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    Essential Information on an Essential Issue

    Letter No.23

    23 August, 1995

    Good news continues to flow from the jobs figures official unemployment has dropped to 6.3% and is the lowest since December 1988. We include a special insert on the employment statistics with this issue of the Jobs Letter. Highlights

    The 6.3% figure puts us as third in the OECD countries for unemployment, after Japan on 3.3%, and the United States on 5.5%. The OECD average unemployment rate is 7.4%.

    The number of jobs, at 1.62 million, continues to be at its highest level since the household labour survey started in March 1986. There have been spectacular drops in official unemployment in Northland (from 13% to 9.6%) and Tasman-Nelson-Malborough-West Coast (7.4% to 4.1%)

    Most of the new 76,000 jobs created in the last year were full-time jobs 68,000 of them. This takes the full-time workforce to 1.27 million, and is the highest full-time figure since December 1987. The biggest job growth over the last year has been in the wholesale, retail, and hospitality (restaurants and hotels) sector which created 25,800 new jobs. Business and financial Services created 15,200, and Community, Personal and Social Services created 12,800 jobs.

    Maori unemployment has dropped from 19% to 16.1%, but Pacific Island unemployment has risen from 15.6% to 17%.

    The number of people registered at the New Zealand Employment Service for July 1995 stands at 154,505 people, which is also a significant drop of 28,600 people in the last year. It is still sobering, however, to realise that this figure is three times the level of the registered unemployed in 1985 at the time of the then "crisis-level" Employment Promotions Conference.

    Warnings of a slowing down of good news. Sharon Evans of Statistics NZ warns that the positive trends over the past two years are beginning to slow. There were only 5,000 new jobs created in the last three months, compared with 12,000 in the previous quarter. And two key sectors showed a decline in employment over the three month period the building and construction sector, and manufacturing.

    While it is certain that many new jobs are being created in this economic recovery, there is also some questions as to why there is not a corresponding increase in the participation rate of the workforce. While the official unemployment rate has dropped dramatically over the last year from 8.4% to 6.3%, the participation rate has hovered around 64%. In the last six months it has dropped slightly from 64.9% to 64.4%.

    CTU President and Employment Taskforce Member Ken Douglas is concerned. He told Radio NZ : " The participation rate is still not a healthy figure I'm not really quite sure what that means, whether people are being squeezed out of the unemployment statistics, or less people are seeking work. The percentage of the workforce is not growing as the unemployment figures come down... " The labour force participation rate is the number of employed and unemployed expressed as a percentage of the working age population. The people left out of this figure are either retired, have personal or family responsibilities, are attending educational institutions, have physical or mental handicaps, are temporarily unavailable foe work, or do not want to work.

    Source - Morning Report, National Radio 18 August 1995 "Interview with Ken Douglas"
    Watch for : Economists, bankers and politicians pointing to racially-based employment figures and warning that we are getting close to full employment. Our media watch reports that several commentators are pointing to the european unemployment rate of 4.4% and saying that this is likely to be close to "full employment". They have fears that more jobs will put the pressure on wages to rise.

    Bankers Trust Economist David Plank told the National Programme's Morning Report : " In the United States, most people there believe that full employment rate is about 5.5%. That's made up of people who are switching jobs, or just taking time out. So whenever unemployment gets to that level in the US, they tend to see wages start to increase, or at least that becomes a concern. The issue in NZ from a monetary policy point of view is whether a 4.4% rate in the european pakeha group has any implications for wage growth ..."

    Source - The Daily News 18 August 1995 " Decrease in building jobs points to lower inflation" and Morning Report, National Radio 18 August 1995 "Interview with David Plank"
    David Plank's views on full employment are similar to American descriptions of the "natural rate of unemployment" which have appeared in prominent US business journals over the last year. The theory is that even with modest economic growth, joblessness will decline to a level that historically has triggered a pickup in inflation. Fortune Magazine economists say this "natural" rate of unemployment is widely thought to be about 6%. Fortune : " Below that point, the theory goes, all those who are truly employable have found work except for people temporarily between jobs. Expanding businesses seek to attract workers by raising wages, and then try to recover that cost by raising prices ... "
    Source - Fortune Magazine 13 June 1994 "Fortune Forecast" by Joseph Spiers.
    Tourism industry leaders are trying to beef up their training facilities in order to attract skilled staff for senior management positions. Brian Smith, general manager of the Aviation, Tourism and Travel Training Organisation told the Dominion last week that until now, the tourism industry had no real training culture. He says his organisation is trying to work, from the bottom and up through to senior management to instil a training environment and career paths.

    Chris Ryan of the Tourism Board says that in the past there has been an ad hoc approach to training with people getting jobs in the industry and learning as they go. Tertiary Institutions are quickly moving to fill the gaps in training. Next year, Victoria University will start a degree course in tourism and services management, taking 60 students.

    Source - The Dominion 17 August 1995 "Trained staff lacking say industry leaders"
    The Tairawhiti Polytech has developed a series of training courses for people who want jobs in possum control. They are running a seven-day course in "Introductory Pest Management", and 18 day "Commercial and Contractual Possum Hunting Course" and a three month full-time "Certificate in Pest Control". For more information ring Tairawhiti Polytech 06-868-8068.
    Source - Rural Bulletin August 1995
    A recent survey by the Institute of Environmental Science and Research shows that a quarter of drinking drivers at fault in fatal road accidents were unemployed. The jobless drivers were also twice as likely to be driving unlicensed cars or not have a current warrant of fitness, and four times as likely to have been disqualified from driving at the time of the accident. A quarter of these drivers had their accidents on a Thursday which is also benefit day.
    Source - The Dominion 11 Aug 1995 "25pc of killer drink-drivers jobless, survey shows"
    Timber mills in Otago and Southland are cutting production and bush gangs are laying off staff as the industry gets squeezed between rising costs of production, and falling returns, especially from US and Australian markets. One lumber firm in Tapanui has sought voluntary redundancies as it cuts its workforce from 149 to 125 people. The company blames the value of the NZ dollar and a softening export timber market.
    Source - The Dominion 8 August 1995 "Fall in timber returns prompts job redundancies "
    It's been a year since the closure of the Tomoana Freezing Works and the loss of 850 Hastings jobs. Tomoana Resource Centre manager Peter Bradleigh disputes reports suggesting that only about 10% of the Tomoana workers were still jobless. Bradleigh told the Sunday Star-Times : "We're probably looking at 500 of the 855 made redundant on the 19th (August 1994) still being out of work ... there's still some ringing in for food parcels. "
    Source - Sunday Star-Times 13 August 1995 "Hastings fights its way back"
    Wellington's Downtown Community Ministry says that Income Support Service claims that beneficiaries owe $602m are misleading and were a result of attempts by ISS managers to get performance bonuses. Spokesman Tony McGurk says the level of legitimate debt is just a fraction of the figure claimed. He also said the Service was reluctant to exercise its discretion to write off debts caused by its own errors. McGurk : " It is just beneficiary bashing to hide their embarrassment about their own incompetence the figure of $602m is totally off this planet... "
    Source - The Dominion 31 July 1995 "$600m debt `misleading'"
    Employment Minister Wyatt Creech is defending criticisms that an increase in part-time work is due to the changes in employment conditions brought about by the Employment Contracts Act. In an article in the New Zealand Herald he says that the growth in part-time work is due to an ongoing international trend which has been steadily increasing since the 1950's. He says this trend has been largely unaffected by labour laws, recessions or any other influences.

    Creech says that an OECD study, Employment Outlook, shows NZ is following an international trend towards a greater range of "non-standard" work patterns, outside the full-time, 40-hr week. The study showed that throughout the 1980s, part-time working increased in almost all countries. Creech : " Terms such as the "americanisation" of the labour market and "McJobs" have been tossed into the debate without any clear definitions. These are easy claims to make, and in our cynical world are often too easily believed. When real research is done, however, there is far less substance to the claims than the political propagators intend to create..." In NZ, part-time work made up 13.9% of total employment in 1979, 15.3% in 1983, and 20.1% in 1990.

    Source - Wyatt Creech in New Zealand Herald 31 July 1995 "Growth in part-time work suits modern workers.
    The New Zealand Herald reports a staff shortage in the freight industry, with companies experiencing expanding workloads in our growing economy, but insufficient staff to keep pace with demand. The biggest shortfall is for documentation clerks who handle the paperwork for importing and exporting a wide range of goods.
    Source - New Zealand Herald 7 August 1995 "Freight companies desperate for staff"
    Youth unemployment is starting to emerge in Japan, a country with one of the lowest unemployment rates in the OECD. The young jobless are starting to threaten the social stability that comes with the traditional Japanese `lifetime employment' labour system. The unemployment rate for 15-24 yr olds has climbed to a record high of 7.5% in March this year, which is more than double the overall Japanese jobless rate. Many Japanese companies are scaling back on new hirings, and making it harder for new graduates to find salaried jobs. The jobless rate for new graduates has worsened for the third year in a row, with 30% of last year's graduates failing to find secure full-time jobs. Leading Mitsubishi Research Economist Jonsen Takahashi suggests that unemployment " could be the biggest problem for Japan's economy from now on ..."
    - New Zealand Herald, 30 May 95 "Jobs Getting Scarce in Japan"
    Australian unions are launching a number of legal political moves to improve the conditions of impoverished migrant "outworkers" in Australia. Greg Ansley in the New Zealand Herald reports that thousands of migrant women are employed throughout Australia as outworkers doing piecework sewing at home on very low rates of pay. Most of the women are jobless foreign language migrants whose ethnic communities have very high unemployment rates compared to other Australians.

    The Textile Clothing and Footwear Union estimates that 300,000 outworkers "pore over sewing machines for piece rates in a Dickensian style of indentured labour..." They work an average of 14-18 hrs a day, often seven days a week, for an average of $A2.50 an hour. This gives them a weekly wage of $A250-$300 for a 90-100 hr week, with no entitlements.

    The outworkers must buy their own sewing machines, threads, electricity and machine repairs. In comparison, an Australian factory worker receives about $380 for a 38 hr week, with penalty rates, sick leave, holiday pay and award protection. Anna Booth of the Clothing Union says : " New migrants generally are the most desperate workers and when they have no experience of high wages, a regulated industrial relations system, union involvement, language skills and they are entirely dependent on their own community for information about Australia, they are extremely vulnerable to exploitation..."

    Source - New Zealand Herald 17 August 1995 "Australian unions turn attention to impoverished migrant labour"

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