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    Essential Information on an Essential Issue

    Letter No.27

    26 October, 1995

    overview of the October 1995 Government Jobs Package

    Last week's government job package is the most significant employment policy announcement in the five years of National Government. It is finally the end tof he Employment Task Force process that was initiated after the last election. The package lists a range of measures aimed at helping beneficiaries, job-seekers under 20yrs, and the long-term unemployed, to find a job or a suitable training scheme. The announcements are a continuing reflection of the social philosophy of the National administration, and continue the direction this government is taking in re-designing the welfare state.

    We give an essential summary of the policy announcements in this special issue of the Jobs Letter, as well as initial comments gathered by our Media Watch from leaders and commentators on the employment policy debate.

    The jobs package is being marketed as a key component of the Hand-Up programme heralded earlier this month by Bill Birch, and is designed to ensure all New Zealanders share "... in the benefits of the economic recovery". The fuller policy package includes tax changes and a new programme of family assistance now being developed. The media has widely dubbed the strategy a `carrot-and-stick' approach to getting people off `welfare dependency'.

    PM Jim Bolger says that the jobs package is based on three key interrelated principles opportunities, incentives and responsibilities. Bolger: "...The policies will provide increased opportunities for NZ'ers to access assistance to improve their employment prospects. They will give beneficiaries stronger incentives to move into paid work. With these increased opportunities and better incentives comes the responsibility to take advantage of the opportunities on offer ..."

    Task Force chairman Sir John Anderson says that while the package does not follow the Task Force's 120 recommendations letter-for-letter, the principles are broadly in line with the Task Force report. He singled out Maori and Pacific Island programmes, and the Local Employment Co-ordinators as ideas specifically related to the Task Force recommendations.
    Source - The Independent 20 October 1995 " Govt to spend $500m on employment"

    Government spokespeople have been consistent in their acknowledgement that this jobs package comes at a time of economic recovery and when the numbers on the dole queue are the lowest since September 1989. The numbers also show NZ as having one of the lowest unemployment levels in the OECD.

  • COMPARED TO 1985 ...
    The Jobs Research Trust continues to use the benchmark of the "crisis-level" Employment Promotions Conference in 1985 to assess how well or poorly we are doing with unemployment. Latest figures from New Zealand Employment show that with 148,859 registered people in September, we still have almost three times the 51,394 registered unemployed people at the time of the conference in 1985. Last month, there were 16.9 registered unemployed people for every notified vacancy at NZ Employment.

    Many press announcements recorded `half a billion' dollars being spent on employment initiatives with this package. Nearly half this spending had already been announced previously. This expenditure is also calculated over a three year period, or about $67 million per year. Some of the calculations in this package are also based on money that will be retained by beneficiaries under the new abatement rates, rather than being actually new money paid out by government.

    The government has developed a Maori Labour Market Strategy which will puts a Maori face on measures such as the existing Job Action courses contracted out by NZ Employment. It also will introduce a pilot programme to boost the self-esteem of Maori jobs seekers, which will be based on the [[[Limited Service Volunteer training model which is presently run by the army and other armed services. [[[Job Plus subsidies will be made more flexible to enable work to be carried out on developing Maori assets. The cost: $19 million over three years, or about $6.4 million per year.

    Alongside the Maori strategy is a new Pacific Islands labour market strategy a feature which was criticised as missing from the original Employment Task Force report. This, again, largely involves putting a Pacific Islands face on existing programmes, but also will help with measures to upgrade the standards of Pacific Island training providers, and to focus on Pacific Islands men aged 35yrs and older who are less likely to hold qualifications, or who have language difficulties.

    Local employment co-ordinators are to be appointed who will disseminate information and develop strategies to meet local labour market needs by bringing together and chairing Local Employment Co-ordination Groups who will comprise key local players in the employment and training fields. These co-ordinators will be under contract to the Department of Labour, in contrast to the Employment Task Force's recommendation for more independent `commissioners' who would "... act as an advocate, a mentor, and , if necessary, a thorn in the side of unhelpful bureaucrats..."

    The jobs package also sees the introduction of a fully-subsidised work scheme, to be started later this year. This is a significant proposal, and represents the first return to the sort of programmes that were used in the 1980's. The new programme, called Job Connection is highly targeted to only 100 people who are extremely long-term unemployed (over four years). They'll be on the scheme for six months, then moved into other programmes, such as Job Plus. The scheme will cost $1.1 million.

    There are 11,300 people who have been unemployed for more than four years.

    No immediate news in this package for Training Opportunities Programme (TOPS) providers, except to restate the fact that "an independent evaluation of the programmes is currently underway", and "the evaluation has brought to light a number of areas where it could be improved..." No reporting deadline for this evaluation is stated.

    More money is announced for the Industry Training Strategy (an extra $58.8 million) which will provide around 13,000 new places for apprenticeships, primary industry cadets and trainees, by 1998. The government flags a new system for funding industry training, by encouraging Industry Training Organisations (ITOs) to contain costs or to seek mergers with more financially secure ITOs.

    Many of the policy announcements have been post-dated to either mid-1996, or April 1997 ... so we'll have to wait some time for the actual benefits of the full package. The Employment Task Force process was announced in December 1993.... which means that, for many parts of the policy proposals, it will be three years and four months before the full policies `hit the ground'.

    CTU President Ken Douglas, who was also a member of the Employment Task Force, says he is saddened and angry over the government's jobs package, saying that it falls short of the expectations raised by the Task Force process, and it lacks strategies to create jobs.

    Douglas: "The Task Force wasn't just about pushing the institutional processing of unemployed people and improving the performance of managing the unemployment. Nor was it about polishing the people ... improving how unemployed people felt about themselves and the world. It was really about the serious question of what the government would do to actively initiate a strategy to build jobs and to create new jobs... " Douglas believes there needed to be specific initiatives in the announcement, such as infrastructural development and renewal strategies, and investment strategies in areas where jobs will grow... "These areas have not been addressed..."

    Source - Radio New Zealand Checkpoint interview with Adelle Broadbent 20 October 1995

    Employment Minister Wyatt Creech brought together all members of the Employment Task Force before the announcement to share the elements of the upcoming jobs package. Ken Douglas reports that the "exchange of opinions and views" with Mr Creech indicated that while there was some support for some of the positive aspects of the package, there was also disappointment widely expressed that there wasn't a response to the comprehensive approach that the Task Force had taken to the job creation issue.

    Source - Radio New Zealand Checkpoint interview with Adelle Broadbent 20 October 1995
    Richard Tweedy of the Employers Federation welcomes the initiatives, and believes the package will break down the barriers that keep people from working: " Unemployment is significantly down because of the performance of the economy ... we've had a lot of new jobs coming into the economy, and this package is really the next positive social policy initiative. The package is aimed at helping people adjust to the concept of looking after themselves rather than perhaps the dependency psychology that's out there now ... this is seen by allowing people to earn more money before their benefits are cut into... "
    Source - Radio New Zealand Morning Report 20 October 1995
    Womens Affairs Minister Jenny Shipley says that the abatement changes will have a significant impact on the lives of unemployed women: " It will provide an enormous incentive for women who are only seeking part-time work, as they balance their family and their work responsibilities... to increase their families income by their own efforts, and hopefully, as a secondary effect, to encourage their own children to see that the welfare system will support their family, while they will also be rewarded by labour-market participation. This is a very important medium-term message to ensure that welfare dependency does not become an overwhelming and unsolvable problem ..."
    Source - Radio New Zealand Checkpoint 19 October 1995
    Barnardo's, one of those groups working with struggling families, is quoted on Radio New Zealand as welcoming the increase in childcare funding, but commenting that the initiatives need to come into effect immediately, and not in nine months. Barnardo's also thinks that it is not enough to just relax the stand-down period for beneficiaries, but it should be abolished altogether.
    Source - Radio New Zealand Morning Report 20 October 1995
    Sue Bradford and Ivan Sowry of the Auckland Unemployed Workers Rights Centre believe that the amount of money spent on these new policies is `just a sop' when compared to "the billions of dollars they've saved since the 1991 benefit cuts..." The Rights Centre also continues to be opposed to the whole concept of stand-down periods: " People should not be punished twice for being unemployed, for being sacked, or for leaving a job which is not suitable for them..."

    The new abatement rate schedule is less generous than that recommended by the Employment Task Force. This is because the Accommodation Supplement, which is received by two-thirds of the welfare population, will continue to abate at 25c for every $1. The Task Force advised that this was a disincentive to work and should be softened. Also, people on the dole earning more than $80 will still have their earnings abated at 70% (the Task Force had proposed a softer regime of 50% on income between $80 and $150).

    The new abatement rate schedule introduces a two-tiered system of abatement rates, separating the unemployed from other beneficiaries like those on the DPB or the Widows and Invalids Benefit. This second group of people will be able to gain a rebate on earnings between $80 and $180, and this will mean an extra $46 a week in the pocket for a single parent earning $180 a week.

    The two-tiered system will also mean that if an unemployed person and a single parent obtain identical part-time jobs with the same employer, the single parent will be able to retain significantly more of their wages earned than the unemployed person. (This dual abatement concept was recommended by the Employment Taskforce, and aimed to encourage the unemployed to seek full-time, and not part-time work.)

    Sue Bradford and Ivan Sowry are pleased that the government is finally addressing the question of abatement rates, but note that these changes have not taken into account the fact that the Accommodation Supplement abates by 25c for every $1, and the Special Benefit abates at $1 for $1. Their conclusion: " the only people who will really get something out of the new policy will be those with low housing and few other extra costs..."

    Former Finance Minister Ruth Richardson believes that the changes to the abatement schedule don't go far enough. She says that benefits need to be time limited as well as work-tested. Richardson: "People need to know there's a deal: If there's no work, there's welfare. But if there is work, then welfare should not be available. So time-limited and work-tested benefits have to be at the heart of good public policy ... "
    Source - Radio New Zealand Morning Report 20 October 1995 Ruth Richardson speaking at the Manufacturers Conference 19 October 1995
    Labour's Steve Maharey believes that the government has underspent on this jobs package so that it can save money for the later tax cuts. He also feels the package `misses the point' about job creation. Maharey told Radio New Zealand: "It is mainly about training, and income support. There's nothing really in here which directly results in jobs being created. When you are talking about `crisis' levels of unemployment amongst Maori and Pacific Islanders, I think that's what people are going to come back and ask the government for...Where are the jobs?"
    Source - Radio New Zealand Morning Report 20 October 1995
    The Sunday Star-Times says in an editorial that "...rather than creating new jobs, this package seems intent on stirring up the pool of 150,000 unemployed, along with assorted other beneficiaries, and seeing what happens. This $252 million package is rooted in the philosophy that the unemployed, given a gentle nudge and a sniff of more cash, will give up their idle ways and get a job. It begs the question of where these new jobs will come from."

    " In the past, governments would have confronted the problem by investing in the country's future. Improving the economic infrastructure by such activities as road building and tree planting. Such interventionist practices are currently out of favour while the omnipotent market albeit with the restraining help of the Reserve Bank Governor reigns supreme. That being the case, the Government's hands are largely tied..."

    " The Government's goal is to deliver gains in come, living standards and quality of life to all New Zealanders. The best way to do this is to assist more New Zealanders take advantage of the employment opportunities available ..."
    Jim Bolger, on announcing the jobs package.

    "The Task Force report had a fundamental conclusion that the `trickle down' theory was not going to be enough to take us back to the concepts of full employment ...
    "There is no indication that there is any relenting from the present policy mix that we've got of maintaining a high interest rate and a high exchange rate regime, which is essentially trying to keep the economy on balance by keeping it near to a starvation point all the time...
    "The Task Force report tried to build a comprehensive proposal for the government to consider. They have picked up on most of the `sticks' in the basket, but not many of the `carrots'..."
    Ken Douglas, CTU President, and Task Force member

    "You can't say these measures are bad, because they are not. But the $250 million dollars invested is a bit like fiddling while Rome burns ..."
    Jim Anderton, Alliance leader responding to the jobs package

    "The employment policy seems largely involved with creating a level playing field for the unemployed, so that when a job or jobs appear, all will have an equal chance of fighting for it ..."
    editorial comment in the Sunday Star-Times

    "In this package the government continues to propagate the myth that unemployment will be solved by tinkering with training and self-esteem, when in fact the only answer for the hundreds of thousands of NZers who remain out of work today is a meaningful job at a living wage..."
    Sue Bradford and Ivan Sowry, in a fax to the Jobs Letter, responding to the jobs package

    How many of the initiatives in the jobs package needed the Employment Task Force process to make them happen?

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