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    Essential Information on an Essential Issue

    Letter No.65

    22 August, 1997

    The latest official unemployment rate is up for the June quarter to 6.7% or 122,000 people, 13,000 more than a year ago. The numbers of people in jobs also rose 0.2% to 1,693,000 people, largely comprised of a rise in part-time employment. In the year to June, part-time work has grown 3.2%, while full-time employment has shrunk by 0.5%. We include our regular Statistics That Matter feature in this issue of The Jobs Letter.

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  • Winners and losers: The largest increase in employment has been business and financial services (up 21.3% in the past year), off-set by decreases in manufacturing (down 5.9%) and agriculture, forestry and fishing (down 7.9%).
  • Despite the government focussing on long-term unemployed, those out-of-work for longer than six months increased by 1,600 in the year to June 97, to reach 38,000 people.

  • The Maori unemployment rate, at 16.6% is now almost 2½ times the rate for the general population.

  • Northland has sustained the biggest jobless rise of all the regions from 8.5% to 9.8% over the quarter. A large contributing factor to this rise was the recent benefit changes which are requiring more beneficiaries to enrol with the NZ Employment Service and "actively seek work"

  • The number of jobs advertised nationally has continued to fall, with the ad numbers down by 4.9% on a year ago, according to the ANZ Bank's monthly job ad survey.

  • Our Media Watch reports that despite the unemployment numbers being the highest number in nearly three years, media coverage of the jobless figures was less than usual, and was tucked away in the business sections of some of the major newspapers.

  • The financial markets were not happy with the unemployment statistics, mainly because the figures were not as bad as they were predicting. Financial analysts had been expecting unemployment to reach a 7% rate, and for employment levels to fall further. The stronger-than-expected jobs data has dimmed hopes in the financial sector that the Reserve Bank will ease up on monetary conditions.

  • BNZ chief economist Tony Alexander however is maintaining his view that unemployment will reach 7.5% by the end of this year. His reason: companies are involved in a second round of restructuring in response to the weak economy, keeping confidence and spending low.
    Sources The Daily News 6 August 1997 "Maori jobless figures rise" by NZPA, and "Job data dims hope for monetary easing" by Chris Cameron-Jones; The Dominion 4 August 1997 "Data tipped to show jobless rise" by NZPA, 6 August 1997 "Jobless figures surprise" by James Weir, and "Jobless number 14,000 more than a year ago survey shows" by Helen Bain; New Zealand Herald 6 August 1997 "Jobless numbers continue to rise" by Patricia Herbert, 12 August 1997 "Job ad numbers still on decline" by NZPA; The Independent 8 August 1997 "Job figures give markets a nudge".

    The NZ Employment Service (NZES) has launched its campaign to vastly extend its Community Taskforce programme to a running total of 7-10,000 people (compared with the present 2,500 people). A national TV advertising campaign featuring "real job seekers and real sponsors" has begun in an effort to convince more community organisations, education and health authorities, government departments, local authorities and private employers to take part.

  • Jobseekers can nominate themselves for Community Taskforce, and they do not have to be on a benefit to qualify. Long-term unemployed people who have been on a work-tested benefit for six-months or more may be referred to a Community Taskforce project.
    While on the projects, participants work between 6-8 hours a day for up to three days a week. They continue to get paid whatever benefit they are on ... plus $20 a week for "work-related" costs.

  • The $20 payment under Community Taskforce used to be paid as a flat rate allowance to participants, subject to 3 days of work being completed. It is now going to be paid out only as a reimbursement after proof of actual travel and other work-related expenses are produced (up to a maximum of $20 a week) .

    This change in procedure has been called "petty" and "an administrative nightmare" by Alliance employment spokesman Rod Donald, saying it will mean a huge increase in work for NZES staff. Donald: "What kind of rates will be paid to people, will there be mileage allowance for cars paid at the state sector rate?"

  • Just how many community groups come on board with the boosted Community Taskforce will be the thing to watch. The scheme has been around for some time, and it is not universally popular with community groups. Reason: unlike earlier subsidised work schemes, there is no government help with supervision costs or project expenses. Many community organisation are already working to stripped-down budgets with over-worked key staff or volunteers. They do not necessarily find themselves with the capacity they would wish for in order to interview, train and give ongoing support to the short-term unemployed participants.
    Sources Media releases from NZES to the Jobs Letter "Successful Community Taskforce programme to be extended", and The Dominion 30 July 1997 "Taskforce allowance decision `petty'" by NZPA

    The Conservation Corps programmes run by Youth Affairs and targeted to young people between the ages of 16 and 25 years, will soon be trialed with young prison inmates aged 16 to 20 years. Their work will involve the prisoners in a range of conservation, practical education, challenging recreation, Te Ao Maori and work experience activities. Youth Affairs says it hopes the skills and attitudes learned on the Conservation Corps will reduce re-offending and also improve the employment prospects of the prisoners once they are released.
    Source email to the Jobs Letter 14 August 1997
    NZES has also announced that it is changing the way it calculates how long people have been registered unemployed. The changes meant that over 12,000 job seekers were re-classified last month with an increased duration of unemployment. This has led to an 18% increase in people now classified as long-term unemployed the main target group of the government's new employment strategies.

    The changes address the long-criticised anomalies with the NZES register which meant that when job-seekers left the register for short periods for training, seasonal or other short-term work, they were subsequently recorded as "new" job seekers if they signed back on the register after eight weeks. The new rules will only classify the job seeker as "new" after a break of 13 weeks. Job seekers who have attended a TOP training course will be exempt from the 13-week cut-off period.

    Source Media release from NZES to the Jobs Letter 20 August 1997 "More long-term unemployed to get assistance"

    More degrees than skills. Some employers believe that polytechnics are more interested in manufacturing degree courses than in providing practical work skills for their students. Whether it is nursing, computers or journalism, short practical certificates of 6-12 months have now been turned into three-year degrees or even post-graduate diplomas.

    The change started to happen after the Education Amendment Act passed in 1990 which freed up the tertiary education sector, enabling polytechnics to offer degree courses. But now employers are asking: does moving up the qualification scale mean that polytechnics are abdicating their core function of training people ?

  • Lawrence Watt of the National Business Review reports that 18 polytechnics now produce 82 degrees and the Qualifications Authority now has applications for 26 new degrees, compared with none in 1990. The Auckland Institute of Technology now has more degree students (about 4,000) than universities such as Lincoln, and more than half the students at Wellington Polytechnic are taking degree courses.

  • Raewyn Idoine-Dunne, chair of the Computer and Information Technology Group, says the changes are creating a huge vacuum: "That whole middle level of training that polytechnics were designed for is being evacuated lock, stock and barrel ..." She points the blame to the funding mechanisms that enable polytechnics to get more money for their degree courses, than for shorter training.

  • Manufacturers' Federation CEO Simon Arnold believes that when it comes to choosing tertiary education option, parents and students are half a generation behind the expectations in today's job market. He says the manufacturing sector needs more technical people, and recommends that students maintain contact with maths and science beyond the fourth form. Arnold: "Technical qualifications shouldn't be undervalued and crowded out because everyone thinks they should have a bachelor of business studies when they would be better off with a certificate in, say, electronics..."
    Source National Business Review 25 July 1997 "Skills more use than degrees" by Laurence Watt.

    The government's promise of 200 extra police seems impossible to fulfil as many NZ communities head towards a police recruitment crisis. The police have to find 700 new officers by next June in order to replace those leaving the force, as well as increasing numbers by the promised 200. Auckland is looking for 130 new recruits, but the training programme beginning in October has no officers destined for Auckland.

  • The Army, Navy and Air Force are all facing severe staff shortages, and the government has been told that the military is continuing to have difficulties maintaining its "directed level of capability".

    The Army is 895 staff short, and particularly short of armourers, electrical technicians, medical assistants, field engineers and signallers. (It is presently looking at trade structures and bonuses to stop the loss of key staff to private businesses). The Navy is short of 295 staff, and needs technical and communication trades. (It is presently coping by hiring civilians on short-term contracts). The Air Force is short of aircrew, technical, fire and communication staff.

    Source New Zealand Herald 6 August 1997 "Force suffers recruiting blues in struggle to find numbers" by Sarah Catherall

    NZ Railways at its heyday employed 22,500 people before it was SOE'd and then sold off to Tranzrail in the meantime shrinking to its present staff of just under 4,000 people. Yet TV1's Assignment programme reports that today's railways are now carrying more freight than at any other time since 1974.
    Source Richard Harman TV1 Assignment 24 July 1997

    The Christchurch City Council has long been at the forefront of leading local solutions to local social problems. And it has been putting its money where it's mouth is: it recently decided to contribute $1.1m out of its $178m budget towards social spending initiatives, such as employment, early intervention, mental health, disability and anti-drug initiatives.

    Winebox fallout: You'll be hearing more about the words form versus substance. Despite Sir Ronald Davison's "no fraud, no conspiracy and no incompetence" verdict on the winebox tax evasion investigation, ordinary NZ'ers are getting a keener sense of the difference between what may indeed be legal, but also what the public overwhelmingly believes to be wrong.

    Sir Ronald's Winebox Inquiry report states that NZ courts give effect to the form of, rather than the economic substance of a transaction. This means that the legal form and documentation of a transaction is more important than its substance the real monetary effect of the deal. In coming down on the "form" side of the winebox debate, Sir Ronald's "no fraud" verdict was a foregone conclusion.

  • Ian Wishart, author of the book The Paradise Conspiracy, which covers the winebox inquiry, gives this analogy: "If you are a social welfare beneficiary and you claim a second benefit without disclosing the first, you will be prosecuted under the Crimes Act for fraud."

    "If you are a corporate and pay "tax" in the Cook Islands, receiving both an instant "tax" refund and a tax certificate in return, and then use the certificate to claim another refund in New Zealand, then you are a smart businessman to be admired ..."

    Source Sunday Star-Times 17 August 1997 "Questions on who got off the hook" by Ian Wishart
    "`Consultant' means never having to say you're unemployed..."
    -- Gary Johnson, editor of the internet-based NewWork News.

    An "auxiliary currency" designed to enable rural areas to become more self-reliant is to be launched in Scotland in October. The charity behind it, Rural Forum (Scotland), is made up of community and voluntary groups, commercial organisations and district and regional councils.

    The currency step is being taken in response to a changing funding environment in which local authorities are giving less financial support to community organisations. "Less money is being provided to the councils, so they in turn have less to pass on to voluntary organisations which provide essential services in rural areas" says Ruth Anderson, the Rural Forum project manager developing the currency. Anderson: "We thought we'd better develop our own money to prevent life in remoter areas being strangled by a shortage of the means of exchange."

  • The new currency is being modelled on the Swiss Wirtschaftsring, WIR, a mutual credit system for small and medium-sized businesses which has been operating for over sixty years and which now has over 60,000 corporate members. Anderson: "We think that if firms, councils and NGOs operating in rural Scotland can pay each other in money that can never leave the area and so is always available to them, it will give them an enormous advantage..."

    In the Swiss system, members' firms can borrow at interest rates of under 3%. The Scottish system is, however, different in a number of ways, particularly in its methods of establishing credit lines which are by community guarantee rather than the collateral-based system which is used in Switzerland.

    Contact: Ruth Anderson Rural Forum, Highland House, 46 St. Catherine's Road, Perth PH1 5RY, United Kingdom, e-mail ruth

    Source email to the Jobs Letter from Richard Douthwaite 2 August 1997

    One of the people who worked on the design of the Scottish rural currency system is Richard Douthwaite, author of the book Short Circuit Strengthening Local Economies for Security in an Unstable World (Lilliput Press 1996). His book proposes that each local community needs to build an independent local economy capable of supplying the goods and services its people would need "should the mainstream economy collapse...", and it details the financial structures necessary for self-reliance, including examples already in use in many industrialised countries. Douthwaite will be visiting New Zealand in September.

    Contact: Richard Douthwaite, Cloona, Westport, Ireland, e-mail or in NZ contact Diedre Kent at e-mail

    Source email to the Jobs Letter from Richard Douthwaite 2 August 1997

    Employment outcomes are by no means assured from foreign investment, despite the free-trading rhetoric that more investment automatically means more jobs. (See Multilateral Agreement on Investment in the last issue of the Jobs Letter). A 1996 report by the Washington-based Institute for Policy Studies has found that while the biggest 200 corporations recorded sales in 1995 exceeding 28% of the world's total economic activity, they provide jobs for only a mere 0.75% of the world's workforce.
    Source Gatt Watchdog open letter to District and Regional Councils, "Re: Local Authorities and the Multilateral Agreement on Investment" 14 July 1997

    Details are starting to emerge on the Australian government's plans to put their Commonwealth Employment Service out to private tender. The tender documents, as quoted in the Sydney Morning Herald, suggest that the Australian government has significantly lowered its horizons in addressing unemployment.

    In the draft tender for the $1.7 billion scheme, the government is providing funding for 812,000 basic placements nearly the same as the number of Australian unemployed. But in spelling our its requirements, the documents say that its standard requirements on the private companies will be for only 50% of placements to be in full-time, permanent jobs. This in effects resigns 400,000 unemployed people to only getting help in finding part-time or casual work.

    The tender outline scales down what it considers a "real job" to being only 15 hours a week. The documents say that a "success fee" will be paid to a private job placement company for finding a person work for just 15 hours over five working days. These reforms come into operation next May.

    Source Sydney Morning herald 5 August 1997 "Jobless scheme ignores 400,000" by Paul Cleary

    Has the Labour Party in Britain really put full employment at the top of their agenda? Our Media Watch reports that only months after the general election landslide of Tony Blair's `New' Labour Party, many commentators are pointing to the fundamental contradictions between the government's popular rhetoric about jobs ... and their real ability to deliver more jobs through their economic policies.

    John Grieve Smith, Cambridge economist and author of Full Employment: A Pledge Betrayed, says that the "welfare to work" proposals announced by the UK government have diverted attention away from the implications of Labour's wider economic policies, which he says are more important in determining the level of unemployment. Smith: "The government says that "everyone in need of work should have the opportunity for work", but the explicit assumption about the control of inflation in the economy is that unemployment should not be allowed to fall below something like its present level for fear of the economy `overheating'. "

    UK Chancellor Gordon Brown's latest Budget states that even with the most optimistic medium-term forecasts, the only reduction in British unemployment in the next few years will be a small fall in the number of long-term unemployed to the 1990 level. Smith: "The danger that unemployment will show little or no improvement is the most worrying sign that the Labour Government's achievement will be to consolidate the Thatcherite social revolution rather than reverse it..."

    Source The Guardian Weekly 20 July 1997 "Jobs for the boys, but not jobs for all" by John Grieve Smith.

    Bryan Gould, Vice Chancellor of the University of Waikato and former British Labour Party MP, considers that the `New' Labour Party in Britain is offering the same economic policy mix as the Tories before them ... and says they cannot expect any better results.

    He points to the first act of the new Chancellor Gordon Brown being the sub-contracting out of monetary policy to the Governor of the Bank of England, an act done specifically with reference to the New Zealand model and the policies recommended by Roger Douglas. Gould: "In future the over-riding priority of policy will be monetary stability and the inflation rate, with the real economy, and minor matters like full employment and the level of public services, left to look after themselves..."

    Gould writes in the NZ Political Review that it is hard to over-state both the real and symbolic importance of this step: "It represents an historic abandonment by the British Labour Party of the traditional commitment of the Left to use macro-economic policy including measures like fiscal policy, demand management, public investment and so on to achieve goals like full employment. Henceforth, the electorate will be told that they should not look to the democratically elected government to be responsible for these outcomes..."

    Source NZ Political Review July/August 1997 "Spoiling the Party" by Bryan Gould
    It's becoming an annual August spectacle in Argentina, and this year was a record turn-out, as millions of people flock to the St Cayetano sanctuary on the outskirts of Buenos Aires to pray for jobs. Saint Cayetano is the Argentine patron saint of bread and work, and pilgrims gather at the sanctuary on the anniversary of his death. They are having to wait in long lines stretching 15 blocks or more before paying homage to the saint's statue. Elsewhere in the country, tens of thousands of Argentines are continuing to block roads and stage demonstrations to protest the government's economic programme.

    The large turn-out for the saint's day this year reflects just how desperate Argentines have become after years of record unemployment and declining salaries. Calvin Sims of the New York Times reports that President Carlos Menem's government has brought stability to an economy once plagued by runaway inflation, but his reforms (including opening markets and selling state-owned enterprises) have put millions out of work.

    Source NYT News Service 8 August 1997 "Millions visit statue, pray for jobs" by Calvin Sims.

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