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    Essential Information on an Essential Issue

    Letter No.78

    11 May, 1998

    Unemployment in NZ is at its highest level for nearly four years... and economists are prediciting that worse is yet to come. We include our regular Statistics That Matter feature in this issue of The Jobs Letter

    John Fraser looks at how young people get a leg up the ladder in today's economy

    The latest figures for March 98 show the unemployment rate is at 7.1%, the highest since December 94 when the rate was 7.4%. Total official unemployment is now 129,000 or one in fourteen working-age people. This is a rise of 7,000 people since December 97, and up 13,000 on a year ago.

  • We actually have had more jobs created in the NZ economy, but they have not kept pace with the numbers of people entering the workforce. Total numbers of people employed have risen by 8,000 since June 1996, while the working-age population has increased by 59,000 people.

    Employment Minister Peter McCardle says that NZ needs a growth rate of at least 3% to absorb the 20,000 job seekers which come into the workforce each year and to also reduce the numbers of unemployed. We haven't had that level of economic growth since 1996.

  • Biggest losers: young people. The number of 20-24-yr olds out of work has swollen to 29,100. Together with the 15-19-yr old age group, they comprise 40% of the total unemployed.

  • The European unemployment rate is a low 5.5%, compared to 18.3% for Maori, 16.4% for Pacific Islanders, and 12.6% for other ethnic groups.

  • The number of full-time jobs rose by 2,000 over the March quarter. This gain, however, must be contrasted with the loss of 7,000 part-time jobs.

  • Investment bankers Deutsche Morgan Grenfell predict that unemployment will peak at 8% by the middle of next year. Bancorp also expects a similar rise.

  • Peter McCardle blames the increase on the Asian decline and the drought. McCardle: " The widely forecast strengthening of economic and related employment growth has been delayed, but the impending tax cuts, the lower NZ dollar, the expected easing of interest rates, and the de-mutualisation of the AMP are all expected to facilitate strong economic growth later this year.

  • Business Roundtable chairman Bob Mathews points to "government inertia and mismanagement" as the main reasons for the jobless increase. He says the figures were just the latest in a series of bad economic indicators. With the current account deficit and external debt "at dangerous levels", he believes NZ is now highly vulnerable to further adverse events.

    Source _ New Zealand Herald 7 May 1998 "Jobless up and worse tipped to come" by Patricia Herbert; The Dominion 7 May 1998 "Unemployment level highest in four years" by Nick Venter; The Daily News 7 May 1998 "Jobless numbers highest in years" by Nick Venter

    The International Labour Organisation (ILO) is warning that Asia's economic crisis is throwing millions out of work, and is wiping out years of progress against Asian poverty. Despite the fact that the Asian currencies have largely stabilised, the ILO warns of social pain and the risk of political instability in the coming months. In a report to a Bangkok conference of east-Asian employment ministers, trade unionists and employers, the ILO predicts that unemployment will treble in Indonesia, Thailand and South Korea.

    Greatest concern: The collapse of what had been rapidly rising economic expectations in Asia, and the absence of any social safety nets, such as the dole. The Guardian Weekly comments that Asia's jobless rate is unlikely to go beyond the highest levels seen in western Europe or the former Soviet bloc, but is potentially more explosive because of the weak or non-existent welfare provisions.

  • The World Bank predicted last month that the number of Indonesians living in poverty will double to more than 20m people. The ILO: "Just as the Great Depression forged a new social contract in many industrialised countries, so too must the current Asian crisis be an impetus to creating a more socially-oriented model of development..."

  • In China, where the restructuring of bankrupt state companies is causing millions of redundancies, the official jobless rate has risen to 5%, but earlier this month premier Zhu Rongji admitted that 10% of the workforce is unemployed. Even this may be well under-stated. Under-employed workers in rural areas are excluded from the count _ this includes many who have lost their jobs in the cities and have returned home to no jobs in their villages.

  • The Economist predicts that over a three-year period, Indonesia, Thailand and South Korea will see virtually no overall growth. Compared with their previous growth rates of 7-8%, this amounts to a cumulative loss of output of 20-25%. The Economist: "In other words, the slump in Asia will be of the same sort of order as the slump in America during the Great Depression between 1929 and 1923, when output fell by 30%."

  • Most vulnerable are migrant workers and women, who have been the backbone of a cheap, mobile and docile labour force that once powered the region's "economic miracle". The numbers of migrant labourers grew from about a million in the early 1980s to more than 6.5m last year. Many of these people now face not only unemployment but expulsion as the factories that employed them go bankrupt. Both Malaysia and Thailand have started to repatriate large numbers of migrant labourers, many of whom were working illegally. In Malaysia the total may be as many as 2.5m _ a quarter of the workforce.

    The forced repatriations may not reduce the unemployment, as many native Thais and Malaysians are unwilling to take up the "3D" jobs (dirty, difficult and dangerous) that the migrant Burmese and Indonesians were employed in.

    Source _ The Guardian Weekly 26 April 1998 "millions made jobless"; The Economist 25 April 1998 "Asia's new jobless" feature.

    Fewer than 5% of NZ'ers have responded to the government's household questionnaire on the Code of Social Responsibility. The final questionnaires were due to be all in by last week. Only 90,000 people completed the forms _ 40,000 short of the government's target. Expect analysis of the comments to be made public by the end of July.
    Source _ TV1 News 8 May 1998

    The community wage scheme will seriously limit the power of the court to use community work as an alternative sentence, according to Masterton barrister Ken Daniels. He says that the requirement for those receiving the wage to carry out up to 20 hours community work will deplete the work available for those who are asked to carry out such work as a penalty for offences committed against the community.

    Daniels: "At the moment people who have committed minor offences and for whom fines or periodic detention are inappropriate are often placed on community-based schemes. These are of benefit not only in their own rehabilitation, but also to the community who may have suffered because of their actions. Such penalties are routinely ordered by the courts, not only in the district court but also as part of penalties imposed on younger offenders.

    "The limited number of placements currently existing with community organisations may be filled by those compulsorily ordered to work for their community wage. Courts and social welfare systems will be deprived of a good alternative to more difficult forms of sentencing"

    Sources _ Wairarapa Times-Age 23 April 1998 "Barrister opposes work scheme"by Jo Seddon .

    The Government's employment strategies are expected to have a significant impact on the role of local authorities in supporting job creation initiatives and programmes for the unemployed. With the greater emphasis on providing "local solutions to local problems", district councils will be a major player in developing such strategies. With this in mind, the Society of Local Government Managers (SOLGM) is holding a special conference early next month to focus on a local government response to these issues.

    Organiser Brian Coffey of Youth Works in Dunedin says that while policies at the national level are still being formulated, local managers have a "unique window of opportunity" to influence the outcome. SOLGM is writing to every council in the country to encourage participation in the meeting, particularly those who currently run employment-related initiatives. The two-day conference will include information sharing on "best practices", an update on the government's employment strategy including current views on local authority involvement, and identifying a range of options for participants to take back to their respective councils to consider.

    For further information contact Brian Coffey at 03-4880-567.

    Source _ Brian Coffey fax to the Jobs Letter

    The annual G8 world leaders summit is gearing up in Birmingham this week (see feature in The Jobs Letter No.75) -- but you can follow proceedings from your home if you have access to the internet.

    The University of Toronto and the London School of Economics have combined to provide a site which will enable students and educators worldwide to participate as online attendees of the conference. The sophisticated and interactive multi-media site is being created by Real Education Inc, who are specialists in online distance learning projects.

    Top scholars will follow the themes of the conference and present their views and insights directly to the site. Participants will be encouraged to attend live interviews with world leaders and join chat rooms and threaded discussions. Of special interest to Jobs Letter readers will be employment issues, which will be covered in a section on "multi-lateral trade, investments and labour relations". Participants can register now for their "virtual" attendance at It's free.

    Source _ "Birmingham Summit of the Eight on the Internet", press statement from Real Education Inc.

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