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Essential Information on an Essential Issue
19 May, 1997
ECO-TAX REFORM -- Job Creation by Going Green
- NEW EMPLOYMENT STALLED
Official unemployment has risen 0.5% to 6.4% in the March quarter, and is the highest in
two years. The number of people in jobs is down by 2,000 or 0.1%, continuing the stall in job
creation over the last six months. In this issue of the Jobs Letter, we feature our regular review of
the employment statistics. Some highlights:
The number of long-term unemployed (over six months) the prime focus of government
policies has risen by 2,700 in the year to March to a new total of 39,400.
The Maori unemployment rate has risen by 1% to 16.2%, while Pacific Island unemployment
has risen by 2% to 16.9%.
For the first time in recent years, the 6.7% female unemployment rate is higher than the 6.2%
rate for men.
The unemployment register at NZES rose by 3.4% or 5,130 people in the month of April
to 157,841 people.
- ECONOMY SLOWING SAY MANUFACTURERS
Rising unemployment figures are confirming that the economy is slowing, according to the
chief executive of the Christchurch Manufacturers' Assoc. Michael Hannah. He says that while
the lowering of short-term interest rates are welcomed, the longer-term picture does not look
so appealing. He points to a `lag' between employment changes in the service sector following
an earlier drop in incomes in the producer sector. Hannah: "We are aware that local
service-industry redundancies, affecting telecommunications, banking, insurance, and shipping are yet to feed
into the unemployment figures ..."
Hannah says the latest rise in unemployment highlights the difficulties faced by manufacturers
and others exposed to the "lethal cocktail" of a high dollar and high domestic costs. He says that
most of the rise in unemployment rate was due to a drop in jobs in manufacturing and agriculture,
the very sectors most exposed to the exchange rate.
The stats: Employment in manufacturing is down by 3.7% or 10,900 people in the year to
Mar 97. Employment in agriculture, hunting, fishing and forestry is down by 16,700 people, or 10%.
- FEWER JOBS GOOD NEWS FOR THE MARKETS
The downturn in job creation is seen to be "good news" for the financial markets. Almost
immediately on the announcement of the employment statistics, residential home mortgage rates
were cut, share prices rose, and the currency dropped. Bankers Trust says in its commentary on
the jobs data that it was "unambiguously" good news for the inflation outlook. According to
the financial sector, the weaker the jobs statistics, the less risk there is to inflation, and so the
lower interest rates can be.
- WOMEN IN THE STATISTICS
Statistics NZ puts the volatility of the unemployment statistics down in large part to the
large swings each quarter in the number of women seeking work. The number of unemployed
women has fluctuated between 49,000 and 54,000 over the past year. Patricia Herbert of the New
Zealand Herald comments that the overall increase in unemployment is in some ways artificial
because it does not reflect economic factors so much as the impact of Government policies that
are designed to encourage domestic purposes beneficiaries back onto the job market.
Herbert: "The amount people on the DPB can earn before having their benefits cut was raised
on July 1 from around $50-60 a week to $80. And they have been warned that the government
plans to impose a work test on them further down the track. These moves encouraged a number
of beneficiaries to seek work in the Sept quarter, but as December approached, many stopped
looking as they knew they would have to be home to look after their children during the
summer holidays. They returned to the job market when school resumed ..."
- McCARDLE PUTS FAITH IN GROWTH
What will reduce the overall level of unemployment? Employment Minister Peter McCardle
is continuing to put his faith in the overall coalition government's plans to achieve stronger
economic growth. Bob Edlin of the Independent quotes McCardle in estimating that we need
2.5%-3% gdp growth just to absorb the new entrants into the job market, and more growth than this
if we actually want to reduce the numbers of unemployed. The latest "concensus forecasts"
(which average the predictions of a range of forecasters) point to only a 2.5% gdp growth in the year
to 31 March 1998. Edlin: "By McCardle's own account, that's not enough to do the trick ..."
Meanwhile, as the coalition government gets on with economic growth as its primary
employment strategy, McCardle is focussing on reducing the time people are unemployed as the key
challenge of his proposed jobs policies. He told Parliament's social services select committee that
about 50% of unemployed people have been out of work for six months or more, compared with
about 16% in 1984.
McCardle hopes that his opponents will put aside their "pre-occupation" with
anti-workfare campaigns and consider the benefits that the entire employment policy will have for job
seekers: "This government aims to have a balanced and personalised approach to addressing
unemployment that is not derived from any punitive motivation, but rather will deliver better outcomes
for those job seekers most in need..."
- SUE BRADFORD ORGANISING AGAINST WORKFARE
Veteran activist Sue Bradford believes that NZ is entering another downward employment
cycle and she expects the official jobless figures to be well over 200,000 people by the middle of
this year. The Auckland Unemployed Workers Rights Centre is currently seeking the support of
trade unions, community organisations and churches in a campaign of lobbying and direct action
which they hope will "make mass work-for-the-dole schemes inoperable in NZ". They are targeting
the upcoming Budget as a date for direct action activities.
Sources - The Daily News 7 May 1997 "Employment Data sparks mortgage cut"; New Zealand Herald 6 May 1997 "Job
News keeps markets dangling" by Brian Fallow; New Zealand Herald 7 May 1997 "Jobs reversal signals home loans cut"
by Patricia Herbert; The Dominion 7 May 1997 "Unemployment rises to 6.4%"; The Dominion 8 May 1997 "Focus on
cutting long-term jobless" by NZPA; The Independent 9 May 1997 "Money Markets make merry as unemployment rises" by
Bob Edlin; The Christchurch Press 7 May 1997 "Regional unemployment may get worse, says chief" by Greg Jackson; fax
from Peter McCardle to the Jobs Letter 14 May 1997 "McCardle says Welfare groups should read employment policy
more closely"; fax from Sue Bradford to the Jobs Letter 7 May 1997 "Unemployed attack jobless rise".
- COMMUNITYWORKS DESIGNING A WORKFARE SCHEME THAT WORKS
The Community Employment Initiatives Group (CEIG), an informal grouping of 23
employment-related groups in Christchurch, has come up with their own plan for a community work
programme which they hope will have some influence on the policies of the upcoming
McCardle workfare schemes. The CEIG group has been meeting since January looking at
McCardle's concept of the "community wage". They believe that politicians "have little idea" on how
to implement this, and that the community sector has the closest understanding of the needs
and fears of long-term unemployed people. The group decided to design their own scheme for
local conditions, rather than wait to have one imposed on them from Wellington. They are
currently promoting their proposal with the Minister and relevant departments.
The CEIG group is up-front about their own concerns about the concept of a "community
wage". They say there is a perception that the schemes will be used to "punish" people for being
unemployed, and that the new policies imply there is enough full-time work for everyone, and a
match between skills of the present unemployed and available work. CEIG fears a displacement
of existing workers with the new schemes, and that they will be used to drive wages down.
CEIG is calling for community work schemes which are themselves part of a wider approach
to unemployment, including: reducing the standard working week to 30hrs, redefining "work"
to encompass service and leisure involvement which is not currently being acknowledged,
incorporating the non-paid work into the evaluation of the success of the economy, and using
social accounting principles.
Their proposal: Communityworks. They suggest a pilot programme to be run for a
two-year period from 1 July 1997. The individual projects would cover a wide range of work, and
leisure with a training component built into all projects. Fully paid and trained supervisors will be
employed on two-year contracts. The participants would have up to two years on a project, and
be able to transfer between projects in that time. They would work between 6-8 hrs a day, two
days a week, and receive $80 per week Participant's Allowance, which would not effect current
benefits or other allowances.
Source - notes of OHP presentation from Community Employment Initiatives Group Christchurch faxed to the Jobs Letter
- UNIONS DESCRIBE PRISON WORK POLICY AS SLAVERY
The proposed new policies to make prisoners work will introduce slavery into prisons,
according to Maxine Gay of the Trade Union Federation (TUF). The new policies will commercialise
inmate employment, and the inmates will be paid an average of $13 for a 30-hr working week.
Gay: "There is only one word for labour without wages, and that is slavery. The TUF supports
an increase in rehabilitation programmes inside the prisons. However, slavery is not
rehabilitation, and programmes must be designed that do not put law-abiding citizens out of work ..."
Meanwhile, Dept of Corrections service development manager Mike Curran is re-assuring
people that the prisons are not going into markets "where we would immediately drive people out
of jobs..." He says that `slavery' is not an appropriate label for what amounts to giving prison
inmates a constructive activity. Curran: "We tend to target the sort of jobs that no-one else
wants, like clearing swamps and packaging nails into plastic bags ... the sort of stuff that private
industry generally can't get people to do." He points out that profits would not be huge from the
prison ventures the department had security costs that other businesses don't have to face, and
many of its workers were unskilled, resulting in lower productivity.
Source - Otago Daily Times 29 April 1997 "Proposed prison work policy `slavery', unions say. .
- BRITAIN: RADICAL WELFARE CHANGES
In the UK, the new Chancellor of the Exchequer, Gordon Brown, is preparing to announce
what the Guardian calls "the most radical welfare Budget since the second world war". His aim:
placing high employment and growth along with low inflation as explicit goals of economic policy,
decisively raising public and private investment, while fighting long-term unemployment, poor
housing and social exclusion. One of his first acts is to add "high and sustainable levels of
employment" to form part of a new Treasury mission statement a return to one of the key
objectives of the historic 1944 employment white paper.
Brown says he wants to be judged on his success in helping to reshape the welfare state: "I
am not interested in measures that just alleviate the problem of youth and long-term
unemployment for a few months. I'm interested in developing a welfare state built around the work ethic.
In 1997, there have been 600,000 young people aged under 25 without work. How is it a
society like ours can get itself into a position where we are wasting talents like this?"
Brown says there will be four options for the young unemployed a
£60-a-week subsidy to employers who offered a straight job, a premium to the state benefit if work is taken in the
voluntary sector, jobs in a new environmental task force, and relaxation of the 16-hour rule to
allow youngsters to train without loss of benefit. He is also backing changes to the benefit
structure designed to remove disincentives to work for jobless households and single parents.
Source The Guardian Weekly Volume 156 Issue 20 for week ending May 18, 1997 "Brown promises radical welfare
Budget" by Will Hutton, Patrick Wintour and William Keegan
- VOICE : UK LABOUR LOSES ITS ENEMIES
" Whereas "Old" Labour was always willing to name its enemies the bankers, the gnomes
of Zurich, the rich, the ruling class, the public schools, the scions of industry "New" Labour
has put a stop to all that. Its only enemies are concepts: inefficiency, waste, anti-social
behaviour, nostalgia and incompetence.
" This change of emphasis is important because it underpins Labour's technocratic approach
to running Britain. Once you have dispensed with the idea that conflict is natural even healthy
and that there are no real class or sectional interests, the answer to every problem is to call in
[...] The obsession with stability is part of the pretence that conflict is no longer necessary
nor desirable. What is happening is not that conflict has been eliminated, but that it is moved from
the centre of the political arena, where it belongs, to the fringes, where it does not. As such,
making economics into a conflict-free zone is doubly dangerous, because into the vacuum comes
social authoritarianism ..."
-- Larry Elliott, columnist for The Guardian, May 18, 1997
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