Return to Jobsletter Home

To the last Jobs Letter

To the next Jobs Letter

To this Letters Diary

To the Index







    Essential Information on an Essential Issue

    Letter No.35

    18 March, 1996

    Figures issued this month show that despite the recovering economy, the value of real wages is failing to rise. The Real Wage Index in the December 1995 quarter showed no change, and for the 1995 year as a whole, it showed a fall of 1.2%. The Real Wage Index measures the buying power of wages and salaries by adjusting take-home pay for rises in consumer prices. Since the index began in December 1992, real wages have fallen by 2.1%, while the overall economy has grown 11.5%.

    Statistics NZ's Labour Cost Index shows that, during 1995, wages did not change for almost half of all surveyed jobs. The Index shows that over the last two and a half years, ordinary time money wages have not changed for a third of private sector jobs. This is despite Consumer Price Index increases of nearly 6.5% over the same period.

    Labour's employment spokesman Steve Maharey says the figures prove that workers are seeing little evidence of the recovery in their pay packets. Maharey: " To achieve a real wage rise, the government is having to manufacture an artificial increase with its tax cuts..."

    Source - The Dominion 8 March 1996 "Despite good economy real wages fail to rise" by Ruth Laugesen and NZX Institute of Economic Research March 1996 Update.

    Are immigrants taking our local jobs, as suggested by Winston Peters? It seems that the employment figures do not support this growing myth. During the 1970s and 1980s we had a net loss of population as people left NZ for greener pastures elsewhere. At that time unemployment also grew to be at its highest. The net gains in immigration began in this decade. This has coincided with a fall in the rate of the official unemployment rate from 11.6% in September 1991 to 6.1% in September 1995.
    Source - faxed Alliance Press statement from Matt Robson to the Jobs Letter 15 February 1996

    As part of an election-year theme of celebrating economic growth, the government is hailing "a 75% growth in manufacturing exports in the past five years and 180,000 new jobs under the Employment Contracts Act", as quoted by PM Jim Bolger when he opened a Malaysian-controlled furniture factory in Manukau earlier this month. Auckland manufacturer's, however, are reporting a different story. A recent survey by the Auckland Manufacturers' Association shows a 3.2% cut in staff in the past year, with a fall in domestic sales of more than 8% and unspectacular export growth. Association chief executive Bruce Goldsworthy says that more than half the respondents to the survey were bracing themselves for declining profits and more job cuts. Goldsworthy: "It is difficult to see where the government's projected growth is going to be achieved when a major contributor to the productive sector is struggling to maintain previous levels of activity ..."
    Source - New Zealand Herald 6 March 1996 "Manufacturing survey likely to prick Bolger's export bubble"

    The Youth Action programme run by NZ Employment has now been expanded to all 16-20 year olds (registered for more than three months), as part of the government strategy to ensure that all young people under 20yrs are in some form of education, training or employment. Under the programme, each young job seeker meets with an employment officer for a one-to-one interview, where together they prepare an `Action Plan'. This personal plan outlines a series of steps to be taken towards employment ... leading to further education or the other services offered such as TOPs training courses, NZES seminars on job hunting, workplace experience or employment on Taskforce Green or Job Plus schemes.
    Source - fax to the Jobs Letter 27 February 1996

    Colmar Brunton research into the types of job seekers on the NZ Employment register has led to the identification of four job-seeker traits, reports Ruth Brown in the Otago Daily Times. The largest percentage of jobseekers (at 30%) are labelled "Withdrawn" these people find it hard to get a job or have given up trying. The "Strugglers" make up 26% of the register, and they really want a job but need job-seeker skills, support, feedback and education. The "Explorers", at 17%, may need a trigger or motivation to get a job. And 27% of job seekers are "Drivers" who are likely to be recently unemployed and are optimistic about finding work.
    Source - The Otago Daily Times 6 March 1996 "Too Little Stress" by Ruth Brown.

    Cabinet papers, released under the Official Information Act, indicate that students will owe more than $4 billion under the student loans scheme by the year 2001. This loan figure is expected to rise to $18-$20 billion by the year 2024, when one person in six in the working-age population would be committed to loan repayments. The paper also says that the uptake rate for the student loans scheme has grown from 39% of students in 1992, to an estimated 73% last year, when nearly 98,000 students signed up. It estimates that 50% of the students would still be paying back student loans at age 40, and just over 10% of the students would not repay their loans by the time they turned 65. Some would die with part, or all, of their loan not repaid. The paper describes the scheme as a success and that it comprises "...a major asset on the Crown's Balance sheet."

    The loans policy was introduced in 1992 after private lenders showed little interest in this `market'. Under the policy, students can borrow up to $1000 a year to cover course-related fees and up to $4500 for living costs. The money is recouped through the tax system at a rate of 10c in the dollar on earnings above $13,884 per annum.

    Source - The Daily News 2 March 1996. "Students will owe $4b by 2001, says report" and New Zealand Herald 2 March 1996 "Long haul for student debt" by Particia Herbert.

    The Nurses Society reports that new nursing graduates are facing a year with no reasonable jobs available to them. National Director David Wills says that since November, less than 15% of nursing graduates had found jobs with CHEs, and most of them are having to look to private hospitals or to "look overseas for their first job..." The preference for most graduates is to find a position in a public hospital as the best way to gain valuable nursing experience. But Mr Wills predicts that by June, less than a third of graduates would have found work in public hospitals.
    Source - The Dominion 4 March 1996 "No reasonable jobs for nursing graduates"

    As serious casual labour shortages start to bite into the fruit-picking areas of Hawkes Bay, Nelson, Motueka and Malborough, the Immigration Service has started to grant work permits to overseas visitors to make up for the shortfall. Orchard and Vineyards Employers Association president Richard Prew says: "...when you can't get the casual staff in your country, you have to get them from overseas." The Immigration Service says it is liaising with orchardists in order to find out how many pickers are needed. The policy is that the Employment Service in an area concerned must first declare that there are no suitably skilled New Zealanders available to work, before backpackers or tourists can apply for a work permit or for a variation on their visitor's permit.

    Getting dispensations for overseas visitors to work will only form a part of the solution to the wider issue of labour shortages in the fruitpicking industry. The situation will be much worse in a couple of years with the apple crop expected to double amidst a downward trend in unemployment rates (see Jobs Letter 30). Solutions currently being discussed include transporting and housing unemployed people from other NZ districts to help during harvests.

    Another option is to co-ordinate the industry to provide full-time employment for orchard workers, who could be employed co-operatively across several orchard locations. As the industry has work of different types available 12 months of the year, but not all picking work and not all on the same property, a multi-skilled workforce could be developed to work on rotation amongst various employers.

    Source - The Dominion 8 March 1996 "Orchards short of fruitpickers"

    The government's annual review of the minimum wage comes into force this week with a rise of 2%. This means the Youth Minimum Wage (for ages 16-20yrs) will rise to $3.82/hr or $153/wk for a 40/hr week. The Adult Minimum Wage (over 20yrs) will rise to $6.37/hr or $255/wk.

    Question: Would we need the introduction of income support measures like the Independent Family Tax Credit if we had a more sufficient rise in the minimum wage ?

    Free market theory predicts that a minimum wage must lower employment levels because it raises the price of labour. For example, the Business Roundtable, in a submission to the Government last year, argues that "...there is no case for increasing the current minimum wage rates, and a strong case for reducing them as a step towards their elimination." British economic columnist Will Hutton says that many governments and employers associations are united in opposing minimum wages in principle, preferring to boost the incomes of the poor through family benefits. He says that as processes (such as NZ's Employment Contracts Act) bid down the wages of the bottom 10% of workers, then governments will need to spend more and more on family benefits. Hutton: "Essentially, the taxpayer is funding cheap labour..."

    Hutton likens the use of `family benefits' to the Speenhamland system of support which at the beginning of the 19th century locked the working class of Britain into appalling dependence and poverty. Hutton: "The idea was to save the very poor from starvation by offering them a subsistence income devised by local magistrates and funded by the ratepayer. But, just as today, the free market pushes down wages, and ratepayers found themselves subsidising rapacious employers. Poverty exploded, the rates becoming unsupportable, and the economy began to wind down as levels of demand fell away..."

    Source - Will Hutton in the Guardian Weekly 23 July 1995 "A guaranteed minimum wage makes economic sense" and "Work" the Labour Party newsletter on Labour and Employment issues March 1996.

    Auckland's Unitec Institute of Technology has started a new course of interest to charities and community groups. The Diploma in Not For Profit Management is a modular course covering the following areas: Not-for-Profit Culture and values ("... in contrast to normal commercial practice, not-for-profit agencies must worry about money in order to achieve their mission, as opposed to worrying about its mission in order to make money"), Stakeholder Communication and Image Management (" to look like a blue chip company on a potato chip budget"), Accounting and Financial Management, Small Team Leadership and Conflict Resolution ("... navigating through the perils of human behaviour"), Fundraising and Sponsorship ("...every agency's nightmare"), Volunteerism and Employee Motivation and Management, and Governance, Planning and Board Development.

    One of the main people helping to develop the Unitec course is veteran community worker Sue Bradford of the Auckland Unemployed Workers Rights Centre. Bradford: "For years, groups like ours have been very aware of the big gap in training needs for people who hold positions of responsibility in our organisations. With the continued onslaught of the effects of new right ideology on our sector through ever-tightening funding restrictions and the development of contracting as one of the main resources for community groups, it has become more important than ever that people managing our organisations have the basic skills needed to cope."

    For further details contact Unitec. Private Bag 92025, Auckland phone 09-815-4399 fax 09-815-4399.

    Source - brochure from Unitec, and letter from Sue Bradford 7 February 1996

    Internet Bookmark : Maori News on the world-wide web
    The Maori news summary Nga Korero o Te Wa is now available on the internet. Nga Korero is a monthly newsletter produced by Auckland journalist Adam Gifford. Like the Jobs Letter in format, it seeks to summarise and point towards essential news and views within Maoridom. The internet version is the same as the printed letter, and information is grouped into relevant sections (eg arts, business, people, politics etc). This homepage also links to other internet sites of Maori interest.

    Good news for the latest jobs figures in the United States has led to a massive Wall St sell-off of shares which has also led to the depression of stock-markets worldwide. The sell-off started after the US government reported that February non-farm payrolls grew 705,000 compared to forecasts of a gain of 326,000 jobs. The unemployment rate dropped from 5.8% to 5.5%. If these figures were correct, it indicates that the US is further along an economic recovery cycle than expected. The figures may yet prove to be statistical illusion: they show that the United States is creating more jobs in one month, than what continental Europe was expected to create this year.

    This may seem like `good news' for the economy, but not for Wall St. The better-than-expected jobs figures means that the US Federal Reserve, their central bank, is likely to hold its interest rates steady, or even raise them, in order to avoid inflation. The stock market was expecting the Federal Reserve to bolster the sluggish economy by cutting its interest rates. Investors immediately responded to the changing expectations with a massive sell-off, leading the Dow Jones Index to drop 171 points in trading on Friday 8th March ... this was the third biggest points fall ever.

    Source - New Zealand Herald 11 March 1996 "Massive Wall St sell-off spreads across the Atlantic". and The Dominion 13 March 1996 "Job figure spurs shakeout"
    Contracting Trends: Throughout the US last week, General Motors plants were at a standstill as 65,000 GM workers went on strike. Their strike was not so much about their present wages or conditions, but about the future of their work. The source of their dispute: the continuing use of cheaper outside contractors or "outsourcing" to make car components presently made within the GM plants.

    The GM company it says it is no longer competitive, and it is trying to save on labour costs compared to other US manufacturers who use much more outsourcing. Seventy percent of a GM motor vehicle is made by GM workers making $40/hr (including benefits). Only thirty percent is sent to outside contractors. A Chrysler vehicle shows almost the reverse picture with its $40/hr workers only making thirty percent of the vehicle, while the remaining seventy percent of the vehicle is sent out to outside contractors making half as much wages, or less. GM believes that unless it lowers its labour costs, it can never become competitive it says it makes only $413 profit on every vehicle it sells, compared to Chrysler making $2,200 per vehicle.

    Source - ABC News 12 March 1996 lead story
    The German government facing a post-war record in jobless levels is establishing is own multi-party Alliance for Jobs, reminiscent of the Australian and NZ examples of Employment Taskforces. Chancellor Kohl has called on opposition parties and the unions to help his government in the fight against unemployment, which is presently at 3.8 million or one in ten of the German workforce. Opposition parties have accepted the invitation, and federal and state agencies are joining together to set up joint working groups to propose remedies focussing on financial policies, the labour market, and social security systems.
    Source - New Zealand Herald 10 February 1996 "Germans join to create jobs".

    "The last time we got this rating was in 1983 when Muldoon was Prime Minister, and doing all the things that we're now told were very bad for us..."
    PSA President Tony Simpson, commenting on the Standard and Poors credit upgrade to AA+

    "Acting like a spoiled rich kid, Wall Street couldn't stand the news that another part of the US economy the one in which people work for a living is having a better time of it..."
    Time magazine, 18 March 1996

    To the Top
    Top of Page
    This Letter's Main Page
    Stats | Subscribe | Index |
    The Jobs Letter Home Page | The Website Home Page
    The Jobs Research Trust -- a not-for-profit Charitable Trust
    constituted in 1994
    We publish The Jobs Letter