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    Essential Information on an Essential Issue

    Letter No.45

    27 August, 1996

    An essential summary of the latest employment statistics.
    NZ First's Community Wage, Work-for-the-Dole, and Workfare.

    The latest employment statistics -- the last before the elections -- show a slight drop in the official unemployment rate from 6.2% to 6.1%, although the level of unemployment is only returning to what it was one year ago. The good news: the economy has had a better-than-expected job growth of 0.9% in the June quarter. We include a special insert on the job statistics in this issue of the Jobs Letter.

    Question : Why do we have increasing job growth while at the same time our unemployment rate seems stuck at just over 6%? The reason is that the workforce itself -- defined as everyone aged 15 or over -- is growing faster than the ability of the economy to create new jobs. This is particularly true in Auckland, which has a young population structure and is the favoured destination for immigrants. Last year, Auckland held three-quarters of the new 45,000 labour force entrants.
    Source - New Zealand Herald 16 August 1996 "Pre-election job figures better than expected" by Patricia Herbert

    Jim Anderton says that unemployment will remain at 6% because he believes that the government, the Reserve Bank and the Treasury all have policies designed to keep it that high. He says that the Reserve Bank's monetary policy and inflation target require a minimum level of unemployment in order to restrain wage rises and help to keep inflation low.

    Anderton says that Treasury's anti-employment stance had been released inadvertently in a paper on tax cuts and their macro-economic impact, as analysed through the use of a Treasury economic model. According to the paper, the ongoing unemployment rate is described within the economic term NAIRU (non-accelerating inflation rate of unemployment) which the Treasury model determines to be at 5.9%.

    Anderton: "That's the rate of unemployment Treasury determines we must have to keep prices stable. If it were to go lower, the government would act through a combination of higher interest rates and a higher exchange rate to reduce economic activity and increase unemployment..."

    Source - Sunday Star-Times 18 August 1996 "Fewer jobless bad news for market" by Bob Edlin

    What will happen to forestry jobs after the sale of Forestry Corp to the Fletcher-led consortium? Reports last week indicate an uncertain future for the 400 workers at the Waipa mill after the sale, although there may be further jobs created from investment in new processing facilities.

    The Forestry Corp sale is the second biggest privatisation sale of a state asset, after the Telecom sale. The sale includes the cutting rights to the giant Kaingaroa Forest and the Waipa sawmill. Most of the land has not been sold, because it is leased from the Crown, and subject to 20 Maori land claims. It is a controversial sale, coming just weeks before the first MMP election. The government got $1.6 billion from the sale which will go towards retiring foreign currency debt. At present the Forestry Corp employs 700 people and has contractors who employ a further 1100 people, contributing an estimated $150m a year to the Bay of Plenty economy.

  • At the announcement, Forestry Corp chief Michael Andrews gave a commitment to invest $16m in upgrading the Waipa mill, but also said he could give no long-term plans for the mill or its 400 workers. He also said Fletchers will invest $260m in new processing facilities over the next eight years, which could lead to the creation of 700 new jobs. The 22,000 logs that the Forestry Corporation presently ships overseas each week, will now be processed in the region.

    But the New Zealand Herald reports that the $260m is about half of the $500-600m that the government said it would have to invest in the Forestry Corporation if the asset was kept in public ownership. Fletchers will also look towards creating economies of scale after more than doubling its forestry estate to 300,000 hectares. Fletchers has suggested that better mill and processing technology will cut staff numbers. It is also considering extending its contracting work from silviculture, harvesting and transport into processing activities. Fletchers: "These contractor relationships are very efficient usually employing fewer people, but they do create a number of business people within the communities..."

  • Also uncertain: the future of some co-operative forestry research at the Forestry Research Institute. It employs about 500 people, including 370 researchers in six science divisions, mostly in Rotorua. Nearly half of its $40m annual funding comes form the commercial sector, but the rest comes from the government's public good science fund. Fletchers told the Institute last week that it was pulling out of co-operative research into eucalyptus, and reviewing its involvement in other programmes.
    Sources - New Zealand Herald 20 August 1996 "Down in the Forest something big is stirring" and "Tree boffins foresee hard times" by James Gardiner; New Zealand Herald 21 August 1996 "Waipa mill staff fear job losses" and "Net gain raises question on new jobs" by Bernard Orsman, The Dominion 21 August 1996 "$2b for Forestry Corp" by James Weir and Anna Kominik.

    The violent riot scenes at Canberra's New Parliament House just before the announcement of the latest Australian Budget were the most visible expressions of outrage at the Australian government's plans for massive budget cut-backs and the rollback of the Australian welfare state. A broad coalition of 20,000 people -- unions, Aborigines, doctors, students, community, welfare and youth organisations -- were angered at deep cuts to education and job programmes, increased health costs, and a raft of broken election promises. The Howard government plans to chop $400m off Aboriginal Affairs, 30,000 public servants will lose their jobs, and the union movement will be significantly curtailed by new industrial legislation.
    Source - New Zealand Herald 22 August 1996 "Australia licks its budget wounds" and TV3 news item 21 August 1996

    NZ First has announced more details of its employment policies: Anyone unemployed for more than six months would be required to work; the unemployment benefit will be renamed a 'community wage'; an additional $150m will be provided for community employment initiatives; a one-stop shop will be created for all employment assistance, income support and education and training advice for unemployed people; and regional employment commissioners and regional employment committees will be appointed. (see feature in this issue on Workfare policies)
    Sources - New Zealand Herald 10 August 1996 "Work for dole with NZ First" by Audrey Young, and Sunday Star-Times 18 August 1996 "NZ First works to promote its new employment policy" by Ian Templeton

    For the second time, Hamilton City Council workers have sought court action in order to halt the restructuring plans of the council, which has sold its contracting department, tendering out $7m worth of work formerly done by its Citiworks staff.

    Earlier this month, the council voted to accept another 14 tenders for its work, and 53 Citiworks staff were handed redundancy notices, bringing the total axed staff to 113, including management and community development workers. Public Relations and Administration staff will hear if they still have jobs next month.

    Source - New Zealand Herald 22 August 1996 "Protest March"

    The Ministry of Corrections has bought the assets of a footwear factory in Wanganui and is planning to staff it with prisoners. Footlab Pacific, formerly owned by Hannahs, went into receivership earlier this year. The Wanganui Prison has resurrected the business and will operate it from within its institution. Some staff from the old business will be asked to provide some management. The Prison says it will inherit the market Hannahs had before it went into receivership, and will also provide shoes for other prisons.

  • The Footwear Industry Association is angry it was not consulted over the moves to make shoes in prison. Association President Nigel McKinlay says: "I can't get my head around the decision. If the intention is to compete in the marketplace using prison labour at subsidised or artificially low wage rates and with the business financed by government money ... then our industry will be concerned."

  • Footwear Workers Union secretary Robert Reid says the workers from the former Hannah's workplace are outraged at the decision. His union represents the 70 workers who lost their jobs when the Footlab plant closed down. They had not yet got any redundancy pay after the receivership. Reid: "I cannot believe that 70 law-abiding footwear workers have lost their jobs to be replaced by prison labour. Thousands of footwear workers have lost their jobs over the past decade because of the reduction of tariffs on imported shoes ... Is the only way for a footwear worker in NZ to get a job, to rob a bank and get put in prison?"

    The Minister of Corrections, Paul East says that the launch of the footwear factory at Wanganui prison is part of the government's commitment to "have every prison a factory and every inmate a worker..." The government proposes that prisoners will work a 30-hr week for up to 92c a day, aimed at "preparing them for life on the outside."

    Prisons already house more than 100 industries from making school furniture, running orchards and forests, bone carving, sewing and landscaping. Most of the schemes reduced the running costs of the prison, and if commodities are sold, the money is reinvested. East: "Many offenders come to prison with few or no work skills and unless they learn the value of an honest day's work, they will find it hard to get a job upon release and may re-offend..."

  • see also "Incarceration a new growth business" in Jobs Letter No.49

    Sources - New Zealand Herald 15 August 1996 "Jobs plan to ready inmates for release" by Alison Horwood and Roger Wakefield, and The Daily News 15 August 1996 "Prisoners taking our jobs"

    Former Employment Taskforce chairman and National Bank Chief Executive Sir John Anderson has written to his bank staff with the news that some will lose their jobs due to cost-cutting measures. Anderson says that the bank is making less profit ... so costs have to be reduced. The details of the job losses will be announced over the next six months.

    More layoffs are also expected in the banking industry as a result of the Westpac takeover of Trust Bank.

    Source - TV One news item 15 August 1996 by Lorelei Mason

    Seventeen Georgie Pie Restaurants have been sold to its competitor McDonalds in the first moves by the food giant Progressive Enterprises in getting out of the unprofitable fast food chain. The remaining 15 Georgie Pie restaurants will continue to trade, although leases on four outlets will not be renewed when they lapse in the next two years. There are about 800 Georgie Pie jobs at stake in this deal, but McDonalds say they are confident they will be able to take on all workers who are willing to shift from selling pies to hamburgers.
    Source - New Zealand Herald 22 August 1996 "Pie becomes food image problem" by Leanne Moore and TV1 News item 21 August 1996 by John Stewart

    The Auckland Unemployed Workers Rights Centre is touring the North Island with a roadshow entitled "Telling the Other Story", a 75-min performance of drama, songs and skits to show the political events of the last decade from the viewpoint of the unemployed, beneficiaries and the low paid. The performance is followed by discussions of local issues, and the upcoming choices in the election. The ten-person roadshow is led by activist Sue Bradford.
    Source - brochure from Sue Bradford August 1996

    "If you can't afford to pay a necessary worker a decent wage -- then you have a business problem, not an employment problem..."
    -- advice to South Island farmers from Rod O'Beirne, national deputy chairman of the Agriculture Industry Training Organisation.

    Workers used to be sacked, dismissed or laid off. In the blunt days of Victorian capitalism, they called it the axe, the boot, the chop, the elbow and 'the bum's rush'. But in the 1990s, and after a fifteen years of redundancies by employers, the 'spin doctors' have come up with some very creative ways of describing/disguising the process of making someone unemployed.

    Britain's fourth biggest union, the GMB for general workers, has put together a list of 50 ways employers today are describing the process of giving someone the sack. The list includes 'downsizing' (a word coined by American economics guru Stephen Roach), and also: 'rationalisation', 'delayering', 'restructuring', 'democratic streamlining', 'increasing capital effectiveness', 'shaping up for tomorrow', 'equalisation of the payroll to manpower requirements', or a 'radical examination of our overheads'.

    The union reports that some workers were told: "You've made yourself redundant", and that they had "priced yourself out of the market". Others heard: "Think of this as a career opportunity", or "This will get you out of a rut ...".

    Source - New Zealand Herald 12 June 1996 "Downsized, delayerd, whatever, they all spell the sack"and Guardian Weekly 16 June 1996 "fifty ways to lose your workforce"

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