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    Essential Information on an Essential Issue

    Letter No.99

    14 May, 1999

    Our regular feature based on the figures for the March 1999 quarter.

    The unemployment rate has dropped sharply to 7.2% in the March quarter from 7.7% last December. The rate has returned to where it was a year ago. There are now 135,000 people officially unemployed in March compared to 143,000 in December. We include our regular Statistics That Matter feature in this issue of The Jobs Letter.

  • The drop in numbers of unemployed people has been far larger than what economists were expecting. While government politicians have been celebrating the figures as a sign of a robust economic recovery ... economists are more cautious, saying the figures probably overstate the strength of the labour market. Their reasons: the increase in employment is not broadly-based, since it is concentrated in the primary sector (mainly forestry) and services, while employment in manufacturing for example continues to decline.

  • The drop in the unemployment figures has been driven by a 10% decrease in female unemployment, although Statistics NZ says this is the most "volatile" figure in their seasonally-adjusted statistics which make it difficult to get a true picture. Social Services Minister Roger Sowry says the figures reflect the numbers of women leaving the Domestic Purposes Benefit, which fell by 4,000 in the first three months of this year.

  • Most of the new employment is in part-time jobs which are up 2.9% or 12,000 people in the quarter compared to rise in full-time employment of 0.4% or 5,000 people. The (seasonally-adjusted) annual figures however show that part-time employment increased by 30,000, while full-time employment fell by 19,000.

  • There is also a drop in the number of people outside the labour force, resulting in a 0.3% increase in the participation rate to 65.4%.

  • There has been a significant drop in the employment levels of young people aged 15-19 years. The employment level of this group has dropped by 11,900 people or -9.4% compared to the same time last year.

  • There were no significant annual or quarterly changes in the level of unemployment by ethnic group. The unemployment figures in March include 85,200 European/Pakeha, 32,000 Maori, 12,400 Pacific Island people and 12,100 `other' people.

  • Treasurer Bill Birch says the reduction in unemployment confirms for him the rapid turnaround in the NZ economy after last year's recession. Birch: "The result yet again shows the very close relationship between growth and jobs. The rapid improvement in unemployment also points to the benefits of a flexible labour market which has ensured that economic growth is quickly translated into jobs..."

  • Labour's Steve Maharey is not as sure about the quality of jobs generated in this recovery. He says the big rise in part-time work does not provide people with a living or represent a strengthening economy. Maharey: "There is no evidence of an increase in the kind of wealth-generating jobs that can return NZ'ers to long-term prosperity..."

    CTU economist Peter Harris agrees: "The net effect of the slump and the recovery of the past 12 months is that 19,000 full-time jobs have gone, to be replaced by 30,000 part-time jobs."

  • Green Party leader Rod Donald says young people are bearing too much of the brunt of government economic policies. Donald: "The latest statistics expose a time bomb waiting to go off. Jobs are disappearing under National's economic policies and most of them are being taken from our young people. This inevitably leads to a climate of hopelessness and despair for many of our youth who see no prospect of ever getting a real job. No amount of make-work schemes or training courses can make up for the fact that employers, particularly in the manufacturing sector, are being squeezed by imported goods made with cheap labour..."
    Source _ Statistics from Statistics NZ, The Dominion 7 May 1999 "Unemployment drops sharply". The Daily News 7 May 1999 "Drop in jobless attributed to part-timers"; New Zealand Herald 7 May 1999 "Economists do not take data as gospel" ; press release from the Green Party "Young people hit hard in the job market" by Rod Donald

    Sydney will not have nearly enough local workers to fill all the job vacancies that will be created by the year 2000 Olympics. Games workforce general manager Ian Clubb anticipates New South Wales will be 20,000 workers short for the games. Clubb says NZ is a likely source of labour to fill a significant portion of these because NZ'ers do not require work permits. Others workers will come from other Australian states and from Asia.
    Source New Zealand Herald 5 May 1999 "Jobs going for NZ at Olympics"

    Te Puni Kokiri has issued a report into how the Labour Department deals with Maori job-seekers more than six months after Work and Income NZ took over the Labour department's role. The report was delayed because it was asked for at a time when NZ Employment srvice was amalgamating with Income Support to become WINZ. Te Puni Kokiri chief executive Ngatata Love says the report shows that there are processes within the employment agencies that still need improvement in particular, the need to prove that their work was getting Maori into jobs.

  • Labour secretary John Chetwin says that the transfer of employment functions to WINZ has given his department "the opportunity" to focus on its capability in relation to Maori issues. The report notes that the majority of the department's Maori staff worked within the employment sections such as NZES and the Community Employment Group and have subsequently moved to WINZ.
    Source _ The Dominion 5 May 1999 "Delay in report on Maori `unfortunate'"

    Wally Stone is the latest government appointee to the Tourism Board, a political choice which The Dominion describes as "... recognising him as one of the country's outstanding entrepreneurial businessmen." Stone has been a developer and director of the Ngai Tahu-based Kaikoura Whale Watch tourism venture. He has also been active in employment-related projects since he joined the Internal Affairs SCOPE (Small Co-operative Enterprises Scheme) as an advisor in 1985.

    Since the appointment, several media reports have highlighted Stone's transformation from a street kid with a string of convictions and a bleak future ... to an important Ngai Tahu business leader. Christchurch Mayor Garry Moore, who has worked closely with Stone while a SCOPE advisor himself, sees the appointment as an inspired choice. Moore: "The very innovative techniques that equipped Wally to survive on the wrong side of the tracks are perhaps now those that enable him to be brilliant on the other..."

    Source _ The Dominion 11 May 1999 "Strangers smile that turned life around" by Val Aldridge

    A survey by Statistics NZ finds that over two-thirds of parents, with at least one child under 14, have jobs. Over half the children under 5 years old are cared for by people other than their parents, usually extended family. The survey also finds that one in seven parents found access to childcare a barrier to their employment over the previous 12 months.
    Source New Zealand Herald 24 April 1999 "Family first source of childcare survey"

    An attempt by WINZ to get a beneficiary to repay a 25-year old debt, along with the revelation by Maori Affairs Minister Tau Henare that he had not repaid an unemployment benefit overpayment made to him years ago, has highlighted WINZ policy on debt collection.

    WINZ is required by law to recover debts and it does this, as most companies do, by sending one and if necessary a second letter asking for repayment. If unanswered, a phone call is made, followed by a third and fourth more strongly worded letters. The last resort for non-repayment is that WINZ has the power to deduct the payment directly from the person's wages, bank account or, if they are dead, their estate. WINZ does not apply interest or penalties to money it is owed.

  • According to The Dominion, WINZ is currently owed $753m, by 335,000 people. A department spokesman says it can not say how much of that sum is for overpayment as opposed to fraud. WINZ made $28.1m in overpayments in the last month alone.
    Source The Dominion 28 April 1999 ""Department owed $753 million"

    In Australia, the government has announced a funding boost which will enable more than 500,000 young people to take part in "new apprenticeships" over the next four years. The Australian Government is allocating more than $1.5 billion in employer incentives and benefits to encourage new apprenticeships from four-year TAFE courses to one-year traineeships. An extra $100 million has been earmarked for the "Regional Skill Shortage Incentive" which will create an additional 30,000 apprenticeships in rural and regional areas, where businesses say they are frustrated by shortages of willing candidates.

    Under the Coalition Government, the number of apprenticeships in Australia has almost doubled to 220,000 young people. Its new target of 530,000 people (over the next four years) reveals the extent of the government's ambition.

  • The shortage of skills in a growing number of occupations has alarmed the Australian Government and new industry-specific initiatives will target the worsening problem, with information technology already identified as an area of special need. Co-ordinated programs across ministries such as immigration, employment and education will be introduced to ease the skill shortages - a problem that is likely to worsen as the Australian economy starts to thrive again and unemployment falls further.
    Source _ Sydney Morning Herald 8 May 1999 "Jobs lifeline for 500,000" by Tom Allard

    This electorate contains 21,720 households, of which 47% have household incomes below $30,000 per year before tax. That 47% is 6% above the rate for the country as a whole. There are 31,632 adults aged 20-59 in the Nelson electorate, of whom 64% are in paid, full-time work. Another 14% are in part-time work. Unemployment in the electorate is 8% below the national average.

    No localities in the Nelson electorate have high levels of deprivation, only 8% of the population are in localities ranked among the 20% most deprived. The Nelson electorate ranks 47th among 61 electorates for poverty.

    ( Electorate statistics compiled by Judy Reinken, and based on 1996 Census).

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

    How's your re-structuring going? Is there a major business or government department in NZ that hasn't been re-structured, downsized or `re-engineered' (often repeatedly) in the last 15 years? Has there been any studies undertaken as to how the goals of the re-structuring and downsizing were measuring up after the fact?

  • In the US, estimates of the numbers of American workers who have been `downsized' from jobs in the major corporates, from 1980 to 1995, vary from a low count of 13m people, to as high as 39m.

    In the early 1990s, the American Management Association conducted studies of firms which had engaged seriously in downsizing. The AMA found that repeated downsizings produce "lower profits and declining worker productivity..." Another study by the Wyatt Companies found that "less than half the companies achieved their expense reduction goals; fewer than one-third increased their profitability and less than one third increased their productivity..."

    Source Eileen Applebaun and Rosemary Batt in "The New American Workplace" (pub 1993 by Cornell University Press)

  • Richard Sennett, in his recent book "The Corrosion of Character" writes that because managerial ideology presents the drive for re-structuring as a matter of achieving greater efficiency, we need to ask whether such institutional change has succeeded in its goals.

    Sennett: "It became clear to many business leaders by the mid-1990s that only in the highly paid fantasy life of consultants can a large organisation define a new business plan, trim staff and `re-engineer' itself to suit, then steam forward to realise the new design.

    "Many, even most, re-engineering efforts fail largely because institutions become dysfunctional during the people-squeezing process: the morale and motivation of workers drop sharply in the various plays of downsizing. Surviving workers wait for the next blow of the axe rather than exulting in competitive victory over those who are fired...

    "Institutional changes, instead of following the path of the guided arrow, head in different and often conflicting directions: business plans are discarded and revised; expected benefits turn out to be ephemeral; the organisation loses direction, a profitable operating unit is suddenly sold, for example, yet a few years later the parent company tries to get back the business in which it knew how to make money before it sought to reinvent itself..."

  • Sennett says that because institutional re-structurings signal to the finance markets that change is "for real", the stock prices of institutions in the course of re-organisation often rises, as though "any changes are better than continuing on as before..."According to the markets, the disruption of organisations becomes profitable.

    Sennett: "While the disruption may not be justifiable in terms of productivity, the short-term returns to stockholders provide a strong incentive to the powers of chaos disguised by that seemingly reassuring word `re-engineering'. Perfectly viable businesses are gutted or abandoned, capable employees are set adrift rather than rewarded, simply because the organisation must prove to the market that it is capable of change..."

    Source _ "The Corrosion of Character" by Richard Sennett (pub 1998 by W.W.Norton and Company)

    by Andrew Kimbrell
    The word job in English originally meant a criminal or demeaning action. (We retain this meaning when we call a bank robbery a "bank job.") After the industrial revolution took hold in 18th-century England, the first generations of factory workers felt that wage work was humiliating and undignified. Angry about being driven from their traditional work on the land or in crafts, they applied the word job to factory labour as a way of expressing their disgust.

    Even today many of us avoid the word job, preferring more upscale terms like occupation or career to describe what we do for 40-plus hours each week. Yet the older meaning of these words also reveals something about the nature of work.

    Occupation originally meant to seize or capture. (It is still used in this sense when, for instance, we speak of the German occupation of France during World War II.) What an apt description of how jobs take over our lives, subjecting us to the demands of outside rulers. The original meaning of career fits well with the role we play in the speeded-up global economic rat race. In the 19th century, career meant "racing course" or "rapid and unrestrained" activity.

    In searching for ways to put meaning back into our work, we might want to revive the term vocation (from the Latin for "voice" or "calling"). Today, however, "having a vocation" or "answering a calling" usually means embarking upon a religious lifean unfortunate narrowing of the concept.

    We all deserve to be involved in work to which we have been called by our passions and beliefs. Following a vocation can lead to a professionliterally, a "public declaration" of what we believe and who we are. A profession is what our work should be, but so rarely is ...

    Source _ The Utne Reader Jan/Feb 1999 "Breaking the Job Lock " by Andrew Kimbrell, available also at

    The buoyant US economy seems to have put into question the assumption that low unemployment results in high inflation. Modern economists have worked on the assumption that an unemployment rate of below 6% would cause wages to rise, fueling inflation. However, in the US, unemployment is now at 4.2%, the lowest in 29 years and inflation is also at a low level. The Federal Reserve Bank chairman Alan Greenspan attributes this to increased worker productivity through industrial investment in technology. Greenspan tells international bankers that the threat to inflation now is the overvalued American stock market.
    Source The Dominion 8 May 1999 "Productivity the key, says Greenspan"; New Zealand Herald 8 May 1999 "Grenspan warns US of growing inflation threat"

    World poverty is escalating and the gap between rich and poor is increasing at an alarming rate, according to the World Bank's 1999 World Development Indicator. The report says there are 900 million people living in the first world and 4.9 billion in the third world. 1.5 billion people, or one quarter of all the people on earth live on less than $US1/day. Life expectancy has deteriorated by 10 years in sub-Saharan Africa. In the years from 1989 to 1995, the number of people living in poverty in the former Soviet Union has risen from 14 million to 147 million. The report calls for reform of the global financial system.
    Source The Dominion 28 April 1999 "Chaos, Aids, Asia crisis boost poverty, says bank"

    You'll be hearing more about this: the Tobin tax. There has been an international call for governments to enact a small tax on international financial transactions in an effort to discourage currency speculation, and to promote longer-term security of investment in local markets and jobs.

    The campaign for a tax on currency speculation is based on the work of James Tobin, a Nobel laureate in economics based at Yale University. Its purpose is to discourage volatile short-term trading and the destabilizing effect this has on national currencies. The proposal is similar to the Financial Transactions Tax which local economist John Lepper originally suggested to the Alliance Party as an alternative to GST.

    Speculative transactions under the Tobin proposal would be taxed at a tiny percent of volume (0.1%-0.5%), once per transaction. Non-speculative transactions would be exempt, (currently about 10-15% of the daily volume). The tax would discourage the most volatile overnight or short-term currency trades, while leaving longer-term investments barely effected. Dangerous currency volatility would therefore be reduced, and national macroeconomic autonomy restored. Economic studies on the Tobin proposals predict that billions in revenue, potentially as much as $300 - $600 billion per year, could be generated by the tax.

  • The Canadian House of Commons last month passed a motion supporting the introduction of the Tobin tax. Finland, which has just elected a new government, plans to be the first EU country to include a Tobin tax in its economic programme. There is also a growing international alliance of economists and community activists ( who are promoting the concept of the tax around the world.
    Source _ Toes97 Tobin Tax Network email conference; and

    VOICE: BRUCE JESSON 1945--1999
    jesson.jpg - 4142 Bytes"The idea that the New Zealand transformation is irreversible is linked to the idea of globalisation. There is this widespread impression that New Zealand is too small a country to resist the power of global finance, and that the nation state is redundant anyway. It would be pointless for New Zealand to assert itself as a nation. We just have to accept the inevitable.

    "The idea doesn't stand up to scrutiny. Most of what has occurred in New Zealand has not been inevitable at all but has been a matter of choice. The monetarist policies, the privatisation of state assets, the extremes of deregulation, the commercialisation of the state; New Zealand governments chose to do these things with no outside pressure.

    "The impression has been created that the state not just in New Zealand but throughout the world has been undermined by the global marketplace. and that the role of the nation has declined as a result. This cannot be entirely true, however, because in some respects the power of the state has increased, even in New Zealand.

    "We are actually experiencing a contradictory development. For instance, vast numbers of people are dependent on the state for their income, and the state tries to use this circumstance to control their behaviour.

    "It hasn't been the state as such that has withered so much as the state in its benign and humane role. With it has disappeared much of the cohesion and vitality of our society, something that occurred with surprisingly little resistance.

    "For we New Zealanders the challenge is to define the nature of our nation in the context of an increasingly unstable global marketplace. Put simply, the challenge facing New Zealand is to redefine the role of the nation in the modern global economy.

    "This is not an all-or-nothing exercise requiring a choice between a global approach or some parody of fortress New Zealand. Rather, nation-building is about creating a cohesive society that can act internationally with some sense of purpose. It is about striking a balance between the national and the global and deciding what out goals in that relationship should be.

    "In the first instance, the problem appears to be an economic one: how do we restore the productive economy? And there are in fact a number of practical economic measures that can be suggested. At the same time, however, the answers to our economic problems are not always economic but are often cultural and social.

    "One of our main economic problems is that whatever happens globally has a direct impact on our local economy; there are no barriers or sources of resistance. Overcoming this requires the building of a sense of national identity through institutions such as the media and the education system by a government that is not content for the nation to passively accept its fate..."

    Bruce Jesson, (edited) from "Only Their Purpose is Mad" published 1999 by Dunmore Press.

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