Essential Information on an Essential Issue
22 December, 1997
- ONE STOP SHOPS
More details on the Christmas Eve announcements.
Prison Inmate Work Policies.New government report.
- CHRISTMAS EVE JOB LOSSES
BERL says 9% unemployment to come
This Christmas Eve has seen a rash of job losses all over New Zealand ... with over 800
lay-offs announced in the last month alone (see
- BERL (the Business and Economic Research Ltd) is predicting continuing job losses in
NZ next year as a result of the sluggish economy. They predict that the unemployment rate will rise
to 8.3% by June 98 and stay at 9% for the following two years. (This compares to the Sept
97 official figures of unemployment at 6.8%).
Their predictions forecast a loss of 30,000 jobs in the year to June 1998; 8,000 in the
following year; and 22,000 job losses in the year 2000.
Source Sunday Star-Times 14 December 1997 "Unemployment looks set to rise" by
- ONE-STOP ANNOUNCEMENT
One-stop announcement. Employment Minister Peter McCardle was trumpeting it as
"the most far-reaching reform of employment policy in New Zealand's history." But what was
looking like a "re-announcement" of his coalition government employment strategy in Wellington
last week ... has indeed turned out to contain some significant surprises.
Major winner: the dominant role that the Department of Social Welfare and its "welfare to
wellbeing" ideology will have on the design of the new one-stop-shops.
Major disappointment: still no concrete strategy in place for the Employment Commissioners
and the funding of regional initiatives. Also no new details on the replacement of the dole with
a community and training wage, nor on the introduction of a work-for-the-dole programme.
- Instead of the new one-stop-shops housing only the unemployment benefit section of
Income Support, it now turns out that the whole of Income Support as well as NZES will be
absorbed into a new (and as-yet-unnamed) super-agency. This represents a significant and
radical shift in power-sharing between two of NZ's largest government services and will effect 14%
of the NZ public service or about 4,600 staff.
- Instead of the focus of the new super-agency being just on job seekers and the
unemployed, it will now focus on the needs of all "working-age beneficiaries" which will include all
sickness and invalids beneficiaries, widows and people on the domestic purposes benefit, students, and
the unemployed. The latest official numbers (Nov 98) registered with NZES is 173,270
people. Officials estimate that the new agency will be dealing with 900,000 people.
This re-focussing is all part of the coalition government view that "... for all working-age
beneficiaries, re-entering the workforce where appropriate is a key route to financial independence
and income support should be seen as providing transitional assistance whilst a person is
Last week's announcement was cloaked in the language and terminology now associated with
the government's proposed Code of Social Responsibility. Whether the new super-agency can
indeed maintain an "employment" focus in the face of having to deal with such large numbers
of people with other pressing concerns will be a primary test of this whole re-structuring.
- The main purpose of creating the one-stop-shops is to put all the government's
resources of income support, job search, employment and training referrals into one place. All
working-age beneficiaries will receive their registration, eligibility and work capacity assessment,
placement and support services from this one venue.
There were many restructuring options considered in the last year ranging from "virtual"
integration (low structural impact, higher collaboration between existing services) to limited
integration ... on through to full integration (full re-structure, re-housing under one new boss). The
Ministers have chosen the last option, and will no doubt need to weather the criticisms that they have
taken the most expensive and disruptive choice.
The Minister's view: "It was considered that a single organisation, with clear accountability
and no duplication or overlap of activities is the logical extension of the convergence of areas of
focus between NZES, CEG and Income Support..."
- The new stand-alone entity will be up-and-running by 30 September 1998. The name of
the new organisation, who the new CEO will be, and whether it will indeed be a government
department or a crown-owned entity ... are all items still under consideration by officials. We'll
know early next year.
(In the meantime Wellington is abuzz with faxes and emails with many pre-Christmas
tongue-in-cheek suggestions of A.C.R.O.N.Y.M.S for the new entity.)
The entity will be organised under one government Minister with also no indication yet as
to who this will be. Peter McCardle is clear that he wants the job ... but there remains the
possibility that the Minister of Employment could be sub-ordinated under the new structure in favour of
the Minister of Social Welfare. Watch this space.
- The Employment and Training Support Agency (ETSA) has survived the earlier
proposals to absorb it into the new one-stop-shops. Instead, 65% of its Training Opportunities
Programme (TOPS) money will be transferred into the new agency. Officials are still making
recommendations to Ministers on the future relationship between ETSA and the new one-stop-shops.
- Virtually all beneficiaries make up the government's concept of "working-age
beneficiaries". (War pensioners and superannuitants do not form part of this group). The government is
giving perhaps its clearest signal yet to the beneficiary population that they are only to consider
government income support as being part of their wider personal goal of moving into paid employment.
- Social Welfare Minister Roger Sowry at the announcement did not specify new
work-testing measures for invalids and sickness beneficiaries. But he told the
New Zealand Herald that "under the one-stop-shop we will be in a position to work test a wider range of people..."
At present, recipients of unemployment benefits, widows benefits, and domestic purposes
benefits with children over the age of 14 years can be required to demonstrate that they are willing
and able to work. Sickness and invalids beneficiaries are not. If the government extends work
testing, these beneficiaries could also be required to undertake community work and training and
attend job interviews.
- The figures: In the year to June, the numbers receiving the invalids benefit increased
8.6% to 46,099 people. About 34,000 people were on the sickness benefit. Sowry: "There are
many people on those benefits who do have the capacity, given the right work environment, to work
particularly part-time. We have to encourage them ... and there will clearly be a focus in
engaging those people with the workforce."
To qualify at present for the invalids benefit, people must undergo a test to measure their
degree of incapacity. Sowry: "We will be able to move to a position where we can assess people on
what they are capable of doing, not what they are incapable of doing..."
- The Ministers were quick to say that "it is not known yet" that there will be any
redundancies from the restructuring. The official line: "Any decision concerning staff numbers will be
the responsibility of the Chief Executive of the new agency." The Word in Wellington is that the
new structure will obviously not need the same number of staff as presently employed by the
various agencies being combined together.
- The new CEO will also have to sort out just how much they are going to pay the
front-line staff of the super-agency. At present, Income Support staff are paid at a rate generally lower
than staff at the NZ Employment Service.
- Social Welfare is looking at contracting out the payment of pensions to
superannuitants. The job may go to a non-government organisation, such as a bank, which will be bulk-funded
to administer the pensions. This would mean this task would not be loaded onto the workload of
the new one-stop-shops. It is unclear, however, just how the new agency would cope with add-ons
to income support, such as the accommodation supplement.
- What happened to the Employment Commissioners? The announcement simply said
that more details will follow (probably March next year). The official word is that Regional
Employment Commissioners will perform "a regional management function" within the new agency.
Sources press statements from Peter McCardle and Roger Sowry 17 December 1997; "First Big Employment
Strategy Decision Sees New One-Stop-Shop for Job Seekers"(McCardle), "One-Stop-Shop Logical for Unemployed"(Sowry);
"Background Information and Summary of Employment Policy" (Q&A); McCardle Speech to Press Conference "Announcement
of Employment, Income and Training One-Stop-Shop"; Press Statement from Rod Donald 17 December 1997 "McCardle's
One Stop Shop will go nowhere"; The Daily News 18 December 1997 "Govt unveils welfare one-stop shop reform" by
Astrid Smeele; The Dominion 18 December 1997 "Beneficiaries may have to work" by Nick Venter; New Zealand Herald 18
December 1997 "New agency to work-test invalids too" by Audrey Young; TV1 Breakfast News 18 December 1997 Steve Maharey
and Peter McCardle intervied by Mike Hosking.
- POLICY REVERSAL ON COMMUNITY TASKFORCE PAYMENTS
Minister of Employment Peter McCardle also last week announced the reversal of an
earlier decision on the $20 payments for the work-related expenses of people on Community
Taskforce (CTF). Earlier this year, Cabinet changed the payment to be one paid only on actual costs
(usually requiring a receipt) rather than paying participants a flat $20 per week. This was to bring
the allowance into line with the rules by which travel costs are paid to other people in training.
The decision was widely unpopular both amongst community sponsors of the CTF, and
the NZES officers who had to administer it because it involved creating yet another layer of
bureaucracy in order to assess the payments. It has also been identified as one of the key
reasons why community groups have been reluctant to come on board as CTF sponsors.
Last week McCardle says he has "listened to the feedback" and Cabinet agreed to change back
to the policy of a flat payment of $20 per week to cover work-related costs.
- Alliance Employment spokesman Rod Donald has been pestering McCardle with
Parliamentary questions on the $20 payments ever since the rules were changed last July. He reports on
an informal survey he took of NZES managers which showed that most of the managers were
simply refusing to implement the new policy. Donald: "Peter McCardle deserves credit for finally
persuading his cabinet colleagues to reverse their stupid policy ... but in the face of almost
universal mutiny, the government had no choice but to back down ..."
Source based on press statement from Peter McCardle 15 December 1997 "Minister Listens to Feedback and
Reverses Earlier Policy Change" and press statement from Rod Donald 16 December 1997 "Minister congratulated for reversing
- BE YOUR OWN BOSS NOT TO BE AXED
The Be Your Own Boss programme (BYOB) is not going to be axed after all. The
popular programme runs business skills courses for unemployed people who want to become
self-employed. The Community Employment Group (CEG) has announced that funds will be trimmed
to $2m for the next two financial years (down from $3m this year). CEG senior management
adviser James Glover says it was never the intention of Government to withdraw completely from
the BYOB programme. He says they are trying to revamp the process of delivering BYOB to
their "target groups" which are Maori, Pacific Islanders, women and under-privileged rural people.
- PARTING SHOTS FROM O'REILLY
Commissioner for Children Laurie O'Reilly, has announced his resignation after
battling terminal cancer for several months. He gave his parting shots at a NZ First meeting
in Christchurch saying that future commissioners should be given proper funding to do the job,
and that the Children's Commission should be separated from the Social Welfare Department.
He reported that homicides of children by parents are now running at one a month and that
new incidents of children being abused was "miles more" than the recent estimate of 17 children a day.
O'Reilly saved some stern words for criticisms of the priorities of the public service when it
came to children : "The director-general of Social Welfare has said her prime obligation is to the
Public Finances Act. How can you be a business manager and discharge your obligation for the care
and protection of children in your care? You can't. I ask: what value do you put on children in
Source The Dominion 15 December 1997 "O'Reilly makes stinging attack"
- SOCIAL RESPONSIBILITY CONFERENCE
Responsibility" Conference being held at Massey University Albany on
12-15 February 1998 has already received a large number of registrations. The previous
conference "Beyond Poverty" had to turn away a hundred people because the venue has a maximum
capacity of only 300 ... so the organisers are encouraging people to register early.
The conference will include over 50 speakers and workshop presenters including Jonathon
Boston, Jennifer Pitcher, Rodger Spiller, Bonnie Robinson, Anne Else, Bill Bradford, Celia
Briar, Garth Nowland-Foreman, Dave Tollich, Jane Higgins, John Stansfield, Keith Rankin,
Leah McBey, Liz Gordon, Prue Hyman, Steve Maharey, Toni Allwood, Vicki Terrell, Bruce
Hucker, Will Low and Ruth Dyson.
There will be a mixture of keynote speeches, workshops and also smaller focus groups. Part
of the conference will be held at the Hoani Waititi marae, where participants will be hosted by the
Te Whanau o Waipareira Trust. Contact: Social Responsibility Conference, P.O.Box 3813,
Auckland 1 phone 09-302-2496 fax 09-377-4804 email email@example.com
Source Social Responsibility Conference notices
- KOBE G8 JOBS CONFERENCE
Labour and economic officials from the G7 industrialized nations (plus Russia) gathered
at Kobe, Japan, late last month for a 2-day conference to further discuss issues in tackling
unemployment and promoting structural reform of the G7 economies. Top concerns: finding
solutions to the problems of joblessness among young people and maintaining socio-economic vitality
as populations age.
While the world's media was focussed last month on the Kyoto Climate conference, our
Media Watch reports that the Kobe Jobs Summit almost completely passed by the attention of the
international press. The conference followed up on the 1994 Detroit jobs summit and the 1996
Lille summit. And for the first time, the gathering included observers from the International
Confederation of Free Trade Unions (ICFTU) and International Organization of Employers (IOE)
Each participating country gave presentations on how their governments were tackling
these issues, including working closer with the business community in relation to the promotion
of internships and on-the-job training programs. Non-government representatives at the
conference called for greater flexibility and co-operation between trade unions, corporations, and
governments. Their advice: flexibility that allows for technological change is the key to retaining
high levels of employment.
The Japanese media reports that, as host country, Japan has been eager to lead
discussions on how to encourage elderly people to keep working. It has one of the world's
fastest-growing graying populations: by 2015, people aged 60 or more will represent 20.6% of the overall
work force, up from 13.1% last year. Compared to other participating countries, Japan's
unemployment rate is low (3.3% last year). About 20% of Japanese workers, however, are employed on a
part-time basis and are eligible for fewer benefits.
Sources Asahi Evening News, 27 November 1997 By Kimie Itakura http://www.asahi.com/english/enews ; and Japan
Times 29 November 1997 by Eric Johnston.
- JOBS SHOCK IN ASIA
The recent stockmarket shocks and "corrections" in the Asian economy have a
familiar bottom line: job losses. Asia's currency crisis, which touched off bankruptcies, has also
halted spending and slowed economic growth. And
Business Week predicts that layoffs throughout
Asia could reach as many as 2 million workers.
These jobs will not just in the Korean financial sector, but also in Thai assembly plants,
retail stores in Hong Kong, and construction sites in Indonesia all of which are firing workers
by their thousands. Migrant workers who fueled Asia's building boom are also likely to be
sent home. And the Japanese are reporting that their long-sacred lifetime employment system
Business Week: "An unemployment crisis is gathering force in Asia, and layoffs are soaring
to levels not seen for more than a decade... If these workers take to the streets in force, the
region's political calm could be shattered. "
David C. Roche, an economist at London's Independent Strategy Ltd., notes that
Mexican living standards fell nearly 30% after the peso shock three years ago. Roche: "That kind of
drop in Asia would produce nothing short of a revolution." Compounding the risk is that most
Asian countries lack unemployment benefits. International Labor Organization's predictions: a lot
of unrest in Thailand, Indonesia, and Korea.
Business Week : "The layoffs will change Asia's labor markets for decades. Asia's miracle used
to mean that just about every employee would have a job for life. The image of Asia's workers
may now change from salaryman in a starched white shirt to banner-waving protesters ..."
Source Business Week 22 December 1997 "Jobs Shock in Asia" by Mark L. Clifford in Hong Kong, with Moon Ihlwan
in Seoul, Michael Shari in Bangkok, and bureau reports
Financial analysts Deutsche Morgan Grenfell (DMG) estimate that the Asian crisis
will reduce NZ's growth rate by 0.8% or more over the next year. Hardest hit: the NZ tourism
industry, which until recently had double-digit growth rates, boosted by high-spending Asian tourists.
Thirty-six percent of NZ exports primarily dairy products, meat and timber also end up
in Asia. DMG predicts a drop of 4.5% in exports next year, than would otherwise have been
Source The Dominion 6 December 1997 "Asian crisis will reduce NZ growth"
- The Asian financial storms have already hit the shores of the United Kingdom. In
recent years many British local authorities have been competing with each other to offer South
Korean firms cheap sites and tax holidays in exchange for setting up business and creating jobs in
their local areas. What the South Koreans were bringing to Britain was not necessarily new
technology, but instead, cheap capital. We now learn that much of this capital was illusory, or simply did
not exist. And now, after the "corrections" ... nor will the British jobs.
Martin Woollacott, columnist writing in the
Guardian, comments: "In part, the East Asian
firms may have been operating on the basis of loans that ought not to have been made, by
institutions which did not actually have the money... We have a truly serious situation which, even if it
does not lead to a crash, already means that ordinary people in many countries will have more
difficult and more uncertain lives paying the price of lost savings, lost jobs and lost services..."
Source The Guardian Weekly 7 December 1997 "Capitalism for some is a zero-risk game" by Martin Woollacott.
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