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    Essential Information on an Essential Issue

    Letter No.83

    30 July, 1998

    Latest Research in Income and Inequality

    A Massey University study has found that 80% of NZ households have a smaller share of NZ's total income today, than they did 16 years ago before the revamps of the 1980s and 90s. Professor Srikanta Chatterjee reports that while four out of five households had a reduced share of the total income, the top 10% got about 15% more income over the 16-year period, and the top 5%, the very rich, got 25% more income. Professor Chatterjee also says that inequality, in terms of income distribution, has grown more quickly in NZ than in other countries.

    We present some edited highlights of the Chatterjee report, as a special feature in this issue of The Jobs Letter.

    1,400 job-seekers have been secretly denied community work-scheme jobs in a government experiment, according to Green Party Co-Leader and Alliance Employment Spokesperson Rod Donald. Donald last week revealed that the NZ Employment Service has set up a confidential control group of 1,400 job-seekers as part of an assessment of the Community Task Force scheme. He says that, without their knowledge, the job-seekers had their files tagged to stop them being referred to Community Task Force placements. This "control group" has been established as measures to enable the Employment Service policy group to assess whether those on CTF were more, or less, likely to get real work compared to those who were not on the CTF.

    Donald: "This is not just an unfortunate experiment, it's an insidious one. Whether or not it's legal, it certainly is immoral they are playing with the lives of the unemployed. Using job-seekers as human guinea pigs is a further example of the callous way the government is treating the victims of its economic policies. It is particularly cruel that the government blames job-seekers for not finding work, yet at the same time 1,400 of them have been denied the opportunity to participate in the Community Task Force scheme.

    Donald also says the experiment is "a futile exercise" because even before the government has measured the effectiveness of the CTF scheme it has extended this pilot into its full Community Wage Scheme. "The Government has committed enormous resources and imposed a massive change in employment strategy without knowing whether or not the pilot scheme has made any significant difference to job-seekers' employment prospects"

    Source Press release from Rod Donald 22 July 1998 "Job Seekers Used As Guinea Pigs "

    The government has backed down on its decision to force single parents into community work. Under Employment Minister Peter McCardle's proposals for the community wage scheme, single parents with children aged 6-13 years were to be required to be available for part-time community work. Cabinet, however, decided last week to drop this provision. The new super-Agency, however, will still be able to require sole parents to take part in training, job seeking, and other work-related activities. In defending the change, McCardle says the decision was made after considering the submissions on the Social Services (Work Test) Amendment Bill ... and doing some "fine tuning of the strategy".
    Source _ The Evening Post 23 July 1998 "Work plan backdown angers Nat MP"

    The government has also softened the sanctions on domestic purposes beneficiaries who fail to comply with the work-testing requirements. Instead of losing their whole benefit, sole parents with children aged 6-13 years will now lose up to 50% of their benefit, and those with children under six will lose up to 20%.

    The government has also reduced from 18 to 12 months the amount of time a beneficiary will have to comply with work-testing requirements before previous transgressions are wiped out. The appeal period against penalties will now be five working days.

    Source _ The Dominion 24 July 1998 "Government under attack over work-plan change"

    Although clauses in the Bill had been the subject of much lobbying in parliament, the Cabinet back-down came as a surprise to many in the government caucus. One aggrieved backbench National MP was Gerry Brownlee, who, although being a member of the Social Services select committee, was never told of the planned changes until after the decision was made.

    Brownlee strongly believes that requiring single parents to do community work while their children are at school would provide them with valuable training and work experience. He says he is constantly annoyed that MPs are portrayed as "heartless and uncaring" in their efforts to encourage beneficiaries to do more. He contends that some of the groups that came before the select committee "never agreed with government policy" and appear to "glorify in the dire circumstances people find themselves in" Brownlee says he will continue to fight the softening of the community work provisions in the legislation.

    Source _ The Evening Post 23 July 1998 "Work plan backdown angers Nat MP"

    There is a push for still more exceptions on the community wage programme, particularly for those people on sickness benefits with mental illnesses. In a submission to the select committee, the Mental Health Commission says that Income Support staff, with no training in mental illnesses, were work testing mentally ill people and pressurising them into work when they were not ready.

    In a statement to the select committee, the Commission says that, as currently constructed, the provisions of the Bill are a threat to the well-being of those with mental illness and says that publicity about government's intentions and current Income Support communications and goal-setting practices are endangering their lives. The Commission was particularly concerned about interviews for work readiness, saying that the goal-setting exercises "could be dangerous to the client, including increased risk of suicide"

  • Examples: The Commission reported that one woman's work-readiness goal was to get off medication as soon as possible, even though this could have tragic consequences. Another man had been set a goal of getting back into full-time work within six months, despite his medication making a full day's work almost impossible. The Commission says that most mentally ill people wanted to work, but work-testing needs to be "positive not punitive" and needed input from family and doctors.
    Source _ _ The Evening Post 23 July 1998 "Work plan backdown angers Nat MP"

    Urban Maori leader John Tamihere has come out in support of the government's community wage scheme. Tamihere has met with Employment Minister Peter McCardle at the Waipareira Trust's Henderson base, and told New Zealand Herald afterwards that the government scheme in effect mirrored the trust's own programmes. Tamihere says it is a misnomer to call the scheme work-for-the-dole: "If you are getting some form of renumeration then it's desirable to have some form of activity to receive it" He supports the plan for a community wage as long as it meets three conditions: 1. it does not displace other workers; 2. it is geared against the minimum wage so that people are not forced to work for lower wages; and 3. the work is activity-based, for instance coaching sports teams.

    Source _ New Zealand Herald 29 July 1998 "Tamihere backs work-for-dole scheme" by Warren Gamble

    ACT MP Muriel Newman has praised the coalition government for making benefit changes which will "alter expectations and show that benefits are no longer rights, the concept of reciprocal obligations and the notion that the only way out of poverty is to work" But Newman says that ACT is puzzled by many of the recent benefit decisions, particularly on the need "for complicated sanctions being introduced without any evidence that they are really needed." ACT says it is time for an audit of social policy to see whether it strengthens or weakens the family.

    Newman: "The situation is worsening in spite of the initiatives this government has taken _ there have been 20,000 more people moving into dependency or on to the welfare rolls in the period this coalition has been in power. This means that one in three adults has their major source of income from social welfare payments in one form or another. One in three children live in homes where the major source of income is a benefit. What this means is that one in three NZ children are living on the poverty line"

    Source _ The Evening Post 23 July 1998 "ACT decries welfare payments"

    Many of the 79 Head Office support staff at the Labour Department in Wellington will lose their jobs in the next few weeks after the shift of their functions to the new Department of Work and Income. The Labour Department has to compensate for losing $4m with the transfer of the Employment Service and the Community Employment Group responsibilities out from under their corporate umbrella.

    Source _ The Evening Post 24 July 1998 "support staff axed"

    Amidst all the political furore within NZ First over the last month, Employment Minister and NZ First MP Peter McCardle announced that he has achieved all he went into Parliament to do and will decide at the end of this year whether to stand again at the next elections.

    McCardle, who used to represent the former Heretaunga electorate in Upper Hutt for the National Party, became a NZ First list MP after NZ First adopted his employment ideas as policy.

    McCardle says that he had entered Parliament with a clear, particular purpose: "that was to radically overhaul the way that we assist our jobseekers through the creation of a new one-stop shop by going through region-to-region approach and getting jobseekers on an active wage. I have done that . . If you look at my maiden speech, it's a carbon copy of what we've done.

    "It's rather marvelous to be able to put in place, after lengthy examination by politicians and officials, what I have long believed in. It leaves me at the point of view of where to from here . . I will talk to my wife and we'll make a decision at the end of the year."

    Source The Press 16 July 1998 "McCardle considers his political future"

    Christchurch businesses say they are finding it difficult to find people with the right skills to fill employment vacancies. According to a Lampen salary survey, the businesses are expanding despite a generally gloomy or static economic outlook.

    A shortage of trained people is the major reason given where employers have difficulty in recruitment, The sectors in which the skills shortages are most evident: sales, call-centre-customer service, factory-warehouse-production, accounts and accounting, marketing and general management, information technology, administration-clerical, legal secretaries, and research and development.

    Source The Press 21 July 1998 "Skilled staff hard to find" by Alan Williams

    Career Services, the government agency that provides information for career planning, has just updated and re-launched its website containing job, training and industry information. The site, called Kiwicareers, also includes 700 job descriptions and 120 industry overviews and regional profiles, as well as links to associated industry, employment and training organisation sites. The site can be found on http://
    Source _ Kiwicareers at http://

    National Council of Women president Janet Hesketh says proposed legislation to update matrimonial property laws fails to address the unequal pay rates received my men and women. Hesketh suggest that when matrimonial property is split, the husband should be required to pay for their former wife's job training. She says women had to put their careers on hold while bringing up their children. Hesketh: "At the time of separation, he usually has a good job and can go on earning, but she is quite likely to be out of the workforce or doing part-time work or have nothing like the husband's skills"
    Source _ Sunday Star Times 19 July 1998 "Men should pay for ex-wives' job training, says council" by

    Local authorities in Britain are becoming involved in green dollar schemes, and finding they have the potential to provide affordable childcare, build the confidence of unemployed people and re-build what economists are calling the "social capital" of the nation.

    Local Employment Co-ordination manager Jan Francis, who was recently in Britain, reports that local authorities are lobbying government to disregard LETS (Local Exchange and Trading Schemes, as green dollars are by known in Britain) from being considered `income' when assessing benefit entitlements. Francis: "Cash-strapped local authorities, health authorities and the voluntary sector are beginning to find ways in which LETS type exchanges can help them extend their existing services, target resources effectively and establish new partnerships with local communities"

    Examples: Leicester City Council has launched Naari LETS, a scheme for Asian women aimed at reducing their isolation; Stockport has also launched a system as part of its Social Services department; Hampshire uses LETS as a way of integrating people with mental health problems back into the world of work. Islington Council is backing a LETS Build pilot scheme to bring accommodation into the trading network. Bristol, Gloucester and Stirling are among those using LETS for allotments to make food available to people on low incomes in return for their time and effort.

    Source _ Jan Francis report on Peoples Summit Birmingham 15-17 May 1998

    Trend: The British are recording a rise in the number of domestic servants. Spending on home help has doubled in the last decade, with more people gaining work as cleaners and nannies today than in the 50s. The British now spend £3 billion a year on domestic help, compared with £354m ten years ago.

    Alice Thompson of The Spectator says that it isn't the aristocracy who are filling their homes with servants, but the "aspirant middle classes", who are working too hard to worry about mopping the floor. This is good news for Britain's New Labour, which is on a mission to "get people off welfare and into work".

    One problem: the British no longer want to be servants. In a recent survey, 12% said they thought that any type of domestic work would be beneath them. Lady Charteris, formerly the Queen's private secretary, complains: "Now there are practically no nice English servants left. They're almost all foreigners or lunatics"

    Source _ The Week 13 June 1998 "No one wants to be a servant any more" by Alice Thompson from The Spectator

    The 5th Australian Conference on Unemployment will be held at RMIT University, in Victoria, on 1-2 October, 1998. The Conference will analyse unemployment, and responses to it, within the broader framework of the future of work and employment. Keynote speakers at the Conference will include European experts on "Work to Welfare" in Britain, and the so-called `Dutch Miracle'. For further information, please contact Serena Lim, Coordinator of the Centre for Applied Social Research at email:
    Source _ Conference notice from the internet

    "Why is it that after 15 years of reform we are still waiting for the so-called benefits of it? The point is that these results are starting to say `hey, maybe it hasn't worked'"
    -- Paul Goulter, General Secretary of Finsec, the finance sector union

    "The fact that incomes at the top of the ladder have grown more than those at the bottom is not a bad thing. I think it's an inevitable part of increasing the rewards for effort for people who developed skills and who work. You've got to send the right signal _ that its worth your while sweating blood and tears to study. You should be rewarded for that"
    -- Finance Minister Bill Birch

    "Nobody disputes the widening income gap. Economic realists positively welcome it, for it means that success in selling goods and services is being rewarded.

    "Egalitarianism is a fine instinct and long may NZ'ers express it. But to most NZ'ers it does not mean that everybody should be forced into a narrow band of earnings. Equality is not the highest principle of a healthy community _ opportunity is that. It is the task of good government to see that everybody has a fair opportunity to improve themselves by their own efforts.

    "Market rewards have left 80% of households with a smaller share of national income than they held 16 years ago, according to the professor's study. Social research should come with a warning. Relative measures mean that whenever one section of society earns a higher proportion of total earnings, the rest by definition become "poorer". It could be said that 80% have a higher proportion of national income because the lowest 20% have a lower proportion.

    "The gaps are widening evenly throughout the income scale in countries with competitive labour markets. It would be a worry if it were not so"
    -- editorial in The New Zealand Herald 28 July 1998

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