bring others down.

The logic of this process was set out in a statement issued by Jonathan McKernan, a member of the FDIC board reported on Bloomberg.

It was necessary to acknowledge, he said, that bank failures were inevitable in a “dynamic and innovative” financial system—dynamic and innovative being code words for the role of finance capital in devising new and ever more arcane and risky methods for speculation and profit making.

“We should plan for those bank failures,” he continued, “by focusing on strong capital requirements and an effective resolution framework as our best hope for eventually ending our country’s bailout culture that privatises gains while socialising losses.”

That “culture” has been the basis of the financial system for the past century and more—at least since the Federal Reserve was established in 1913.

And the reforms he advocates, never carried out in the past, will not be implemented in the present crisis because the mass of wealth at stake, which the government and the state are committed to protect, has reached truly gigantic proportions, above all because of the Fed’s injections of money into the financial system over the past decade and a half.

The CDC will end “community level” COVID tracking with the end of the public health emergency

Benjamin Mateus

The ending of the Public Health Emergency in the United States on May 11 means that the tracking of COVID-19 at the “community level” by the Centers for Disease Control and Prevention (CDC) will also come to an end, according to anonymous sources speaking with CNN. In short, COVID-19 will be included in a host of other respiratory viruses like RSV, parainfluenza and the flu that are tracked through participating hospitals in limited regions. 

The present flu surveillance network coverage, per the CDC, “includes more than 70 counties in 13 states that participate in the Emerging Infections Program and the Influenza Hospitalization Surveillance Program—California, Colorado, Connecticut, Georgia, Maryland, Michigan, Minnesota, New Mexico, New York, Ohio, Oregon, Tennessee, and Utah.” As the COVID-19 tracking comes to an end, it is expected that it will have similar monitoring, meaning the state of the pandemic will become utterly opaque.

CDC′s Roybal campus in Atlanta, Georgia. [Photo: James Gathany]

The “community level” tracking had been adopted last February 2022, on the wake of the massive BA.1 Omicron wave. It shifted the public health data collection from daily rates of infection to focus on number of hospitalizations and resources available to the local health systems. 

Overnight, maps glowing in red or magenta colors were transformed into pale green and yellow regardless of the rates of infections. Under these new threat guidelines, masks were no longer recommended, ushering in the process that has culminated to the ending of the public health emergency this month. 

At the time, the CDC was severely criticized by many public health specialists, who warned that it was undermining real-time data on the state of the pandemic and minimizing the risk it posed to communities everywhere across the country.  

The ending of the fraudulent “community level” tracking, so that COVID infections which are no longer being tracked in any meaningful manner, apparently means nothing to the public health agency. Only when a person contracts COVID-19 and develops severe disease and requires treatment as an in-patient admission to a hospital, only then is data collected at specific participating health systems and reported to the CDC, which in turn will update their anemic and circuitous webpage without any real guidance on what such data means for the public’s safety.

Throughout the pandemic, it has been repeated by almost every epidemiologist and public health expert that hospitalizations are a “lagging indicator” of community spread. Such information on the recent past offers no public health advantage for the population. It is tantamount to driving a hazardous road all the while looking in the rearview mirror for your bearings.

In final analysis, the delays in reporting these figures to the CDC using the antiquated surveillance systems in place for tracking the flu mean that the early warning systems that had been in place to track SARS-CoV-2 can be considered terminated. COVID-19 is now regarded by the CDC as a permanent fixture of community pathogens. 

The CDC has completely abandoned their public health responsibility to protect the population from COVID, which remains, even in a highly vaccinated and previously infected population twice as deadly as the flu.

The Washington Post reported on the CDC’s first in-person, multi-day conference since the beginning of the pandemic in 2020. It was held last week in a hotel in Atlanta that saw more than 2,000 attendees participate.

Presenter gave lectures and led discussions on the lessons learned on how to track and fight COVID during the week. But at the end of the conference, the CDC branch chief sent staff an email stated, “We’re letting you know that several people who attended the [Epidemic Intelligence Service] Conference have tested positive for COVID-19.” 

The CDC attempted to downplay this by explaining that though they were aware of many COVID cases, they cautioned that using the term “outbreak” was not appropriate. Interestingly, one of the infected included a person who attended the division’s recruiting event on Wednesday where they had the opportunity to mingle and speak to several job candidates and representatives in attendance.

Experience has shown that such conferences, when appropriate testing, masking, ventilation and FAR UVC technology are not employed, function as superspreader events. On the other hand, the recent conference of the super-wealthy and government representatives at Davos, Switzerland, where all conceivable mechanisms to safeguard from infection were employed, proved such events can be held safely if appropriate measures are in place.

From this perspective, lack of such safeguards at the CDC conference on COVID amounts to criminal negligence. For the CDC to caution reporters on not using the term “outbreak” is a politically motivated effort to cover up this negligence.

In particular, the comments to the Post of a public affairs specialist for the CDC, Kristen Nordlund, were revealing of the complete disregard for the dangers posed by the pandemic. She said, “These cases are reflective of general spread in the community. It’s not news that public health employees can get COVID-19.” The level of contempt demonstrated by her words while thousands across the globe continue to die from COVID each week and millions suffer from disabling Long COVID and chronic health conditions worsened by infections is astounding.

In a recent opinion piece published in the New York Times, Beth Blauer, Lauren Gardner, Sheri Lewis, and Lainie Rutkow, scientists and public health specialists who built the Johns Hopkins Resource Center, wrote, “The four of us spent the last three years immersed in collecting and reporting data on COVID-19 from every corner of the world, building one of the most trusted sources of information on cases and deaths available anywhere. But we stopped in March, not because the pandemic is over (it isn’t), but because much of the vital public health information we need is no longer available.”

They noted that in the week ending April 19, 1,160 people died from COVID-19 in the US. They then stated that this figure is “in all likelihood” an underestimate. Nearly every state has discontinued reporting new cases and deaths. At present, only seven states continue to publish data on cases and deaths more than a weekly basis.

The authors observed, “We don’t want to be caught off guard again. Governments at all levels should be continuing to build virus-tracking capacity that was hastily created as the COVID crisis grew. There is still much to do to fix the hodgepodge of antiquated, disconnected surveillance data systems that exist across governments. This is important not only for the next pandemic—and there will be one—but also to help the public health community understand and address other threats that kill people every day: infectious diseases, drug addiction, gun violence, obesity, and poverty.” One could add police shootings to that list.

Allowing SARS-CoV-2 unimpeded access to billions of people across the globe means the virus, like many other pathogens that have shown resilience—Candida auris, monkeypox, RSV, Ebola Sudan, Marburg, tuberculosis, cholera—the ability to evolve and find mechanisms to bypass the secondary defenses that constitute the armamentarium of anti-virals, antibiotics, and anti-fungals that are used to treat patients.

In a revealing article published in Fortune, former Trump White House COVID adviser Deborah Brix predicted that COVID will evolve to eventually evade Pfizer’s drug, Paxlovid, a critical defense for the unvaccinated and those at risk of severe disease and death. “If we lose Paxlovid,” she said, “We could easily double the number of deaths.”

Workers’ resistance grows in Germany amid layoffs, cuts in real wages and exploitation

Marianne Arens

There is a victory mood at the Gräfenhausen motorway service area where the 65 truck drivers who have been on strike for six weeks have succeeded in getting their wages paid. They are an example of the growing resistance in the working class.

Striking truck drivers at the Gräfenhausen-West freeway service area near Darmstadt, April 9, 2023. [Photo: WSWS]

On Wednesday, Polish freight forwarder Lukas Mazur signed an agreement in which he “undertakes to transfer all outstanding payments to the drivers' accounts.” It added: “No legal action will be taken against the drivers.” Previously, Mazur had used private security operatives and the police in several attempts to forcibly retrieve the trucks and the goods they contained, but these had all failed due to the determined solidarity of the drivers. The men, who are mainly from Georgia and Uzbekistan, had declared that they wanted to stay together “until the last man gets his money.”

Their strike has clearly shown the great willingness to fight that is spreading in the working class, as well as the disastrous working conditions that EU policies have wrought in the European transport sector. To overcome them and to really change conditions requires more than a spontaneous readiness to fight. It requires building our own working-class organs, united in the International Workers Alliance of Rank-and-File Committees (IWA-RFC). This was one of the issues raised Sunday at the ICFI's online rally to celebrate May Day 2023.

The central mission of the independent action committees is to break the control and repression of labour struggles by the union bureaucracy. As the founding declaration of the IWA-RFC states, it will lead a “global counteroffensive of the working class' against decades of social counterrevolution, imperialist wars, the coronavirus pandemic and growing threat of fascism and dictatorship. It will enable workers to exchange information, plan joint actions, network and unite workers across workplaces, sectoral and national boundaries, unleashing “the full force of the entire working class.”

The need to build independent action committees has been demonstrated in recent strikes at Deutsche Post, the railroads and in the public sector. There, the Verdi union has called off strikes at short notice, isolated ongoing labour struggles and separated them from their international colleagues, and finally sold out these struggles. This is all done in the interests of the “German economy,” they say, really meaning in the interests of the capitalists and the government’s pro-war policy. In the transport sector at the end of March, 150,000 workers had taken part in a “mega-strike“ before Verdi then accepted a conciliation agreement imposing cuts in real wages. At Deutsche Post DHL, 86 percent of union members had voted in favour of an indefinite strike, but Verdi prevented it at the last minute by reaching a fraudulent wage settlement that also included cuts in real wages.

However, the conflicts remain unresolved, and the anger about the intolerable working conditions in hospitals, nursing homes, kindergartens or at Deutsche Post continues to grow. For example, an offer from Mainz University Hospital was unanimously rejected by union members, and another warning strike announced for May 4 and 5. At national rail operator Deutsche Bahn, the conflict remains unresolved even after the second nationwide warning strike. In the public sector and at Deutsche Post, workers have begun to set up action committees to push their struggle forward.

In the meantime, there is a willingness to strike everywhere, even among workers in precarious employment who have not been very visible so far. One recent example was at delivery service Lieferando, where riders went on strike for the first time in April to push through an hourly wage of €15. Delivery drivers are subjected to miserable working conditions, low wages, and hire-and-fire policies on the streets of major cities. Previously, there have been labour disputes at Gorillas and Getir.

On April 14, the same Friday as the Lieferando riders took action, IKEA workers in seven cities in North Rhine-Westphalia also went on strike. IKEA staff are fighting back against massive overwork caused by staff shortages. This in turn is a result of low pay and high sick absences due to heavy workloads—problems that are also rampant in the public sector. Shortly before, Amazon workers had also gone on strike again over the Easter weekend to fight for fair wages and against exploitation, stopping work in Winsen near Hamburg, Bad Hersfeld, Rheinberg and Koblenz.

Another group of workers that had seen little strike action so far is temporary workers. At the end of March, workers at VW’s personnel services provider Autovision held a warning strike. These workers, who toil for low wages, receive no vacation and Christmas bonuses, unlike their permanent colleagues, and had also gone empty-handed so far regarding the “inflation compensation” payment of €3,000. As a result, at the end of March, around 2,000 temporary workers at the VW plants in Hanover, Osnabrück and Emden took part in a warning strike.

In a very short time, the IG Metall union concluded a new contract for these workers to forestall a spillover of the struggle to the permanent VW workers. The new contract provides for raising the low wages, some of which were previously even below the minimum wage at €10.84 (!), to €13.50 in two steps by December. The €3,000 inflation compensation payment will be granted, but not the vacation and Christmas bonuses. In this respect, the workers are being put off with talk of “further negotiations.”

The great haste with which the agreement was concluded can be explained by the fact that the entire automotive and supplier industry is seething now that the transformation to e-mobility is in full swing. Technical progress is not being used to improve the conditions of the working class, but the transformation is to be carried out entirely at the expense of the workers.

Mercedes-Benz, for example, has already announced major job cuts at its engine and transmission plants, citing the transition to e-mobility and digitalization. Without giving specific figures, Chief Human Resources Officer Sabine Kohleisen told dpa: “It will be the case that we will have less employment at these sites.” For the past year, Mercedes-Benz has been shifting production more and more to a “luxury strategy,” in which essentially only the particularly expensive models will be built in Germany.

At the same time, the enrichment of those at the top of the auto companies exceeds any measure: Ola Källenius, Mercedes-Benz CEO, for example, collected no less than seven million euros last year. VW boss Oliver Blume received €7.4 million and BMW boss Oliver Zipse €7.9 million. Stellantis CEO Carlos Tavares was considered the top earner in the European auto industry, collecting three times that amount, according to finance daily Handelsblatt. Tavares received no less than €23.5 million for last year in salary and bonuses.

Meanwhile, the car companies are shifting a large part of the problems onto the supplier sector. Bosch, for example, still has 27,000 employees at ten German locations, and many are dependent on combustion engine technology. A jobs’ massacre is being prepared, and management is currently in talks with the central works council and the IG Metall about how to implement the job cuts. ZF Friedrichshafen is also facing a job massacre with the elimination of 6,000 jobs.

Automotive supplier Brose has reacted to financial losses by threatening to drastically cut costs in all areas—logistics, administration, and production. In a statement, owners and shareholders berated the Brose workforce for lacking “motivation.” The mood is also bad at the car dealerships and workshops, where more than 15,000 employees took part in nationwide warning strikes in the automotive trade at the beginning of April.

New Zealand PM rules out raising tax on super-rich after report shows massive concentration of wealth

Tom Peters

Last week, New Zealand’s Inland Revenue Department (IRD) released its findings from an investigation into the wealth of the country’s 311 richest individuals.

The High Wealth Individuals Research Project, which looked at income and assets from 2015 to 2021, revealed the extreme concentration of wealth in the hands of a tiny handful of billionaires and multi-millionaires. This group collectively holds $85 billion in assets—more than three times New Zealand’s annual public health budget.

The Inland Revenue Department's "High-wealth individuals research project" report; New Zealand Prime Minister Chris Hipkins speaking to a business audience on April 27, 2023. [Photo: Inland Revenue Department/Chris Hipkins' Facebook]

The group’s annual income varied from $1 billion in 2017 to a staggering $14.6 billion in 2021 (equal to 4 percent of New Zealand’s gross domestic product). Their median wealth nearly doubled from $60 million in 2015 to $106 million in 2021.

The Labour Party-Greens government, like others throughout the world, exploited the COVID-19 pandemic to engineer an historic transfer of wealth to the ultra-rich. Property values and corporate and bank profits have surged due to the government’s subsidies, bailouts and tax concessions, and the Reserve Bank’s quantitative easing and ultra-low interest rates.

Previous surveys have shown that New Zealand is an extremely unequal society. According to Statistics NZ’s regular Household Economic Survey (HES) in 2021, the richest 5 percent of individuals owned 43.1 percent of the country’s wealth, while the bottom 50 percent held just 2.1 percent.

The IRD’s new findings, however, show that wealth is much more concentrated, because super-rich individuals hardly ever participate in the HES. Factoring in the wealth of the group of 311, the share owned by the richest 5 percent increases to 45.5 percent.

Significantly, the new study found that the 311 wealthiest people paid tax on their economic income at a rate of just 8.9 percent—less than half the 20 percent rate paid by someone on the average wage. This is similar to the effective tax rate paid by the 400 richest families in the United States, which has been estimated at 8.2 percent.

Only 7 percent of the income gained by the richest New Zealanders is in the form of personal income subject to tax. The remaining 93 percent comes from returns on investment, including financial assets and capital gains from businesses and other property—all of which is either not taxed, or taxed at a lower rate than incomes.

What this shows is a system designed for the wealthy to avoid tax on a colossal scale.

Working people are also disproportionately taxed through the Goods and Services Tax (GST) on food and other products. The GST was introduced by the Labour Party government in the 1980s, which slashed top income and corporate tax rates. GST now makes up 32 percent of total tax in NZ—higher than the OECD average of 20 percent.

In response to the IRD report, Labour Party Prime Minister Chris Hipkins told the media that “the research out today suggests there is some unfairness in our tax system.” But he reassured the business and financial elite that the government would not increase their taxes in the May 18 budget.

Despite campaigning in the 2017 election on introducing a modest capital gains tax, in 2019 former Labour Prime Minister Jacinda Ardern ruled out any such tax while she was in office. The government was rewarded for its pro-corporate policies in the 2020 election, when many of the country’s wealthiest electorates switched their support to Labour from the conservative National Party.

With the global economy now in an escalating crisis, triggered by the pandemic and made worse by the war in Ukraine, the ruling elite and its political parties are determined that working people must pay the price.

The surge in wealth for the rich coincides with falling real incomes for most people. According to Statistics NZ, the median household disposable income increased by 6.2 percent in the year ended June 2022, while the cost of living increased by 7.3 percent.

Inflation remains at 6.7 percent, with food prices up 12.1 percent over the past year. Rents have increased by 15 percent in the past two years. According to Kiwibank, someone making the average income of $71,000 in 2021 is now nearly $5,000 worse off in real terms than at the beginning of 2021.

Numerous reports highlight deepening poverty. The longitudinal study “Growing Up in New Zealand,” which surveys more than 4,500 children, recently reported that 7 percent of children had experienced homelessness by the age of 12. About one in five children lives in poverty.

Increasing numbers of families are resorting to charity to survive. Last month the Family Works food bank in South Canterbury reported a 41 percent increase in demand in the past year, following similar increases reported by charities across the country.

In response to the inflationary crisis, the Reserve Bank admitted last year that it is pushing up interest rates in order to produce a recession, drive down consumption and push up unemployment.

Meanwhile, the vast sums of money handed over to the super-rich in recent years are to be paid for through cuts to government spending on healthcare, education and other basic services. Hipkins told the media, “we can’t sustain the high levels of spending we had during the COVID-19 period” and the May budget would be a “no frills” affair.

Asked whether this means austerity, Hipkins replied: “Absolutely not… our health system, our education system, the public services that New Zealanders rely on are funded to keep up with increasing costs.”

This is a lie. Healthcare is undergoing a major restructure, which the government says could include 1,600 job cuts. The COVID-19 response has been dismantled, even as the coronavirus continues to spread out of control and hospitals are overwhelmed and understaffed.

In the education sector, universities and polytechnics are slashing hundreds of jobs and imposing real wage cuts with the crucial assistance of the trade union bureaucracy. School teachers have recently held nationwide strikes after rejecting below-inflation pay offers.

Local councils are also looking to slash costs. In Auckland, home to one third of NZ’s population, mayor Wayne Brown has suggested cuts to libraries, the Citizens’ Advice Bureau and numerous arts and cultural programs, as well as the sale of shares in the airport. “Taxing the rich is not an option,” the right-wing mayor told Radio NZ on Friday, echoing the Labour government.

While cutting wages, jobs and social services, the government has indicated that billions must be found to expand the military. Despite widespread anti-war sentiment, New Zealand is being integrated into US-led plans for war against China, which are at an advanced stage. US imperialism is seeking to resolve its economic decline through the violent redivision of the world, including war against both Russia and China.

Sri Lankan parliament approves savage IMF measures

Saman Gunadasa

President Ranil Wickremesinghe, left, arrives at the Sri Lankan parliament, Wednesday, Feb. 8, 2023. In the center is parliament speaker Mahinda Yapa Abeywardena. [AP Photo/Eranga Jayawardena]

On Friday, the Sri Lankan parliament approved the International Monetary Fund’s austerity program, after a three-day debate. It was endorsed by 120 parliamentarians, mainly from the ruling Sri Lanka Podujana Peramuna (SLPP), with 25 opposition MPs—three from the Janatha Vimukthi Peramuna (JVP) and 22 from SLPP breakaway groups—voting against.

Sixty parliamentarians from the Samagi Jana Balawegaya (SJB), the main opposition group, and MPs from the Sri Lanka Freedom Party (SLFP) and Ilankai Tamil Arasu Katchchi (ITAK) abstained.

Those who voted against, or abstained, have no fundamental disagreements with the IMF’s demands but are cynically attempting to capitalise on the rising mass opposition to the austerity measures.

President Ranil Wickremesinghe presented the IMF agreement to parliament on April 26. “We have no other option but the IMF agreement… Let’s get both parties together and pass this,” he declared, and added: “If this program is not done, none of us will be able to survive in another two or three years.”

The initial staff-level agreement between the government and the IMF was signed last September. The IMF’s Executive Board, however, only released its $2.9 billion bailout package on March 20 after reviewing Colombo’s ability to implement its brutal attacks.

These measures included: lifting the value-added tax (VAT) to 15 percent on all goods and services; imposing new pay-as-you-earn tax rates on tens of thousands of workers and professionals; abolishing fuel, electricity and water supply subsidies and hiking tariffs; maintaining the market-driven exchange rate; reducing imports; and cutting public employees’ pensions via the introduction of a contributory scheme for those recruited after 2006.

Wickremesinghe boasted in parliament that he had imposed more than 15 of the measures initially demanded by the IMF. These policies have escalated hyperinflation and increased poverty and starvation facing millions of families while also contributing to an unprecedented economic contraction—an estimated 7.8 percent last year and a predicted 3 percent this year.

Announcing the bailout package and the first installment of $330 million, IMF mission chief for Sri Lanka Peter Breuer declared that the country was undergoing a “brutal experiment.” The remainder of the bailout loan will be released in three instalments, subject to the IMF review and supervision. 

The Wickremesinghe government is now committed to the privatisation of state-owned enterprises (SOEs), more tax revenue increases, further cuts to education and health, which will be opened up to more private investment, and the destruction of hundreds of thousands of state workers’ jobs.

The government must also undertake domestic debt restructuring. The major local creditors to the government are the state banks and the main pension funds—the Employees’ Provident Fund and the Employees’ Trust Fund. Any reduction in these loans will severely affect the savings and livelihoods of workers and retirees.

Wickremesinghe threatened any bank unwilling to restructure its debts. If they “cannot face this situation” and take on “this responsibility and carry forward the economy,” he said, “the stock market says it will collapse. If that happens, I will close it [the bank] down.”

These remarks indicate Wickremesinghe’s total commitment to the dictates of international capital, reassuring foreign creditors that workers and the poor will be made to pay. 

The parliamentary debate on the IMF’s austerity program was a farce. The opposition SJB denounced the government for not going to the IMF earlier, insisting it was the only alternative. Sri Lanka’s growing foreign debt and economic crisis were intensified by the global outbreak and persistence of COVID-19 and the US-NATO war against Russia in Ukraine. 

SJB leader Sajith Premadasa told parliament it was “correct” for the government to go to the IMF but cynically declared that “its negotiated solutions are incorrect” and that he disagreed with the austerity measures imposed upon ordinary people. Knowing that he cannot negotiate terms with the IMF, Premadasa’s statements are an attempt to hoodwink the population. 

SJB parliamentarians promoted the privatisation models adopted by Singapore and Malaysia, presenting these as ideal methods for privatising SOEs.

SJB parliamentary and chief opposition whip Lakshman Kiriella praised the IMF austerity measures, claiming they would “restore macroeconomic stability and debt sustainability” and “unlock Sri Lanka’s growth potential.”

The SJB’s concern, he said, was whether the government would “keep its promises to the IMF.” This was a reference to former President Gotabhaya Rajapakse, who halted the previous government’s IMF measures after he took office in November 2019.

JVP leader Anura Kumara Dissanayake hypocritically criticised the IMF program, claiming it would worsen existing social problems that were the sole creation of corrupt former governments. Citing various examples of corruption by previous governments, he claimed that the only way forward was with a non-corrupted government involving his party that would implement the required austerity.

Last October, Dissanayake told the “Swarnavahini” talk-show that “going to the IMF has become inevitable” because Sri Lanka had defaulted on foreign loans, and “society must bear a certain cost.”

On January 24, Dissanayake told a Colombo big business event it was necessary to open education and health up to more private investment. He insisted: “If we want to come out of this crisis, we must do it. We will be forced to take painful action.”

In other words, the JVP has no differences with the Wickremesinghe’s bailout agreement with the IMF.

ITAK, the main Tamil bourgeoise party, has publicly campaigned for the IMF loan package as the only solution to the economic crisis. It changed its tune and began criticising Wickremesinghe’s policies to dissipate the rising opposition among the Tamil masses.

Last week, on April 25, mainly Tamil and Muslim workers and the poor launched an almost total shutdown of the country’s north and east, opposing the government’s Anti-Terrorist Bill and voicing their anger over the government’s attack on living and social conditions.

On March 1 and 15, about half a million workers across Sri Lanka engaged in strikes and protests against increased income tax rates and privatisation. The trade union bureaucracies, which directly or indirectly support the IMF policies, limited these struggles, sowing illusions that the government could be pressured to halt its austerity policies and repressive laws.  

On April 28, two Colombo daily newspapers—the Daily Mirror and the Island—published editorials supporting the IMF measures.

“The MPs’ right to support or oppose the IMF agreement or anything else for that matter cannot be questioned. But they should not lose sight of the fact that beggars have no choices,” the Island declared. The Daily Mirror said: “If we do not work together, commence squabbling and indulge in back-biting, we face the prospect of facing a situation similar to that of yesteryear or worse.”

These editorials show that the ruling elites are acutely concerned about the rising popular opposition and the need to rally counter-revolutionary forces against the working class and the poor.

While the mass uprising of workers and the poor in April and July 2022 brought down President Rajapakse and his regime, the trade union bureaucracy, supported by the pseudo-left groups, allowed Wickremesinghe’s elevation into the presidency.