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    Essential Information on an Essential Issue

    Letter No.82

    17 July, 1998

    Submissions on the Social Security (work test)Amendment Bill

    The Chief Executive of the new super-agency was appointed earlier this month. It is Christine Rankin, the existing general manager of Income Support.

    In a letter to NZES and Income Support staff, Rankin says: "I know some of you will be happy with this decision, and others will be disappointed, and the first thing I want to say to you is that this is the opportunity to create a new agency with its own unique culture. I want to take the best from all the agencies involved in the merger and make our agency an exciting and rewarding place to work"

    Rankin (44) describes herself as "not a traditional public servant". She was a single parent herself before joining the Department of Social Welfare in 1978. In 1987 she was appointed the director of the Grey Lynn district, and two years later she became director of the Auckland/Grey Lynn district. In 1992 she was appointed the northern regional manager of Income Support, and in 1995 became the general manager. As a manager, she says that she expects staff to work hard and set high standards, but she is "very committed and loyal to my people"

  • How will the employment agenda fare under her leadership? Rankin told The Dominion that employment initiatives will be an extension of what "my people" are already doing for customers.

    Rankin: "Most people on benefits want their lives to be good, want their children's lives to be good. We case-manage them and tell them they have a responsibility to become independent. A benefit is not a career option. No one has ever talked to thousands of these people before. They have never believed they could hope or dream "

  • It was revealed at a Parliamentary Select Committee last week that Christine Rankin will be paid $250,000 for this top job. State Services Commission head Michael Wintringham confirmed that the Commission had problems recruiting a chief executive to run the super-agency. He says that if the successful applicant came from the private sector, the payout would have been much higher.
    Sources -- Transition Talk Issue 28 30 June 1998; The Dominion 4 July 1998 "Saturday Profile: Shape up or ship out says Work and Income's Christine Rankin" by Val Aldridge

  • OOPS
    Ooops. It seems the Maori title Manaaki Tangata chosen for the new Department of Work and Income is already being used by another government initiative -- a Maori initiative to reduce alcohol dependency and addictions.

    Economist Keith Rankin in recent months has been challenging "the Left" in NZ to look again at the current debate on the Community wage and consider other options to treating the proposal with cynicism and threats of non-compliance. He believes the Community wage equates to the concept of "participation income", and is worthy of greater support.

    The Community Wage requires certain beneficiaries to give up as much as 20 hours of their time per week to non-market work. Rankin points out that the present requirement is that such beneficiaries seek full-time market employment, a commitment of 40 hours of a person's or a family's time to the market economy. The Community Wage idea requires no commitment at all to the market economy. It requires only a half-time commitment to what is now understood as the "voluntary sector".

    Rankin: "The fact that the Community Wage was not formally conceived as a "participation income" does not mean that it cannot be received by our communities as one. The Community Wage has the potential to legitimate a lifestyle which involves transforming the 40 hours we sell to the market into a combination of leisure and non-market work. That would be a major advance from the twentieth century obsession with the labour market"

    "The Community Wage can do more than legitimate non-market work. By making the unemployed into community employees, it also makes it possible for them to become community employers. Community employment can be the cornerstone upon which we rebuild our local economies"

  • Rankin advocates a form of "subversive compliance" with the Community Wage programme: "Let's make the Community Wage into a form of participation income that has some of the characteristics of a Universal Basic Income. And let's do what we can to use the community wage fund to create local employment cooperatives organisations, set apart from the global market economy, that enable otherwise unemployed people to become community-sector employers"
    Source -- Keith Rankin "Subversive Compliance" May 1998
    full text available on

    NZES reports that there were 8,169 people on Community Taskforce projects in June, which is well within their target of 7-10,000. Since the beginning of the year, the number of people on the work-for-the-dole scheme has doubled, and it is expected that next year between 25,000 and 30,000 unemployed people will participate.
    Source -- Media release from Minister of Employment 14 July 1998

    Amidst the outrage on the lack of time given to the public for submissions on the compulsory work test legislation, (see Voices, this issue) the details of many of these objections has been somewhat lost. CTU Secretary Angela Foulkes told the Social Services Select Committee that there are very high risks of both economic and personal abuse that arise "out of the poorly defined status of those directed to undertake organised activities." Foulkes says that the Bill creates an open-ended and non-appealable right for a departmental official to define what people will be required to do, and when they will have to do it.

    In addition, Foulkes believes that community work will create a competitive pressure on lower paid workers, and erode their existing employment rights. Foulkes: "Community work will displace paid work. The concept of forced labour is repugnant, and is in breach of basic United Nations and International Labour Organisation conventions."

    The CTU submission outlined several major amendments it wanted to see in the legislation. These included

    1. Any community work placement should be voluntary.

    2. Any penalties for breaches of the work test should only be applied after the completion of a due process, and should not involve summary justice.

    3. There should be explicit provisions about the sorts of projects that qualify and do not qualify for community work.

    4. The Act should define a screening process to establish the capacity of the organisation providing the work to ensure proper workplace standards and protections.

    5. The chief executive should be required to define and publicise those standards.

    6. Provisions should ensure that each worker allocated to a position has her or his rights explained.

    7. The statute should establish procedures for a regular monitoring of providers, both as to the sort of work that is being done and the way placements are being treated.

    8. Parliament should make it abundantly clear that community work is not to be used as a weapon against the employed by shoring up rights of the employed to holidays on pay, to reasonable notice of termination, and to fair compensation in the event of redundancy; and make an unambiguous statement that it will reject initiatives to further downgrade the security of employment provisions.

    Source -- Press statements from the CTU

    Do work-for-the-dole schemes displace other employment? Yes, according to American research done by the Russell Sage Foundation. Professor Chris Tilly of the University of Massachusetts studied the impact of workfare schemes on the macro labour market of New York City. His report "Workfare's Impact on the New York City Labor Market" concludes that the effect of the 30,000 current workfare placements of welfare recipients is to displace 20,000 other workers, and to to reduce wages for the bottom third of the workforce by 9%, or some combination of these.

    Tilly says the 9% wage drop would reduce average hourly wages for the lowest 30% of New York's workforce from $6.33 to $5.76. It is worth emphasizing that this estimate is not for New York City employees alone. It implies that wages will be 9% lower than they would otherwise have been for the bottom third of the entire City workforce, both public and private.

    A summary of the Tilly study can be found on the internet at

    Source -- Sally Lerner, from the Futurework Internet discussion conference and Tilly paper at

    Figures from the 1996 Census show that young people share a disproportionate burden of the unemployment in this country. Statistics NZ says that 43% of the unemployed were aged 15-25 years, despite this group making up only 21% of the working-age population.

    This figure is high despite the increased participation of young people in tertiary education. The figures: young people aged 16-24 enrolled in tertiary education rose by just over a half in the period 1986-1996, from 15.4% to 23.2%.

    The wholesale, retail trade, restaurant and hotel industries are the largest employers of young people, providing work for 35% of 15-25 year olds in 1996, compared with 20% in 1986.

    Source -- The Dominion 30 June 1998 "Young people make up 43% of unemployed -- statistics" by David Venables

    The stranded Russian seamen, who recently marched to parliament from Lyttleton about pay claims, may be illustrating why there are so many foreign companies are attracted to NZ fisheries, and so few New Zealanders. The Russian workers claim their employer is in serious breach in NZ labour laws which state that anyone working in New Zealand, including our territorial waters, must receive minimum wage.

    The Russian company has offered its workers $57/week gross, claiming the workers only work two days/wk. This "part-time work" is not covered by minimum wage protection. The fishermen, however, claim they work twelve hour/day, seven days/week. The local fishing industry lobby group, Future Fisheries, claims that minimum wages are not being paid on any foreign vessels and this is why New Zealand companies are not able to compete in our own waters.

    The Hoki season in the next month will see 4,000 foreign fisherman come to NZ working in 60 boats. An industry source says that the companies who own these boats routinely declare they are paying minimum wage and then make deductions for food, clothing and transportation home. These foreign workers may be earning as little a $1 per day. The Fishing Vessel Owners, those companies who hold NZ fishing quota and form joint ventures with the foreign boat owners, point out there have been no convictions of companies regarding the minimum wage. However, the Labour Department admits that it only investigates if they receive a written complaint. Labour MP Ruth Dyson says that complaints are unlikely to be forthcoming from foreign workers without English language skills and whom live in very vulnerable circumstances.

    Sources -- The Independent 1 July 1998 "Russians plight exposes wage law abuse" by Graeme Speden

    What is next for Te Whanau o Waipareira Trust? The Trust earlier this month gained official recognition as being essentially a tribe. Trust chief executive John Tamihere told the National Business Review that as a result of this recognition "urban Maori can no longer be ignored either by traditional authorities or by government funding agencies"

    Waipareira Trust claimed that the Crown, through the Community Funding Agency of the Department of Social welfare, failed to recognise the trust's status and failed to properly consult with the trust. Tamihere: "The claim was about our right as a pan-tribal whanau in the urban area to be acknowledged as a Treaty partner and our right as urban Maori to organise ourselves in accordance with our own tikanga to address our own problems in our own way"

    Next target for Waipareira: managing the dole payments and the Children and Young Persons Service in West Auckland. Tamihere's radical scheme would see the trust having the authority to manage personal and family budgeting, to ensure people were living within their means and making sure rent, food, power and bills were paid. Tamihere believes that the bureaucracy of 15 government agencies at work in West Auckland are doing little more than maintaining a conveyor belt of dependency. By shifting these government resources to the control of the trust, Waipareira would be able to take a client-centred approach and use the scarce government resources more wisely.

    Waipareira has a core business of providing health, education, justice and social services to 55,000 West Aucklanders. About 70% of the trust's income is from tenders that this year total $7m. Its projects include a 49% investment holding in the $48m Westgate shopping centre near Te Atatu, and helping establish a West Auckland University around the Hoani Waititi marae.

    Source -- National Business Review 10 July 1998 "Urban iwi to invoice tribes for welfare work" by Jock Anderson

  • VOICE:
    "We will not tolerate directives and commands from bureaucracy and government. We will not tolerate the same nonsense from a minority presently leading the tribes. We are unashamedly multi-tribal, unashamedly multi-cultural, unashamedly Maori and absolutely cohesive in our Maori social, cultural, political and economic methodology"
    -- Waipareira Trust chairwoman June Mariu, from their 1997 report

    Warren Berryman, editor of The Independent, believes we should treat the dole as an unemployment insurance claim, and not a needs-based handout. Berryman says that a person who loses his job through no fault of his own "should not be forced to crawl on his belly to some bureaucrat to prove he needs the dole". Need is not the issue, he says, when we treat the claim as a form of insurance.

    Berryman: "I insure my car, my house, my health. Why not insure against the prospect of losing my job? It's a risk like any other"

    Berryman compares his situation, at age 58, with that of his son aged 20, as asks: if we both lose our jobs, why should we get the same amount of dole?

    "I'm paid more, thus I pay more in taxes -- a higher unemployment premium. But if I lose my job, I also lose a bigger salary, and a career some years in the building. My financial commitments are also greater.

    "The guy paying $10 a year to insure a bicycle doesn't get as much as the guy paying $1,000 to insure a Rolls Royce when both vehicles are written off. So why is the guy paying $1,000 a year to insure a $100,000 job entitled to the same dole as a student paying $10 a year to insure against the loss of a $10,000-a-year, part-time job?"

    Berryman believes that the government, instead of putting all his taxes into an undifferentiated fund, should earmark a portion of this money as an unemployment insurance premium. "Better still," he says, "the government could give me the option of insuring with a private sector company and claiming the premium as a tax deduction"

    Source -- The Independent 15 July 1998 "Bureaucracy is the sole winner when one must pawn one's soul to get the dole" by Warren Berryman, editorial

    Reich.jpg - 7997 Bytes For former US Labour Secretary Robert Reich, recently lecturing in NZ as a guest of the Labour Party, the question of the dole is not one of guaranteeing `insurance' but more one of guaranteeing `employability'.

    Reich: "Rather than unemployment insurance, which assumes people will get their old type of job back again after they're laid off in the roughs of an economic cycle, its important to consider what might be called re-employment insurance. That is, systems of job re-training, job search assistance, job counseling and also, perhaps, wage subsidies for a limited time if the subsequent job pays less than the former job.

    "Rather than job security, which is unrealistic in this new economy, you give people a degree of employability security. They know they can move from job to job without too much danger "

    Reich believes that we have to develop a new social contract that is not premised on preserving the old jobs and the old industries and ways of doing things: "And this entails ensuring the adjustment of large sections of the population to a different economy. You finance it in part out of the huge gains made by those at the top. This is not a matter of redistribution of wealth, because you are effectively investing in the future productivity of all of your people. Even those at the top will benefit as the rising tide lifts all boats "

    Source -- The Independent 17 June 1998 "Labour plumps for a prophet from another country" by Graeme Speden

    A group of engineers and executives who were found working overtime last month at a subsidiary of Alcatel, the French telecom company, have received an official reprimand for their efforts. A team of inspectors from the Ministry of Jobs and Solidarity arrived promptly at 7pm and demanded to know why they were still at their desks. (Alcatel says they working overtime to try and conclude key contract negotiations).

    Alcatel is one of several prominent French companies raided by job inspectors in recent weeks as a part of a French plan to limit the working week to 35 hours. The inspectors have been seen photographing car license plates in company car parks, and have even started monitoring personal computers to check if employees are secretly working at home.

    The government says the 35-hr limit will force companies to create more jobs. French law calls for all companies with more than 20 staff to institute the 35-hour week by January 1st, 2000. Smaller firms have two more years to comply.

    Source -- The Week 20 June 1998 "Europe at a glance"; The Guardian Weekly 21 June 1998

    COMMACT Aotearoa is convening a national conference on "Community Development strategies in a harsh environment" in Wellington 29-30 October 1998. The conference flyer says: "We see this as an occasion to look at the theme of community development in the 21st century, acknowledging that the environment in which we are working has changed hugely over the last 16 years, and that as social entrepreneurs we must begin to develop new mechanisms to create jobs, services and products relevant to today"

    COMMACT Aotearoa is the local chapter of a Commonwealth-wide NGO which develops forums for local action and economic development workers. Contact P.O.Box 423 Auckland

    Source -- COMMACT brochure

    Author and activist Noam Chomsky is booked to speak at the NZ Peace Foundation Media Awards Ceremony in Auckland, 11 November 1998. For more information contact the Foundation phone 09 373 2379 or email
    Source -- Peace Foundation awards brochure

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