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    Essential Information on an Essential Issue

    Letter No.52

    20 December, 1996

    The 1996-97 ILO Jobs Report -- There's plenty of work to do !!

    The appointment of Peter McCardle as the new Minister of Employment in the coalition cabinet heralds a raft of new policy changes for the unemployed, and the community and government agencies involved in their support.

    For the first time since Annette King's appointment in the late 1980's, Employment has a Minister who not only wants the job, but comes into it with a controversial agenda of his own. If the coalition process holds together, we will see more significant changes on "New Zealand's greatest challenge" than we saw coming from the Employment Taskforce process of the last term of government.

  • The Peter McCardle agenda includes :

    -- plans to make part-time work or training mandatory for the unemployed, and to replace the unemployment benefit with a community wage or training allowance.

    -- plans to restructure New Zealand Employment Service, integrating this agency with the unemployment benefits division of Social Welfare, as well as other agencies such as CEG and ETSA that run community job and training schemes.

    -- appointing Regional Commissioners of Employment who will work with regional committees and local businesses to find work for local unemployed.

    The coalition government says it will introduce programmes in the next three years that require registered unemployed to undertake a prescribed level of work or training. The coalition document does not say how much people will be paid to take part in the programme, although our Media Watch notes several reports of election campaign speeches by NZ First leader Winston Peters who referred to a $10 hourly rate.

    McCardle says his plans to replace the dole with a community wage are at least a year off. Under the scheme the unemployed will be doing "... a whole range of constructive jobs that would not otherwise be done." He says that people will be placed in only community work that was appropriate to their skills and most would work in the public sector, either in local bodies or community groups.

    According to documents released by the Alliance last week, the proposal to introduce a community wage was not agreed to by Labour in its draft agreement with NZ First. Peter McCardle, who defected from National to NZ First this year, had previously lobbied unsuccessfully for National to adopt the scheme, which had been opposed by Treasury, and the former Employment Minister Wyatt Creech.

    -- for a fuller discussion of the work-for-the-dole proposals,
    The Jobsletter Issue No.45
    also see The Jobsletter Issue No.55

  • McCardle proposes that Regional Commissioners be "contracted" to produce regional employment plans and to place long-term unemployed in their region into work. He told the Dominion that the money earmarked for the employment schemes "may be used for additional travel costs or material assistance..."

    The total employment package is projected to cost $60m in the next fiscal year, and $80m in 1998/99.

    Sources -- The Dominion 18 December 1996 "Working for benefit at least a year off says McCardle" by Jonathan MacKenzie, The Dominion 12 December 1996 "Jobless may get $10 an hour for community work" by NZPA,

    Other social and employment initiatives included in the coalition government plans include :

    -- introducing a new family service, with $70m funding a year, within the Social Welfare Department.
    -- raising the accommodation supplement by 10%, at a cost of $110m a year.
    -- spending $110m a year more on special benefits, and reviewing the formula for living costs.
    -- rentals on Housing NZ houses are frozen pending a review of their affordability for tenants.
    -- raising the adult minimum wage from the present $6.375 and hour to $7. (With a review a year later which may see it increase towards NZ First goal of $7.50).
    -- an immediate review of minimum wage rates for under 20-year olds.
    -- the Employment Contracts Act to be kept under "continuous review" as to the security of employment and fairness it offers.
    -- introducing the concept of "fair bargaining" into the Employment Contracts Act and investigating whether "casualisation" of employment is being used to undermine the development of competition in some industries.
    -- employing 500 more police officers in the next three years.
    -- scrapping the regional RHA health purchasing system, and the Crown Health Enterprises will no longer be required to be profit-driven.
    -- scrapping asset testing for elderly hospital patients, and introducing free medical care for pre-schoolers.
    -- boosting education funding by an extra $384m, mainly for primary and secondary schools.
    -- working towards the reintroduction of universal living allowances for tertiary students at rates comparable to the dole.
    -- scrapping the $1 billion "fiscal envelope" cap and settling treaty claims on their merits.
    -- setting up independent think-tanks for Maori -- a Maori Education Commission, Maori Health Promotion Unit, Maori Economic Development Unit, and a Maori Employment and Training Unit.
    -- urgently addressing the teacher shortages
    Sources -- The Dominion 12 December 1996 "Jobless may get $10 an hour for community work" by NZPA, New Zealand Herald 12 December 1996 "Work, train to get the dole" by Roger Fea


    The coalition government document says that "... it is accepted that as a general principle it is economic policy, as distinct from employment policy, that determines the numbers of employed." Consequently, the coalition deal widens the Reserve Bank's inflation target to 0-3%, and employment and growth will now be written into the goals of Reserve Bank Governor Dr Don Brash.

    But Dr Brash made it clear last week that this would not alter his interpretation of his brief, arguing that the best way the bank could promote the creation of wealth and jobs was "by protecting the purchasing power of the nation's money". He also says that the spending boost that NZ First gained from National in the coalition negotiations may frustrate the coalition's efforts to deliver an export-friendly economy.

  • Dr Brash is particularly worried about the decision to increase the adult minimum wage. He says that this could add noticeably to unit labour costs as it would directly affect about 5% of the adult workforce, and could flow through to other low-paid workers through the wage relativity system.
    Sources -- New Zealand Herald 12 December 1996 "Work, train to get the dole" by Roger Fea, and New Zealand Herald 18 December 1996 "Brash worried by coalition commitments" by Patricia Herbert

    on proposals to introduce 'work-for-the dole'

    "Tens of thousands of community wage jobs are available in areas like health and the environment. Paying the community wage is a better option than allowing people to remain on the slow poison of the dole ..."
    -- Deputy Prime Minister and NZ First leader Winston Peters

    "The proposals are unfair because not all beneficiaries would be required to work. And it's contradictory because government requires some people to work but it doesn't require the Reserve Bank to deal with unemployment. Its still using unemployment as a tool to keep inflation down..."
    -- Maxine Gay, Trade Union Federation General Secretary

    "There hasn't been too much dialogue between us ..."
    -- Local Body Association president Kerry Marshall, who was unsure whether the association had been contacted about the work-for-the-dole proposals.

    "...the idea is dangerous."
    -- reaction from Wellington's Wesley Mission executive manager Graham Weir to the suggestion from Winston Peters that the unemployed could work in rest homes.

    "Work-for-the dole schemes have never worked anywhere and will prove an expensive flop in New Zealand"
    -- Steve Maharey, Labour's Employment spokesman.

    "We are horrified by the new government's policies. NZ First have used the unemployed as a pawn in their power games without realising or understanding the devastating effect compulsory work for the dole has on people who are out of work through no fault of their own. Forced work for the dole is like periodic detention, except that the worker has not committed a crime, and has no lawyer or court system to defend their interests..."
    -- Sue Bradford, Auckland Unemployed Workers Rights Centre

    "It is good to get people back into some form of employment -- regaining the work ethic -- but there are a lot of social implications and we need to see the fine detail. What if there is not enough jobs or people don't volunteer? Do they have to live off fresh air?"
    -- Bill Smith, chief executive of the Otago-Southland Employers Association

    "We'll wait to see if Peter McCardle can produce the goods ..."
    -- Peter McCardle, when asked by the Dominion if he was confident the new system will work.

    The coalition announcement contained a curious announcement that proposed that inmates in prison will be required to work from 6am--6pm, six days a week, a policy to be achieved within the Department of Corrections existing budget of $300m. A spokeswoman for Corrections Minister Paul East says that the wording was ambiguous and should have read that the inmates will work for up to eight hours, during the hours of 6am-6pm, six days a week. The policy as announced is however "a signal of our intention to introduce a 12-hr structured day". The government plans to use the wages paid to compensate victims, prisoner's families and the state.

  • A United Nations policy guideline for work in prisons says that there should be sufficient work in prisons to maintain active employment and that work should maintain, or increase, prisoners' ability to gain employment on their release.
    Source -- The Daily News 13 December 1996 "Prisoners won't be doing 12-hr days"

    The Dominion newspaper says that the latest report of the International Labour Organisation (ILO) on World Employment is "... an unintentional back-handed compliment to the labour market policies that NZ has been following since 1991." In an editorial, the Dominion says the report shows that the ILO is itself "a part of the problem" when it insists on special provisions for trade unions which "... restricts companies unreasonably, adds unnecessarily to their costs, and throws a wet blanket over job creation."

    The Dominion: "NZ would be in deep trouble if it had the European Union's unemployment rate of 11.3%. Even our 10.9% peak in 1991, which seemed bad enough, was better than the current figures from Europe. A thread running through most of these economies is their enthusiastic embrace of ILO standards and the social charter of the European Union, Britain being the exception. As usual, the price of rules that restrict flexibility and over-protect those in employment is paid in the denial of jobs to others ..."

    Source -- Editorial in The Dominion 5 December 1996 "Free markets provide jobs"

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