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    Essential Information on an Essential Issue

    Letter No.90

    20 November, 1998

    Statistics that Matter for the September quarter

    The official rate of unemployment in NZ dipped slightly at the last count, moving from 7.7% to 7.4% for September. This has surprised and puzzled many commentators who were expecting a large rise in unemployment to over 8%, especially after the continuing slump in economic trends worldwide.

    But don't reach for the party hats yet. Statistics NZ describe the drop as "not statistically significant", and their figures also showed that our economy has produced no net new jobs in the last three months, with the number of employed remaining at 1.72m people. The number of unemployed, at 138,000 people, is still also considerably higher than the 125,000 recorded at the same time last year.

    We include our regular Statistics That Matter feature as an insert into this edition of The Jobs Letter.

  • So why has there been a drop in the official figures? The reason is that as many as 5,000 people have "left the labour force" for a variety of reasons such as being discouraged or not actively seeking work and are no longer being counted. The labour force participation rate (the total labour force expressed as a percentage of the working-age population) has fallen to 65%. This rate had peaked in mid-1996, but now is at its lowest level since September 1995.

    The number of people who are classified as no longer in the labour force -- not working or looking for work -- has steadily risen from 783,500 people in 1988 to 999,000 people in September 1998.

    It is in the poorest regions where the participation rate has dropped most markedly. In Northland, the participation rate has gone from 62.1% in Sept 1996 to 56.3% in Sept 1998. In Gisborne/Hawkes Bay it has gone from 62.2% to 59.2% in the same period.

  • We still are unable to print any reliable figures from Work and Income NZ as to the number of people registered as unemployed, notified vacancies or the number on the various work programmes supported by the department. The last reliable figures were in January.

  • Labour's Steve Maharey says the fall in unemployment is merely "a blip", rather than a trend. His own media watch reports 11,000 redundancies announced in the newspapers so far this year, compared to 6,000 for all of last year.

  • NZ First leader Winston Peters says the unemployment figures confirmed he had done a very good job as treasurer before being sacked in August.

  • An increase in female employment was off-set by a decrease in male employment. The hot sector continues to be in the service and sales areas, which had an increase of 21,400 jobs, 13,000 of which were female and mainly full-time.

    Paul Brown of Statistics NZ reports that the last time there was an increase in female employment of the same nature was in the September 1996 quarter, a time which followed the introduction of tax cuts and changes to social welfare benefits.

  • There was a drop of 2,400 in the level of males employed in the Mining and Quarrying industry group, compared to September last year.

  • The unemployment rates for ethnic groups are 5.4% for European/Pakeha (81,400 people), 17.8% for Maori (29,100 people), and 15.4% for Pacific Island (11,700 people).

  • The business sector gave its thumbs-up to the employment data, with a rise in the dollar, wholesale interest rates and share prices after the announcement. Commentators say that the figures may show the economy is in better shape than previously thought.

    Work and Income Minister Roger Sowry welcomes the news: "It puts us in a very strong position ... the feedback I am getting from the business community is that they are doing better than they thought they would a few months ago..."

  • According to the ANZ Jobs Ads series, the number of job ads fell 0.7% in the three main centres in October. The total 17,689 job ads was 18.6% fewer than in October last year, but the bank says the national decline has been leveling off in recent months.

  • Rate Watch. Roger Sowry says there is "a real chance" that unemployment will not go above 8%. Treasury is predicting a peak of 8.5% at June next year. The Reserve Bank is saying 8.2% for March 1999, and the BNZ is saying 8.5%, also for early next year. .
    Source _ Statistics NZ Hot off the Press; New Zealand Herald 6 November 1998 "5000 drop in unemployed a blip" by Audrey Young; The Independent 11 November 1998 "Affcos meat cleaver blunted by jobs ads trends" by Bob Edlin; The Dominion 6 November 1998 "Job stets a boost for dollar, shares" by Mathew Brockett and Helen Bain

    Recession Watch. The American economy is booming at the moment, with low unemployment figures. But National Mutual's chief economist David Corby is predicting that the US is heading for a bad recession, sufficient to bring world growth into negative figures for the first time since the 1930s.

    Brian Fallow reports in the New Zealand Herald that National Mutual was "ahead of the pack" last year in picking the severity of the effects of the Asian crisis. Factors in the coming US recession: the level of overcapacity that has built up in the economy while export growth has ceased, and the US private sector as a whole has been a net borrower for a year or more a pattern that has preceded past recessions.

    Source _ New Zealand Herald 9 November 1998 "US overcapacity pointing to world recession: forecaster" by Brian Fallow.

    Unprecedented numbers of students are looking for summer jobs this year. The Auckland office of Student Job Search reports that 1800 students have already signed up ... compared with about 788 for the same time last year. Job Search manager Sina Aiolupotea says that the boost in numbers is largely due to tougher Community Wage restrictions on the students, and an expected increase in fees to pay for next year (Auckland students may expect up to $8,000 fees).

    The Vice-Chancellors Committee has called for government to pay all tertiary students the emergency unemployment benefit over summer.

    Source _ New Zealand Herald 4 November 1998 "Hard up students queue for jobs" by Andrew Young

    Statistics That Matter: The NORTHLAND electorate contains 26,523 households, of which 58% have household incomes below $30,000 per year before tax. That 58% is 33% above the rate for the country as a whole. There are 38,889 adults aged 20-59 in the Northland electorate, of whom 48% are in paid, full-time work. Unemployment in the electorate is 19% above the national average.

    Localities in the Northland electorate which have high levels of deprivation are all of North Cape to Awanui, Kaitaia and Hokianga. The Northland electorate ranks 4th among electorates for poverty, below Mangere, Manukau East and East Coast electorates. (Electorate statistics compiled by Judy Reinken, and based on 1996 Census).

    Source _ Judy Reinken, statistics based on 1996 Census of Population and Dwellings

    The national Foodbank conference held in Wellington last week decided to organise and promote a national Act on Poverty week to be held three weeks prior to the next election, which they believe could be as early as March. The organisers say they are building on the experience of the Poverty Week and Foodbank Strike which was held prior to the last elections, and also on the Anglican Hikoi of Hope.
    Source _ email from Ian Ritchie "National Act on Poverty Week

    An international survey has found that almost half of NZ's workforce falls below the minimum levels of literacy competence required for everyday life. NZ was one of 20 countries from the OECD covered in the survey, which was published last week by the National Centre for Workplace Literacy and Language.

    The survey shows that 42% of our workforce has substandard literacy skills. Worst affected areas: manufacturing, construction and agriculture, which have 50% of their staff unable to deal with the written demands of work. The survey also shows that 20% of managers have substandard literacy skills.

  • ACT education spokesperson Donna Awatere Huata describes the survey results as "a national disgrace". She says it confirms that literacy is a luxury in NZ. Awatere Huata: "What is even more worrying is that we already know the reading and writing skills of the next generation of workers will be as bad or worse..."
    Source _ The Dominion 10 November 1998 "Literacy A struggle for many workers" by Karen Howard

    James Buwalda, the chief executive of the Ministry of Research, Science and Technology, says that NZ has an urgent challenge to shape "the lives, environments and enterprises for the knowledge revolution". But we are not turning out the graduates needed to undertake this task. He reports that only 23%of our graduates are in science and technology, down from 36% ten years ago. In comparison, countries with similar economies are turning out 40-50% of their graduates in these fields.

    Buwalda quotes US research which shows that 87% of all economic growth is coming from new knowledge and technological change rather economic efficiency and capital investment. Buwalda: "We've been overlooking the major drivers of wealth, productivity and economic growth..."

    Warwick Bishop, the chief executive of the Institution of Professional Engineers, agrees that better education is the key to the success of knowledge-based industries. Big problem: Up to 20% of students are leaving the country once they graduated, leaving fewer people with expertise.

    Bishop says that an Australian study of job prospects among career choices has engineering on top, ahead of health and medicine agriculture, marketing, information technology and telecommunications. He says that the average engineer in NZ earns $10,000 more than the average accountant, but this is not the general public perception.

    Source _ New Zealand Herald 2 November 1998 "High-tech groups can lead growth: Wilde" by Keith Newman

    Applications have closed on proposals from groups wanting to run the government's new Business Development Programme. The government is to replace the current Business Development Boards and the grants they used to provide, with a network of community-based advisory agencies targeting support to small and medium sized businesses.

    There will also be a new National Business Information Service, providing a single source of information about assistance to small businesses. Applicants should expect to hear the final decisions on contracts before Christmas.

    Source _ press statement from Peter McCardle, Minister of Business development

    The INVERCARGILL electorate contains 22,263 households, of which 47% have household incomes below $30,000 per year before tax. That 47% is 7% above the rate for the country as a whole. There are 31,902 adults aged 20-59 in the Invercargill electorate, of whom 64% are in paid, full-time work. Unemployment in the electorate is 6% below the national average.

    Localities in the Invercargill electorate which have high levels of deprivation are West Invercargill, Crinan, and Bluff. ( Judy Reinken, from 1996 Census).

    Source _ Judy Reinken, statistics based on 1996 Census of Population and Dwellings

  • ???
    Career Question: Assuming that you must work ... What work would you do for the next ten years if you won millions at Lotto?
    Source _ Adapted from Max Eggert's "The Book of Career Questions" Arrow Business Books

    Staff Shortages. There is an emerging demand for trained staff in call centres around the country as organisations set up phone-based customer service programmes. More than 70% of the respondents of a Lampen Telestaff survey say they expect a staff shortage. Karen Walker-Raos, national manager for Lampen Telestaff, says that the telephone sales and service industry is expanding quickly in NZ.

    She expects that the call centre or help desk jobs may soon account for as much as 3% of the workforce, in line with a similar percentage in the United States. (In Britain it is 1% of the workforce). Walker-Raos: "We have adopted these trends more quickly than Australia. Organisations have emerged from hard times with a new approach to sales and service _ they have realised that it is easier and more cost-effective to base people on the phone than in the field..."

    Source _ The Dominion 8 November 1998 "Shortage of good staff tipped".

    The new policy for Skill New Zealand, formerly ETSA, has resulted in a tightening up on local level discretionary funding of courses. Skill NZ offices may now only approve funding for courses that are accredited and carried out by training providers registered by the NZ Qualifications Authority. Previously, ETSA offices had the option of funding non-accredited courses provided by unregistered training providers if there was no other option and the local agency considered the training to be appropriate and of an acceptable standard.

    Skill New Zealand does not accredit courses or register training providers, as was indicated in the last Jobs Letter.

    Source _ Dave Owens, correction to item in last issue of The Jobs Letter

    The government is floating the proposal that social service agencies should be made to apply for funding through a single "one-gate" organisation, whether they were seeking money from the government or from private trusts. Nick Smith, the Associate Minister of Social Services, has promoted the idea at a recent national conference of philanthropic trusts. Smith: "I would see a single organisation, whether it is state or non-state, that provides an audit process that everyone else welcomes ... there would be one gate where everyone goes through."

    Smith revealed that he has set up a working party made up of five government departments which was already developing a single application process for voluntary organisations seeking state funding. He believes that an extension of this standardisation to philanthropic trusts would be both in their interests and in the interests of the community and volunteer organisations.

  • Claire Dowdall, a spokeswoman for Women's Refuge, is wary of the proposal. She says that one of the strengths of philanthropic trusts is that they are independent of government and can develop their own particular interests. Dowdall: "If there is going to be one gate and they are setting up some kind of upper level of funding and there is no one else to go to ... that would be a disaster."

  • Meanwhile, the Community Funding Agency has been meeting with trustees of charitable trusts to promote the idea of a "partnership" in which the government agency will help the organisations identify where they should channel their money. The CFA says it is looking to trusts and the corporate sector to provide for community needs. Business strategy manager Verna Smith says: "There is scope for increasing co-operation between all funders to get in behind a shared plan ..."

    The New Zealand Herald reports that private, company and statutory trusts spend about $100m a year on charity, and are reluctant to take more responsibility for health, welfare and education services. Bill Moffat, of the Association of Philanthropic Trusts, says that partnerships with the government were not something that sits comfortably with many of the charitable bodies. Worrying trend: the number of groups who are applying to philanthropic trusts for funds they previously obtained from government. Many trusts have set up "defense mechanisms" in their approvals process to ensure they are not being pushed into areas which they believe should be funded by the taxpayer.

    Michael Hamilton, secretary of the ASB Trust, one of the largest philanthropic organisations in NZ, says his trust will not step into the government's shoes in the fields of health, education and social welfare. Hamilton: "We do not want a situation where they are dependent on us. If we have not got the money next year, what happens then?"

  • One speaker at the national philanthropic conference was Patrick Johnson, of the Canadian Centre of Philanthropy, which has had considerable success in encouraging corporate sponsorship of charities at a time when the Canadian welfare state is diminishing.

    Karen Howard of the Dominion reports that during the 1980s, when Canada was experiencing tough economic times, Johnson's centre started a scheme called Imagine which encouraged companies to pledge a minimum of 1% of all pretax profit to a charity in return for being branded as "a caring company". Results: the scheme now has 450 companies signed up -- one third of the top 1000 companies in Canada -- and providing Canadian charities with $1 billion.

    Johnson: "People who say companies shouldn't be doing it because it minimises shareholder value don't understand that it's good business..."

    Source _ New Zealand Herald 3 November 1998 "Charity trusts say no to govt" by Eugene Bingham; New Zealand Herald 5 November 1998 "Govt wants charity `gatekeeper' " by Eugene Bingham; The Dominion 5 November 1998 "Social funds lost to bureaucracy - Smith" by Karen Howard

    hawken~1.jpg - 5183 Bytes American author and speaker Paul Hawken has come and gone, leaving many of the NZ'ers who attended his lectures thinking differently about the decline of the earth's living systems and the need for business to take it's "natural" capital more seriously.

    Hawken's recent book, The Ecology of Commerce, has sold more than a million copies. His soon-to-be-released book Natural Capitalism: The Next Industrial Revolution is likely to include many of his ideas of how sustainability issues can address human marginalisation-- the result of production taking precedence over people who need good work and income.

    tindall.jpg - 7773 Bytes

  • Hawken has obviously found a soulmate in Warehouse head Stephen Tindall who financed his tour of NZ. Hawken announced to a Wellington business audience that Tindall planned to step down from The Warehouse in the next 18 months and devote the rest of his life, and a hefty $10m a year, to making NZ a sustainable country.
    Source _ The Dominion 11 November 1998 "Environmental guru puts case for sustainability.

    This year's Nobel prizewinner in Economics, Amartya Sen, has long been a voice for the world's poor. A basic theme of his scholarship is that even impoverished societies can improve the well-being of their least advantaged members. His view is that societies which attend to the poorest of the poor can save their lives, promote their longevity and increase their opportunities through education and productive work.

    Sen points to Costa Rica as a society which has achieved high standards in health and education. It has an average income only a quarter of the US level, but boasts a life expectancy of 76 years -- almost the same as in the US. Reason: Costa Rica disbanded its army in 1949 and focussed public spending on basic health and education. Brazil, by comparison, has almost the same average income as Costa Rica, but a life expectancy that is 10 years lower. Brazil also has greater social inequities, and much of the population lives in deep poverty.

    Sen's work can be seen in the annual United Nations Human Development Report, which publishes a Human Development Index that ranks countries by a combination of three factors: average income, educational attainment and life expectancy. Costa Rica ranks 62nd in the usual index of average income, but on the HDI it does much better at 39th.

    Time magazine: "In a world in which 1.5 billion people subsist on less than $1 a day, this Nobel Prize can be not just a celebration of a wonderful scholar but also a clarion call to attend to the urgent needs and hopes of the world's poor..."

    Source _ Time 26 October 1998 "The real causes of famine" by Jeffrey Sachs

    Ian.jpg - 22172 Bytes One of our founding Trustees and Associate, Ian Ritchie, is retiring from both these roles in order to focus on the development of a stronger local team in the Manawatu. He will continue to be an active member of our `media watch' group.

    Thanks, Ian, for all your support, encouragement and guidance to the development of the Jobs Research Trust. No doubt we'll continue to see your work in these pages in the future.

    " In NZ, economic policies are largely shaped by a number of Treasury and Reserve Bank officials, past and present, and by sundry finance market bond dealers.
    " The one thing that they have in common is that they are all 23-years old.
    " 23-year old communists designed the Albanian economy. 23-year old communists in NZ hailed it as a socialist paradise. But now, the NZ economy is the Albania of contemporary capitalism.
    " 23-year olds know everything. And what they know is absolutely right. The 23-year old mind cannot see shades of grey. It has no sense of history or feel for any process of adjustment.
    " I am not dumping on 23-year olds. 23-year olds have rights, just like you and me. But unlike you and me, they don't have duties or obligations ..."
    -- Peter Harris, economist to the NZ Council of Trade Unions, speaking to Northland Federated Farmers, Dargaville.
    Source _ Peter Harris speech to Northland federated Farmers 27 May 1998

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