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    Essential Information on an Essential Issue

    Letter No.89

    28 October, 1998

    Australian Jobless; reports and statistics on employment and unemployment from accross the Tasman

    Amidst talk of a worldwide economic slump, Germany and France are leading the call for a period of government-led economic growth. French Socialist PM Lionel Jospin is promoting the idea of a "new Euro-Keynesian expansion", financed in part by the reserves of the new European Central Bank. Jospin: "The main thing is not the formula, but the intention to act ... Europe should be able to represent an area of growth for the next 10-15 years. Inflation is at almost zero and interest rates are at a minimum. Unemployment, however, is still far too high. In such conditions, the EU should mark its political determination to support growth..."

    French proposals for expansion: financing new technologies and infrastructure developments such as expanding France's high-speed train network.

  • Jospin's proposals already have been welcomed by the new German Chancellor Gerhard Schroeder(see last issue of The Jobs letter. He is proposing to address Germany's 11% unemployment rate with a Buendnis fuer Arbeit (Alliance for Work) which brings together key government and industry leadership. The Schroeder government is also considering wage subsidies such as the Kombilohn, or "combination wage" where the private sector pay rate is topped up by the state.

    According to Brian Block in the National Business Review, it is almost inevitable that German firms will have to incorporate in their growth strategies some measures to create "a fairer distribution of work". This will entail the reduction of overtime, more part-time work for more people and flexible working times. The Schroeder government will also encourage industry to integrate in their personnel planning the needs of the so-called "problem groups" like younger workers, the chronically unemployed and the low-wage sector.

    Sources _ The Guardian Weekly 25 October 1998 "Jospin rallies support for big spenders" by Martin Walker; National Business Review 9 October 1998 "Schroeder sees reform as key to jobs growth" by Brian Bloch

  • Such determination to act on the employment issue will certainly be needed in the coming months, as the fall-out from the Asian economic crisis and tumbling world stock markets continues. In Britain, the Centre for Economics and Business Research warns that the country is "stumbling towards the brink of recession" and predicts that 300,000 jobs will go between now and the end of 1999. The last month has seen heavy manufacturing job losses in the north of England and in Scotland.

    Fujitsu and Siemens have shedded 2,000 workers, while Ford has put one of its major factories on a four-day week. Vickers has closed its tank factory in Leeds with 1,100 job losses, and Barclaycard has announced similar cuts over the next three years.

    Source _ The Week 26 September 1998 "Britain hit by job losses" and The Dominion 7 October 1998 "UK tipped to lose 350,000 jobs" Bloomberg.

    Key indicator of economic downturn: the rising number of bankruptcies. In Japan, the bankruptcy figures leapt nearly 18% last month as a record 1,518 companies across all sectors were forced to close, leaving 3 trillion yen in accumulated liabilities.

    In NZ, the Insolvency and Trustee Service reports that bankruptcies have surged ahead almost 22% to a ten-year high. There were 918 new bankruptcies in the three months to September, up from 754 for the same time last year. There have been 2,455 bankruptcies already this year.

    Source _ the Independent 21 October 1998 "Bankruptcies soar in Japan" , The Dominion 24 October 1998 "Bankruptcies soar to a ten year high"

    The NZ government is now budgeting for more unemployment benefits as the number of unemployed grows in the economic recession. Work and Income Minister Roger Sowry says that an extra $143m has been budgeted to cope with the expected rise in dole payments. This is a 9.8% increase on the $1.4 billion allocated in the last budget.

    Unemployment has risen in recent months to 7.7%, and the government expects it to peak at 8.5% next year.

  • Labour's employment spokesman Steve Maharey is predicting a faster rise in unemployment and the rate to go to 9%. He says that the increased budget for unemployment benefits "illustrates just how poor the government's mismanagement has been." Maharey: "Rather than putting money into making people more employable and creating job opportunities, this government is being forced to find extra money for unemployment benefits..."
    Source _ The Dominion 23 October 1998 "More money required as unemployment grows" by NZPA

    WINZlog.jpg - 5684 Bytes Event of the month: The WINZ Roadshow of senior managers toured nine major centres to launch the new Work and Income Department. Chief Executive Christine Rankin and National Commissioner Ray Smith held large gatherings in convention centres and hotels where they could meet their staff, and explain the vision and `culture' of the newly-restructured government department.

    The immediate impact of the new organisation on the public is a smart and fresh `re-branding' of offices throughout the country ... although in most centres it is simply the new signage and brochures. Christine Rankin says that the "integrated" goal of providing all services under the same roof will take another 12 months.

  • The keynote for the new department: Independence. In a brochure welcoming `customers' to their new agency, WINZ explains: "We are here to support your move towards independence. We've got a lot of experience, plenty of ideas, as well as practical programmes. You might need to find a paid job, do some training, work for yourself or just get the confidence to go back to work. Our job is to assist you to succeed in getting where you want to go.

    "If you are unable to work right now for any reason we can discuss your income support options. And we'll help you plan what to do to get a job when you're able to work again..."

  • There is continuing concern about the future of the Community Employment Group. Its new boss Marie France has been given a contract until February next year. Does this mean CEG resources will be absorbed into the new regional structures after that date?

    The network of Local Employment Co-ordination Committees (LECs) have been rolled over into the new WINZ department and are budgeted to continue at least until June 1999. LEC members are also questioning the role of the committees in the new regional environment, and this is expected to be clarified before Christmas.

    At present there are 42 of these committees throughout the country, with 750 participating members drawn from government agencies, local bodies, business leaders and community organisations.

    Source _ comments from Vivian Hutchinson, Jobs Letter editor

    The State Services Commissioner Michael Windringham has issued a warning to government about the dangers of restructuring the state service. In his annual report released last week, Windringham says that NZ has slipped into "a restructuring culture", where people reach for the restructuring option "instinctively regardless of the nature of the problem." He says that international research shows that structural solutions will not fix policy problems.

    Windringham: "My view is that the majority of the change that came about in the period beginning in the mid-1980s was necessary, and that today we have a state sector that is generally more efficient and responsive than it was 20 years ago. But my main concern is not where we have come from but where we are heading..."

  • Windringham says that commitment to extensive restructuring has been made on the basis of overly optimistic estimates of the time required and the costs involved. His view: "Benefits tend to be overstated as frequently as costs tend to be understated..." He also says that the public service is putting too much emphasis on counting the costs in financial terms, and too little on non-financial aspects.

    He cautions that poor management of change can exacerbate loss of morale, staff loyalty and productivity, poorly integrated information systems, and distraction of the business of the day. Maintaining morale and productivity is doubly hard when organisations implement structural change at the same time as they try to import new policies: "The risk is that neither objective will be fully delivered..."

    Source _ The Dominion 22 October 1998 "Beware culture of restructuring says report" by Victoria Main

    mccardle.jpg - 6446 Bytes Peter McCardle, former Minister of Employment, and now associate minister of Work and Income, has confirmed that he will leave politics next year. He says his dreams as a politician came to fruition on October 1st when the new Work and Income department opened its doors. This signaled the completion of what he says he entered parliament to achieve: to focus employment policy on the long-term unemployed, to set up one-stop employment shops, to introduce regional employment commissioners, and to replace the dole with a `community wage'.

    McCardle, who apparently has had little contact with his former NZ First colleagues since the coalition bust-up, is undecided as to what he will do when he leaves parliament.

    Source _ The Dominion 23 October 1998 "work for dole man handing in cards" by Nick Venter

    Christchurch's new mayor, Garry Moore, says that employment and social issues will continue to be a key focus of his administration. Christchurch City was under attack last year by the Business Roundtable for its spending in the social field, with businessman Doug Myers dubbing it the "People's Republic of Christchurch".

    Garry Moore has a background as an accountant and expects to be rigorous in the financial choices ahead for the city. But he also has a long-time involvement with community groups and employment issues, particularly as a former SCOPE officer with Internal Affairs, and field worker with the Community Employment Group. Expect: a Christchurch mayoral forum on jobs, early next year.

    Source _ from Vivian Hutchinson, interview with Garry Moore

    tamihere.jpg - 4242 Bytes Waipareira Trust chief executive John Tamihere expects to announce later this month whether or not he will stand for Labour in the newly-created Maori electorate of Hauraki. The electorate stretches from Mt Albert to the Coromandel Peninsula and includes Waihi Beach, Morrinsville and Matamata.

    Tamihere is one of the leading figures in Maori urban development projects, including many innovative employment and training programmes, and business ventures. His track record led him to be named New Zealander of the Year by North and South magazine. He has tribal roots in Hauraki, and is a member of the Hauraki Maori Trust Board.

    Source _ New Zealand Herald 20 October 1998 "Labour prospect" and 24 October 1998 "mates set to square off over political prize".

    The training allowance scheme, designed to help beneficiaries pay the costs of training is being changed. The new policy sees the training allowance capped at $3000 per year per person and may be used to pay for up to 60% of course fees, not the whole cost. The remaining 40% of course costs are expected to be made from the trainee's own resources or borrowed through the student loan scheme. Payments will now be made at a constant (flat) rate on a weekly basis at a maximum of $75 per week. It will not be paid to people on TOPS or other fully funded training programmes.

    The training incentive allowance will no longer be available to people who have completed a degree during the past five years. Courses that attract the training allowance no longer have to be ETSA approved, so long as the course is registered and accredited with NZQA. Travel and child care costs are now considered outside the scope of the training incentive allowance.

    Source Dave Owens interview with Ross Elms

    "Myths about Poverty in Aotearoa New Zealand" is a major new publication which pulls apart the current `myths' about poverty in NZ and challenges inaccurate explanations of why it occurs. It has been produced by the New Zealand Council of Christian Social Services and the Joint Methodist Presbyterian Public Questions Committee, who hope the information will encourage communities and individuals to re-examine, debate and discuss some of the common assumptions about poverty and the poor.

    The publication argues that poverty and welfare issues are complex and have a profound affect on the health of our society: "Neither the real problems nor the right answers fit easily on bumper stickers or into thirty-second sound bites. Developing genuine solutions which do not waste money and which really help those in need, depends on all of us honestly examining our own beliefs and trying to separate the facts from the easy stereotypes..."

    The eight `myths' discussed in the publication are: "There is no poverty in Aotearoa New Zealand"; "People can always get help if they really need it"; "Poor people don't know how to manage their money"; "If only they didn't keep having babies"; "Why don't they just get a job"; "Welfare dependency is the real problem, not poverty"; "No need to worry about poverty - as long as we get the economy right"; and "The poor will always be with us".

    The publication is available from NZCCSS at 04-473-2627 or Public Questions at 04-801-6000 or can be freely downloaded from their website at

    Source _ Public Questions website at

    " We trained hard but it seemed that every time we were beginning to form up into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation..." Petronious Arbiter (208 BC)
    -- Petronious Arbiter (210 BC), as quoted by Gordon McLaughlin

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