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    Essential Information on an Essential Issue

    Letter No.46

    13 September, 1996

    Sixty Years of Citizen Keynes -- some tributes to a forgotten revolution.
    Training and Jobs -- ETSA replies to some of the challenges on just what works.

    Our Media Watch says that we have had more announcements of lay-offs in NZ firms in the last six weeks, than we have reported in the last six months. The most recent job losses (see also our report in Jobs Letter No.44) now include :

  • The Arnotts Otahuhu biscuit factory will close with the loss of 290 jobs. Like the Cedenco announcement last month, the jobs are shifting to Australia, with Arnotts saying it will be supplying NZ from its new Sydney manufacturing plants. The closure is part of a programme by the company to modernise and upgrade manufacturing facilities, which has already seen four other plants close across the Tasman.

  • Palmerston North animal eartag company Allflex has announced it will close its factory and move production overseas, with the loss of 130 local jobs. The company's American owners said that high transport costs for raw materials and the high exchange rate for the kiwi dollar meant that upgrading the aging plant was uneconomical. Manufacturing will now be carried out in North America, France and China.

  • Kiwi International Airline came to an abrupt halt last week, not only stranding 3000 passengers, but laying off 169 staff in Hamilton, Dunedin and Brisbane. This is in addition to the 90 staff laid off in earlier cut-back measures aimed at trying to save the troubled airline. The staff are unlikely to be paid any redundancy money, nor recover the training bonds ($1,000) paid by staff employed in the last eight months.
    Sources -- New Zealand Herald 6 September 1996 "Biscuit jobs going to Australia" by Roger Fea; The Dominion 31 August 1996 "130 jobs to go as Allflex production shifts abroad" by Roeland van den Bergh; New Zealand Herald 10 and 11 September 1996 "Airline goes into liquidation" by Monique Devereux and "From a dream to the dole queue again".

    Australia is to privatise its Employment Service. At last month's Australian Budget announcement, the Howard government released Reforming Employment Assistance, a ministerial statement on employment, education, training and youth affairs. The statement outlines the government's plans for dramatic changes to labour market assistance and spells out the end of the Commonwealth Employment Service (CES), the Australian equivalent to the NZ Employment service.

    The CES will in effect be privatised with the creation of an "employment placement market" in which private sector Employment Placement Enterprises (EPEs) are to compete by tendering for contracts with the government to perform employment placement functions formerly performed by the CES. EPEs would be rewarded by the payment of set fees for the successful placement of various categories of unemployed people into jobs, as well as for other functions.

    The vast majority of existing CES staff (around 7000) would be transferred to a public EPE (or PEPE), which would compete against private EPEs for contracts. Although public sector employees would go to the PEPE with public sector wages and conditions, these would cease to apply at an early stage of the PEPE's existence so as to enable the PEPE to compete with the EPEs on equal terms, and to yield the "efficiencies" desired by the Australian government.

    see also feature in Jobs Letter No.48
    Source -- Green Left Weekly 11 September 1996 "7000 jobs to go in privatised CES" by Daniel Kelly

    Is the high exchange rate of the kiwi dollar a major job-killer as several candidates in the current election debates are claiming?The suggestion is that the rush of manufacturing plants to Australia is because the high exchange rate means it is cheaper to supply the NZ market from Australia than to continue manufacturing here.

  • Jim Anderton criticises the management of the exchange rate by Reserve Bank policies: " The anti-business monetary policy means that the NZ exchange rate compared to the Australian dollar has risen by 23% since 1991. This makes our products less competitive on the Australian market. The monetary policies are to raise interest rates in order to raise the exchange rate ... which means we now have one of the highest real interest rates in the world, nearly 9% real. This brings in foreign capital to speculate on the NZ market ... pushing up the exchange rate, and making a very unfriendly environment for the manufacturers, agricultural and horticultural exporters in this country."

  • New Zealand Herald reports that no-one is keeping a complete list of just how many jobs are going to Australia through company transfers in recent times. But among them are: Arnotts, from South Auckland to Sydney (290 jobs); Cedenco, from Gisborne to Victoria (up to 400 local job losses); Helene Curtis, from Christchurch to Sydney (118 jobs); SC Johnson Wax, from South Auckland to Sydney (45 jobs); Caroma Industries, from Mt Roskill to Adelaide (25 jobs); Corfu Jeans, from Thames to Adelaide (25 jobs); Johnson and Johnson (job losses unknown); and Reckitt and Coleman, from Avondale (107 jobs).

  • Arnotts and Cedenco, the two high-profile job losses to Australia in recent weeks, say however that the exchange rate situation was not the biggest factor in their decision to move. Arnotts says their factory was over 40 years old and only working at 53% capacity. It would have cost too much to bring up to world standards. Cedenco was lured across the Tasman by a lucrative joint-venture offer, and by cash and regulatory inducements by the Victoria State government.

  • Bruce Goldsworthy of the Auckland Manufacturers Association told the New Zealand Herald that many Australian companies only set up in NZ in the first place because of the import barriers that existed under previous trade policies. Now that CER (Closer Economic Relations) with Australia has established a single Australasian market, their rationale for being here has evaporated. Economics editor Patricia Herbert says that while NZ manufacturers were quick to exploit the opportunities under CER, recent declining NZ sales statistics suggest that the balance of advantage is beginning to swing towards Australia.
    Sources -- TV3 News 5 September 1996 Bill Ralston interview with Jim Anderton" and New Zealand Herald 11 September 1996 "Formerly made in NZ" by Patrician Herbert

    The pre-election sale of the Works Corporation to overseas based companies last month is as controversial as the recent Forestry Sale ... it is doubtful that under an MMP coalition government that the political will would still exist to sell-off profit-making government enterprises.

  • The Works Corp sale also represents the selling of a huge amount of specialist knowledge on our public infrastructure. After all, the old Works and Development Ministry and Public Works Department build virtually all government-funded infrastructure in NZ from 1879 to the 1980s. This included all dams, roads, airports, urban water supply schemes, bridges, tunnels, power stations and public buildings. If a future government wants to embark on a major programme of public works projects (as, for example, the Alliance announced in its employment policies last week), then it no longer has its own assets or infrastructure experts to work with.

  • There were fears of job losses with the Works Corp sale -- a year ago, the three divisions of Works Corp employed more than 2600 people, but intended to reduce that to 2300. The new owners (Hong-Kong based Downer and Co, and Malaysian-based Kinta Keilas) say they are committing themselves to job expansion with their purchases, but would give no figures.
    Source - The Dominion 27 August 1996 "Crown poised to sell Works" by Steve Evans, 28 August 1996 "Works Corporation sold for $89.8m" by Ruth Laugesen; and New Zealand Herald 27 August 1996 "Works Corp sale report stirs union" by John Armstrong.

    The annual Lampen salary survey reports that few Auckland employers expect the steady employment conditions of the past year to continue. Only 5% of the 270 employers surveyed expect "little or no change". 10% of Auckland businesses plan changes through either restructuring, a merger or acquisition, or a consolidation of operations. Most expect some growth with an increase in skilled staff and a bigger focus on customer service. 20% of employers expect a shortage of skilled workers will continue and only 6% expect a salary and wage increase.

    88% believe there will be no changes to employment with the introduction of the MMP electoral system, but it is believed MMP will create uncertainty and instability in the private sector, and, possibly, a reduction in the job market.

    Source - New Zealand Herald 10 September 1996 "Employers tip year of change"

    Primary school teacher job vacancies have nearly doubled in the past year. 298 positions were advertised in the 19 August Education Gazette, compared with 153 last August. And Education Institute national secretary Rosslyn Noonan says she hears reports of serious difficulties filling the positions everywhere.
    Source - The Dominion 27 August 1996 "300 primary teacher jobs still vacant" by Murray Williams.

    The NZ Employment Service has changed the eligibility for the Business Training Allowance and the Enterprise Allowance. Unemployed people now have to be on the dole for six months before they fit the criteria for this support which enables the unemployed to explore self-employment proposals. (The previous criteria was 15 weeks on the dole).

    This change effects many Enterprise Agencies who rely on the grants to subsidise their advice and support of new businesses being started by unemployed people. One Enterprise Agency manager who rang The Jobs Letter says that the time-limit on eligibility for the self-employment schemes can work against the effectiveness of the scheme itself: "... we all know that once the unemployed hit the six-month point, a heck of a lot of creativity and initiative disappears."

    Source - change confirmed by Howard Vickerage of NZES phonecall 9 September 1996, and call from manager of Enterprise Agency to the Jobs Letter 6 September 1996

    Hawkes Bay pipfruit orchardists and packers have been told to improve the way they treat their staff if they want to overcome the looming picking and packing labour shortages. The Pipfruit Industry Task Group finds that an extra 4000 seasonal workers will be needed to harvest and pack the Hawkes Bay pipfruit crop by the year 2000, and it reports that "labour management practices" are the most important issue for potential workers. Many of the workers surveyed said they were tired of being treated as "faceless labour units".
    Source - The Dominion 3 September 1996 "Faceless labour units complain" by Philip Kitchin

    Auckland University economist Keith Rankin comments on the continuing debate over the 'employed' statistics and how they may be disguising subtler levels of unemployment (see previous issues of the Jobs Letter). Rankin says that the definition of "employed" also includes a number of people who work zero paid hours; ie in "family" businesses. Rankin: "It is of course obvious that unemployed people will lend a hand in a family business. The 1996 census told people working 1 hour without pay in a family business to skip the question about whether they were seeking work, on the grounds that "we are not interested in whether the employed are seeking work..." (reply to a query by Rankin to Statistics NZ re the census format)

  • Rankin also says that It is important to recognise that the "employed" total in the Household Labour Force Survey (HLFS) run by Statistics NZ is not in any way a total of the number of jobs. Rankin: "Self employment is not a job, per se, and in many cases it is another way of being unemployed. And of course unpaid work in a family business is not a job... Furthermore, people employed "fulltime" may not have a fulltime job; they may have two or more part time jobs." Rankin recommends looking at the Quarterly Employment Survey (QES) to see what is happening to jobs, not the HLFS. The QES is a survey of firms, and he says the latest data shows that we have 50,000 fewer fulltime jobs in 1996 than in 1987.
    Source - email to the Jobs Letter 16 July 1996 from Keith Rankin

    Men and Income. Keith Rankin also points to a substantial decline in incomes of NZ males aged 25-34 years, and says this is a major factor behind family poverty in NZ. His figures: From 1981 to 1991, the median inflation adjusted incomes of NZ males aged 25-34 years fell by 26%. Rankin observes that since 1991 we have had the benefit cuts, the Employment Contracts Act and the Child Support Act ... all of which have added to the downward pressures on male incomes.
    Source - email to the Jobs Letter 5 September 1996 from Keith Rankin

    National Housing Day was marked on September 9th, and Jill Van Angeren of the Citizens Advice Bureaus Association predicts that large numbers of homeless people could soon be seen in Auckland -- on the scale of those in big cities overseas. The CABs had a 40% increase in the number of emergency housing inquiries in the past three years ... with half the 2500 inquiries last year coming from Auckland. The CAB Association points to a shortage of Housing NZ accommodation, rents and bonds often being too high for people on benefits and low incomes, and clients forced to live in garages and caravans ... as reasons for their increase in inquiries.
    Source - The Dominion 9 September 1996 "Homeless surge predicted"

    A national network of foodbanks, churches and community groups will be highlighting poverty issues in NZ during a Poverty Action Week to be held in the first week of October. It will involve a range of protest actions including the closure of foodbanks, pointing to the deficiencies in the benefit system, and highlighting how foodbanks "are being used to underwrite the inadequate benefit system..."

    The week of action follows on from the Letter on Poverty which was addressed to all churches in the country last month, asking congregations to consider seriously the issue of poverty and its impacts. The National Day of Action on Poverty, October 3rd, will be the main NZ day to mark the International Year for the Eradication of Poverty.

    Source - press release from Ian Ritchie, emailed to the Jobs letter 3 September 1996

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