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    Essential Information on an Essential Issue

    Letter No.84

    13 August, 1998

    We include our regular Statistics That Matter feature in this issue of The Jobs Letter

    "Towards a New Monetary Policy" with The Alliance

    The unemployment rate is now at a four-year high of 7.7% or 143,000 people at the end of June 1998. This is up from 7.1% or 10,000 people, in the March quarter, and up 20,000 people on June last year. We include our regular Statistics That Matter feature in this issue of The Jobs Letter.

    The biggest wave of lay-offs has been amongst full-time jobs _- 23,400 full-time positions were lost in the three months to the end of June. The drop was off-set slightly by an increase in part-time employment.

  • It is the unskilled unemployed who are continuing to drop out the bottom of the job market. Statistics NZ reports that of the 20,000 people who lost jobs in the last year, 8,100 had no formal qualifications, and 7,800 had school qualifications only.

  • The participation rate (the numbers in the labour force as a percentage of the working age population) has fallen to 65.2% from 65.8% a year ago. This indicates that more people are dropping out of the labour market. This figure was predicted to improve, as benefit reforms encouraged more people to return to the labour force.

  • New Zealand Employment Service reports that the numbers registered as unemployed rose by 26,679 people or 16.4% in the year to June. Interestingly, NZES records a drop of registered unemployed in three of its four regions over the last three months. (Northern region fell 2.3%, Central region dropped 1.1% and the Wellington region, which includes Hastings and Marlborough, dropped 1.8%.

  • Expect the figures to worsen. Economists quoted in the Dominion are predicting the official unemployment figure to rise a further 20,000 people to 163,000 by March next year. This will give an unemployment rate of 8.5%.

  • The Minister of Employment Peter McCardle points to the drought and the Asian economic crisis as reasons for the major job losses. He says that the drought over summer and autumn was responsible for many of the 12,000 job losses in the agricultural sector.

  • The ANZ Bank reports that the number of job advertisements in newspapers was 18.7% fewer in July, than in July last year. This was the largest annual fall since January 1992.

  • Special note: Statistics NZ has now adjusted all its Labour Force Survey figures to align more closely with the results of the recent census. This means it has adjusted retrospectively most of the employment statistics for the last year. So if you are comparing our Statistics That Matter feature with previous versions, many of the earlier figures have in fact been revised.

    NZES also continues to be unable to release reliable statistics on the number of people on their various employment programmes. Reason: they are still ironing out bugs in their changing data systems within the department.

  • The employment figures show that the economy is much weaker than the Reserve Bank predicted three months ago. Economists are now predicting that the Reserve Bank will now ease monetary conditions, which may mean lower interest rates.

    Lowering the interest rates will benefit employers who are considering taking on more staff or buying new plant and equipment to expand. But economists predict that business leaders will want to see the lower rates bedded in before making those capital expenditure decisions.

    The rise in unemployment was welcome news for the merchant bankers Bancorp. Their economist, Stuart Marshall, proclaimed (in underlined bold type) in his analysis sheet, Economic Alert : "It is good when unemployment rises" saying that big shifts in employment were a sign of a "responsive labour market", especially compared to the "rigid" Australian labour market. He says companies are more likely to survive, and will re-employ workers when the economy improves.

    Source _ Statistics NZ figures; New Zealand Herald 6 August 1998 "Jobless quarter worst in 13 years" by Audrey Young; The Christchurch Press 6 August 1998 "Jobless up, but loans cheaper" by Martin van Beyen and Neill Birss; Otago Daily Times 6 August 1998 "Unemployment figures rise but interest rates easing" by Dene Mackenzie; The Daily News 6 August 1998 "Unemployment rises as interest rates fall" by NZPA; The Dominion 6 August 1998 "Unemployment rate worst in four years" by Mathew Brockett; ANZ Jobs Focus for July 1998;

    Christine Rankin has just announced the appointments of the senior executive team within the Department of Work and Income. The top job of National Commissioner goes to her colleague from Income Support, Ray Smith.

    Ray Smith joined the Department of Social Welfare in 1983 and was previously Income Support's Auckland Regional Manager before he became National Business Development Manager in 1995. In 1996 Smith was appointed National Service Delivery Manager and was instrumental in the business re-engineering and resulting re-structure of Income Support.

  • The General Manager of Service Delivery Support is Nigel Bickle, and the General Manager Specialist Services is Patricia Reade. Nigel Bickle was National Operational Policy Manager for Income Support. Patricia Reade was previously with the Employment Minister's Office and is currently on secondment overseas until February 1999. Paul Dibley, Acting Group Manager Human Resources from the New Zealand Employment Service will act for her until she returns.

  • Two new positions in the executive structure have been created. Tony Gavin, former General Manager of the New Zealand Employment Service joins the team as "Strategic Advisor Employment".

    Former General Manager of the Community Employment Group in the Department of Labour Parekura Horomia joins the group as "Advisor Community". Horomia will provide senior management with advice on issues that relate to the delivery of services to communities, and act in the position of Manager Community Employment Group until it is filled.

    It looks like the new Department of Work and Income NZ will be more commonly promoted as WINZ. And the new Maori name will be Te Hiranga Tangata, a reference associating people with "excellence".

    CEO Christine Rankin says that the name captures the essence of the new organisation's ethic, rather than a literal translation. Rankin: "Excellence can refer to the organisation itself or to the efforts of the people within the organisation and also in terms of the concept of wanting to be the best we possibly can as individuals"

  • The new logo and colour scheme for the department has also arrived. The new logo depicts a figure carrying a sun under its arm. Rankin says the "identity" was developed to communicate "empathy for people, while demonstrating self-sufficiency, control and direction". Similarly, the colours are said to have been chosen to convey "purpose and clarity" _ blue "for distinction", orange "for vibrancy" and yellow "for warmth and positiveness".

    The New department will locate its corporate office in Wellington's Bowen State Building.

    At the moment, staff within the Department of Labour and Income Support are being told as to whether they are transferring or being reconfirmed into positions in the new department. Over the next week, position that have not been reassigned will be advertised through internal bulletins, with some positions also advertised to the general public. Applications will close on 25th August, with interviewing commencing early in September.

    Source _ The Head Line Issue 1 31 July 1998, and Issue 2 12 August 1998


    With the big jump in unemployment, the government is facing renewed calls to slow down their programme of tariff reductions. NZ has committed itself to phasing out all tariffs by 2010, and the government is looking into how it can speed up this process. PM Jenny Shipley is unimpressed by the unemployment argument, and believes we must remove tariffs in order to create new jobs.. She told the recent National Party conference: "Tariffs are becoming a huge bogey in the minds of many NZ'ers All they can see is the loss of jobs for some people "

    Commerce Minister John Luxton is presently reviewing the tariff schedules, and will report to Cabinet within the next few weeks. He says that more than 100 jobs are being created every day in the economy, and that slowing down the tariff reduction process would only stop the creation of new jobs which are replacing those being lost. Luxton : "In actual effect the tariffs are preventing new jobs being created in other dynamic areas of the economy because people are having to spend more on clothing, textiles, and footwear than they would otherwise have to spend "

  • The removal of car tariffs on Budget night was estimated to have cost between 1,500 and 5,000 jobs. The textile, footwear and clothing trades are next in line, and industry sources say that at least 10,000 jobs will be affected by any acceleration of the tariff cuts.

    A group of NZ First back-benchers, led by the Rev Anne Batten, wants to see remaining tariffs frozen at 15% for five years from the year 2000. They point to Australia which is reducing its tariffs from 25% to 17.5% between 2000 and 2005, and say we should wait for such a key trading partner to catch up.

    Labour says it will freeze tariffs at 1999 levels for at least five years. Michael Cullen: "We are not going to go along with any plans for a mad acceleration in the rate of tariff reduction. We believe there is a real future for high-quality textile, apparel and footwear industries"

    Source _ The Christchurch Press 7 August 1998 "Calls grow to slow tariff cuts" by Peter Mathias and NZPA"; Sunday Star Times 9 August 1998 "Tariff-strippers won't be swayed" by Bob Edlin

    Despite the statistics clearly showing that those without formal qualifications being the biggest victims of rising unemployment, PM Jenny Shipley told the recent National Party Conference that another key factor was important in the search for the right job: attitude.

    Shipley was quoting a survey conducted by Auckland principal Alison Gernhoefer of employers, asking them what they wanted from the young generation for whom she was responsible. Shipley relayed the findings to the conference

    "They must be pro-work. They must have a belief in excellence. They must strive to achieve their best. They must have all the self-confidence in the world. They must know that the world does not owe them a living.

    "They must be prepared to do an honest day's work. They must be self-reliant. They must have strong literacy, numeracy and computer skills. They must know how to learn, to think critically and to solve problems. They must be flexible and have an adaptable outlook. And they must have a commitment to long-term, life-long learning.

    "They must have a willingness and an ability to upskill regularly, and they must also have social skills. Employers wanted them to have the ability to communicate effectively, the ability to get on with people and the ability to work as a member of a team.

    " Then, and only then, did the employers say they must have an appropriate qualification"

    Source _ The Independent 12 August 1998 "Shipley: Unemployment is a matter of attitude, but whose?" by Bob Edlin

    With much of our worsening unemployment being blamed on "the Asian crisis", it is interesting to see Auckland University hosting the MIT economist professor Paul Krugman for a series of lectures. Krugman is noteworthy for his predictions, made three years ago, of the problems inherent in the Asian economy. At that time he poured cold water on the "Asian miracle" by pointing out that the Asian economies had very poor productivity growth and would not be able to sustain their GDP growth. Rather than being a "miracle", he saw the Asian successes as being nothing more than the result of increased capital and labour inputs. He proposed the "perspiration theory" of Asian growth, saying the economies worked harder, not smarter, at mobilising resources.

    In Auckland, Krugman describes the present Asian crisis as "the worst crisis to have happened to the world since the 1930s" He says the crisis is getting worse every day and now the region needs to look at radical approaches _ ranging from debt control moratoriums to currency controls. He told New Zealand Herald journalist Yoke Har Lee that Asia's crisis was fundamentally a banking crisis with its roots in "crony capitalism", leading to excessive borrowing which later manifested itself as a currency problem.

    Paul Krugman has his articles and papers on the MIT website at

    Source _ New Zealand Herald 10 August 1998 "Asian crisis worsens daily: MIT professor" by Yoke Har Lee; and The Listener 15 August 1998 "heretic to High Priest" by Brian Easton.

    Christchurch mayor Vicki Buck has come out saying she is deeply skeptical about the government's new employment strategies. Buck, who was one of the high-profile members of the 1994 Prime Ministerial Task Force on Employment, has major doubts about the workfare components of the employment strategies, and questions whether the government is really serious about giving everyone in NZ the right to a job.

    Buck: "There's no buy-in to full employment, no targets at all in fact, no acceptance of local solutions and no menu of options to give people a path out of unemployment"

  • Buck concedes that the government has borrowed proposals put forward by the Employment Task Force. The task force recommended subsidised community work -_ which has survived as the community wage _ and a network of employment commissioners which would hunt out and promote local initiatives.

    In the new scheme, these appear as "regional commissioners" reporting to a national commissioner in the new one-stop Work and Income shops. The commissioners (no longer with "employment" in their title) have responsibilities for wider income support programmes and the line management of their departments.

    Vicki Buck says these are "just skeletal remnants" of the Employment Task Force's approach, without any of the deeper changes it envisaged. Buck : "They have taken little bits out of the whole thing without putting the fundamental foundation in place _ the premise that everyone in NZ has the right to a job, that we're a small-enough country to achieve that and that it could be achieved quite cheaply"

    "They have taken the `here are your responsibilities' parts but they haven't implemented any of the stuff that was about making sure people got jobs" The new structure, she says, "is just a Wellingtonisation of the whole thing" with no real local control and recognition "that you have to intervene in the market, you have to provide the jobs"

    Source _ New Zealand Herald 5 August 1998 "Work-for-dole plan shadow of a good ideas says mayor" by John Goulter

    Auckland's Unitec has produced a CD-Rom to help immigrants, and those for whom English is a second language, to find jobs. "English for Employment" has been created by senior lecturer at the school of languages, Pascal Brown. The CD was based on Unitec's Employment Skills English course that it has offered for several years. Brown says that his international research indicated that while there were many English language CDs, none focussed on the use of English for employment.

    The CD contains many video segments, and it shows how to communicate with an employer on the telephone and how and where to find work. It gives guidance on how to use employment agencies and how to write and print copies of curriculum vitae, application forms and letters of application. To help people prepare for interviews, there are more than 100 likely questions and answers, with many employment related dictionary definitions.

    Price: $99.95. For more information contact the Unitec website at

    Source _ letter to the Jobs Letter from Pascal Brown and New Zealand Herald 20 July 1998 "Dfisc helps in work search" by Ric Oram.

    The Sydney Morning Herald reports that the newly privatised employment service, Job Network, continues to experience "teething problems". The Employment Minister, Dr Kemp, recently refused to release figures on the performance level of the new job agencies, amidst opposition claims that the system is in chaos.

    Employment National _ the largest government corporation, which has about a third of all the Job Network contracts, has said that it will stop charging some employers for filling vacancies. It now realises that some employers were not used to budgeting for recruitment services.

  • The smaller job centres are complaining that the Job Network is too performance-based: "If you don't perform, then you are not going to be in the next tender round" The key complaint is that the centres are inundated with jobless people _ including spouses of the unemployed and new migrants _ who do not qualify for unemployment benefits, and are therefore not being "targeted" by Job Network. This means the centres don't get paid for helping them under the new market-driven scheme. Many centres are turning away these "ineligible" jobless. Other centres are placing them in jobs, but argue that the centres themselves are going broke in the process.
    Source _ Sydney Morning Herald 4 August 1998 "Teething problems for Job Network" by Helen Trinca

    Take a look at Denmark. They have developed a no-nonsense approach to welfare that combines the flexibility of the American model with the comprehensiveness of the Scandinavian. In Denmark, everyone has the right to state benefits, but after two years out-of-work, a person must accept the first job on offer or lose their entitlement. The Danes also provide free re-training and have a workfare system which subsidises firms to take on unemployed workers.

    The Danish government has even struck a deal with the main unions, giving employers the right to sack employees at will. In return, the state will pay up to 90% of the sacked employees' salary in their first year out of work. And the result of these reforms? The German newspaper Der Spiegel reports that in just three years, Denmark has cut its unemployment rate from 12% to 7%, while enjoying healthy economic growth at just over 3%.

    Source _ Der Spiegl, as reported in The Week 23 May 1998

    Voice: " Unemployment is a fact of life, huge inequalities have opened up in income and wealth, the private sector does what it likes and the public sector does what it told. The very instability left by the rampaging wolf of global capital makes necessary much more stringent social controls, as jobs move out of the inner-city neighbourhood so the closed-circuit cameras and "zero-tolerance" police move in. And the new culture of control is a makework scheme for politicians and administrators: having abandoned any pretence at managing the economy, they channel their energies into managing the citizenry..."
    -_from "The Age of Uncertainty" by Larry Elliott and Dan Atkinson (pub 1998 by Verso). Larry Elliott is an economics editor for The Guardian.

    Source _ The Guardian Weekly 21 June 1998 "Anxious? Insecure? You'll get used to it" by Dan Atkinson and Larry Elliott

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