Latest Research in Income and Inequality
MASSEY STUDY ON RICH AND POOR
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.
ROD DONALD SLAMS UNFORTUNATE EXPERIMENT
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 "
SOLE PARENTS ESCAPE COMMUNITY WORK
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"
MORE SOFTENING OF SANCTIONS
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"
MORE EXCEPTIONS TO COME?
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"
TAMIHERE BACKS WORK-FOR-DOLE SCHEME
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
ACT CALLS FOR SOCIAL POLICY AUDIT
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"
HEAD OFFICE STAFF TO BE AXED
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"
MCCARDLE CONSIDERS WHAT'S NEXT
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 SKILL SHORTAGES
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
Source The Press 21 July 1998 "Skilled staff hard to find" by Alan Williams
CAREER SERVICES WEBSITE UPDATE
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:// www.careers.co.nz.
Source _ Kiwicareers at http:// www.careers.co.nz.
EX WIVES JOB TRAINING
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
GREEN DOLLARS AND LOCAL AUTHORITIES
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
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
THE RISE OF DOMESTIC SERVANTS
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
5TH AUSTRALIAN CONFERENCE ON UNEMPLOYMENT
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: email@example.com.
Source _ Conference notice from the internet
VOICES: ON THE RICH/POOR RESEARCH
"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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