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    Essential Information on an Essential Issue

    Letter No.24

    9 September, 1995

    Research from psychologist David Fryer shows that unemployment is a mental health issue

    The Reserve Bank is facing intense criticism for it's latest monetary crackdown against inflation (see Diary). Economists have predicted that NZ's job growth at 5% (in the year to June) was going to slow down anyway, but the Reserve Bank's latest moves are seen as a further dampening on job creation.

    A survey reported in the National Bank's Business Outlook says that hiring intentions are at their lowest since the question was first put to business leaders in February 1993. Only 13% of respondents said they were expecting to take on more staff over the next 12 months down from 17% in July. Only 17% said they intended to increase investment, the lowest level since 1992. Arthur Grimes, the Chief economist with the National Bank (formerly the chief economist at the Reserve Bank), says that the Reserve Bank's tight monetary stance will cost new jobs, and will further depress confidence indicators.

    Source - New Zealand Herald 1 September 1995 "Reserve Bank's monetary crackdown seen as wet blanket on job creation" by Patricia Herbert.

    A Dun and Bradstreet survey of company failures last year shows that 916 companies were liquidated last year with an estimated loss of 13,000 jobs. The survey estimates that the company failures cost the economy a total of $628m in the 1994 year. 55% of the company failures were in Auckland, and only 15% in Wellington.
    Source - The Dominion 17 August 1995 "Company failures cost $628m"

    A warning to charities comes from Jim Datson, president of the Fundraising Institute of NZ and a consultant on the voluntary sector. He predicts that large numbers of voluntary welfare agencies will fold over the next few years as NZ witnesses a backlash against charitable giving. He points to government changing ground-rules in the funding of organisations, in effect viewing the welfare agencies as a pot of gold for the government to dip into, and a way to fund primary core welfare services.

    Datson says that the government message is: `We are not going to give organisations subsidies, we are going to be the purchasers of services because that's what the Public Finance Act says that we must do.' But the government does not purchase the whole service, yet still demands that the organisation provides 100% of the service. Organisations entering into contracts were effectively committing their supporters to fund the shortfall through donations.

    Datson told the : "What is known to most donors at the moment is that they are in fact subsidising a government funded service. Over a period of time an enormous amount of stress is going to occur and we are going to see organisations drop off. We are going to see donor resistance and donor anger ... Donors supporting organisations are becoming a pseudo tax base."

    Source - New Zealand Herald 23 August 1995 "Charities abused as a pot of gold" by Catherine Masters

    Amidst all the focus two months ago on the release of the multi-party accord on the Employment Taskforce recommendations, the major review of the government's Enterprise Assistance measures slipped by without much media interest. The review was looking at current enterprise assistance measures available through the Business Development Boards (BDBs) and the Community Employment Group (CEG). John Chetwin, Secretary of Labour, and Kathy Smith, acting Secretary of Commerce, presented a paper to the Cabinet Committee on Enterprise, Industry and Environment. Photocopies of this paper, obtained under the Official Secrets Act, have been circulating many employment groups over the last month.

    It was widely feared that the enterprise assistance elements of CEG (Be Your Own Boss, Business Grow programmes etc) would be restructured or handed over to the Ministry of Commerce (see Annette King's comments in Jobs Letter 14). This has not proved to be the thrust of the recommendations in this report. Instead, Chetwin and Smith recommended that CEG refocus its enterprise assistance elements to provide more intensive assistance to the four priority groups of Maori, disadvantaged rural and urban communities, Pacific Islands people and women.

    The report also recommended that CEG work to identify `local labour market characteristics, resources, skills and constraints' and develop strategic community plans, which can be "used to identify and prioritise initiatives and projects, including elements of enterprise assistance..."

  • These recommendations were in part designed to solve some of the problems which the report identified as specifically relevant to CEG's present operations. The main problems identified related to:
    -- the need to improve how CEG activities are prioritised at a local level
    --uncertainty on the part of grant recipients about the reasons for variations in funding decisions, and whether certain grant applications will receive grant funding
    -- the need to clearly prioritise within the disadvantaged and non-business wise groups
    -- the need to improve co-ordination between different agencies and community groups and
    -- the need to enhance the monitoring and evaluation of CEG activities, including the need to improve the two-way flow of information between CEG and funded groups.

    CEG staff were completing a business plan of their activities for presentation to the cabinet committee by the end of last month. The allocation of any additional resources to CEG, including increasing the number and skill levels of CEG field officers, will be contingent on the acceptance of this plan.

    Source - Review of Enterprise Assistance, paper to the Cabinet Committee on Enterprise, Industry and Environment, 1995, by JM Chetwin and Kathy Smith

    The Human Rights Commissioner Ross Brereton says that businesses which ask for photographs of applicants for job vacancies are in breach of the Human Rights Act. Mr Brereton has received complaints about newspaper advertisements that ask for photos to be sent in with job applications. He says : "By wanting to see photographs they could be intending to discriminate in terms of age, or disability or of race... One of the intentions of the Act is to widen the choice and to avoid that type of stereotyping ..."
    Source - The Dominion 28 August 1995 "Job photographs `breach of act'"

    In our regular Statistics That Matter inserts we list the unemployment statistics for `Mature Unemployed', which we define as aged 50-65 years. We were recently advised that the Mature Employment Services (MES), a network of community-based groups servicing the older unemployed, use the age grouping of 40-65 years as their practice for membership purposes. And in some MES centres, we are told that 35-65 years is used as the criteria. Is this stretching the `mature' point of view somewhat? What do you think? ... Let us know how you would define the Mature Unemployed.

    For the record ... The official unemployed rate for Mature Unemployed at the various age grouping is : Aged 50-65yrs 3.46% ; Aged 40-65yrs 4.06% ; and Aged 35-65yrs 4.33%, compared to the overall average for all ages of 6.3%.

    Could we have had economic reform without savaging the welfare state? This the question asked by Brian Easton in his Listener column last week. Easton attended the 1995 Social Policy Conference in Sydney in July and was able to compare the similar economic transformations which have led both the Australian and NZ economies to become much more open to the world economy and make much more of the market mechanism. But as Easton points out in the Australian case, "there has not had to be the same savaging of the welfare state".

    Easton : " We are frequently told that major reductions in the role of the welfare state are necessary for the economic reforms to work. Yet the Australian reforms worked without them. Over the last 12 years, Australia has done much better than NZ on most economic indicators inflation being the exception. [...] The Australians conducted their transformation under a pragmatic management regime, while the NZ one was implemented in an extreme ideological manner. Ours has been the less successful ...."

    Easton admits that the economy that sustained the traditional welfare state in NZ has been destroyed by changes in the world economy: "But that does not mean we have to abandon welfare, or cut it back to the minimalism of the American `residual' welfare state ... The experiences of Australia, and of continental Europe, tell us there is an alternative..."

    Source - The Listener 2 September 1995 "Anything they can do ..." by Brian Easton

    Japanese workers are dying in droves from overwork. Experts in Japan estimate that 10 thousand Japanese die each year of karoshi - the term they give to death by overwork. This is roughly the same number as die each year in Japanese traffic accidents.
    Source Globe and Mail 25 May 1991 "The Death of Leisure"

    In the new high-tech global economy, Jeremy Rifkin believes we must now grapple with the elementary question of economic justice in how to divide up the benefits of productivity advances made by new information and communication technology revolutions. His question : Does very member of society, even the poorest among us, have the right to participate in and benefit from the productivity gains ? If we can agree that the answer is yes, then Rifkin advocates that some form of compensation will have to be made to made to those whose labour is no longer needed in the new high-tech, automated world of the 21st century.

    Rifkin's book "The End of Work" has three main proposals based on tying such compensation to service in the community, and strengthening the social economy:
    -- shortening the working week to 30 hours
    -- providing an income voucher for permanently unemployed people in return for their retraining and service work in the voluntary or non-profit sector
    -- extending tax credits for volunteering time spent in community non-profit organisations (see Jobs Letter 22).

    - "The End of Work" by Jeremy Rifkin (pub Jeremy P.Tharcher/ Putman) 1994 as summarised in The Utne Reader May-June 1995.

    " If no measures are taken to provide financial opportunities for millions of people in an era of diminishing jobs, then as the new industrial revolution spreads through the economy, crime, and especially violent crime, is going to increase. Trapped in a downward spiral, and with ever fewer safety nets to break their fall, a growing number of the unemployed and unemployable will find ways of taking by force what is being denied them by the forces of the marketplace...."
    -- Jeremy Rifkin, The End of Work.

    "From the standpoint of the market, the ever swelling ranks of the unemployed face a fate worse than colonialism : economic irrelevance. The bottom line is that we don't need what they have and they can't buy what we sell ..."
    -- Nathan Gardens, editor of New Perspectives Quarterly

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