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    Essential Information on an Essential Issue

    Letter No.112

    17 November, 1999

    Statistics That Matter for the September 99 Quarter

    The official unemployment rate has fallen to 6.8% at the end of September, down from 7% in the June quarter. The official number of unemployed is now 128,000 people, a fall of 11,000 people from a year ago.

    This is the third quarter in a row that that unemployment has fallen, and it is now at its lowest official level since December 1997. Unemployment has fallen below 10% in all regions for the first time in almost two years, with the Wellington region recording the lowest rate of 5%.

    Employment levels are up to 1.75m, which is 25,000 more than a year ago. There has been an increase in full-time employment of 1.7% the strongest rise in full-time jobs for three-and-a-half years.

    We include our regular Statistics That Matter summary as an insert in this issue of The Jobs Letter.

    Taxation continues to be a key election issue providing a marked difference between the political parties. National and Act are promising tax cuts after the election, while Labour and the Alliance plan to raise taxes on people with incomes over $60,000. All of them say their policies will result in more jobs.

    Lobby groups such as the Manufacturers Federation are also urging voters to support tax cuts on businesses and employees. In a pamphlet released last week, ManFed asserts: "Higher taxes never created a single job in business or industry..."

    When you compare New Zealand's top tax rates with other OECD countries, and also compare their job creation record, it is clear that NZ already has comparatively low taxes and yet it is not enjoying the level of job growth seen elsewhere.

    The top personal income tax rate in New Zealand (at 33%) is actually the lowest in the OECD. Even if Labour and the Alliance succeed in raising this rate to 39%, every other OECD country (except Mexico) will still be charging higher tax rates. The OECD average rate for top personal income tax is 47.8%, and the European Union average is 49.7%.

    Do countries with corporate tax rates higher than 33% have trouble with job creation, as ManFed suggests? The figures do not support this notion: Employment growth from 1987-97 was 34.3% in Luxembourg where the top corporate tax rate is 39.6%. Japan, the country with the highest corporate tax rate at 50%, has enjoyed a job growth of 11%. Australia's 36% corporate tax rate has seen job growth of 19%. New Zealand, with its 33% corporate tax rate, has had employment growth of only 8.5%.

    Finland has a top corporate tax rate of only 28%. But from 1987-97 their employment numbers decreased by 10.4%.

    Labour says their plan to raise the top rate of tax won't kick in until incomes exceed $60,000. Statistics NZ data, drawn from the 1997 tax year, show that the great bulk of NZ'ers earn below $40,000 a year. Only 143,000 people, or less than 5% of the total, earn more than $60,000.

    Source — The Independent 10 November 1999 "We already have low tax, so where would our tax exiles go?" by Bob Edlin

    On the election campaign, ACT party leader Richard Prebble has been asserting that the poor in New Zealand have actually got richer, not poorer. Prebble cites a Massey University study which, he says, shows "...not that the rich are getting richer and the poor are getting poorer, but the poor are getting richer, but at a slower rate than the already well-off."

    Is he right? Not according to the author of the same report.

    Massey Professor Shrikanta Chatterjee's 1998 study found that 80% of NZ's households have a smaller share of NZ's total income, compared to what they had before the economic reforms of the 1980s. The study found that while four out of five households have a reduced share of the total income, the top 10% got about 15% more income over a 16-year period, and the top 5% got 25% more income.

  • Chatterjee's work only looked at income shares, not actual income. Richard Prebble's argument also proposed by Treasurer Bill Birch when the Chatterjee study first came out is that the national cake had grown. Prebble and Birch argue that although the poor might have a smaller share of the larger cake, the actual slice was still bigger than it was before.

    When the Chatterjee report was first produced, the professor had not done the figures on actual income levels, so he couldn't say whether the "bigger cake" theory was right or wrong. But further research work by Canterbury economist Paul Dalziel (endorsed by Chatterjee) suggests that Prebble and Birch are wrong.

    Dalziel finds that the average income of the bottom 10% of households fell nearly 9% between 1983 and 1996. The average income of the top 10% had increased by more than a quarter. Dalziel: "The data supports reports that poverty and social exclusion have caused widespread problems, particularly among low income households with children..."

    Source — Sunday Star Times 7 November 1999 "For richer and pooer" by Anthony Hubbard

    The Green Party is calling for a substantial increase to the minimum wage as part of its commitment to "social equity and local economic development". Veteran employment activist Sue Bradford, who is No.4 on the party list, says that an increased minimum wage would shift by New Zealand away from "a low-wage servant of globalisation to a work-rich nation".

    The Greens want to lift the minimum wage to $8.25 an hour, compared to the current minimum adult wage in NZ of $7 per hour. This is 42.5% of the average wage, and still well below what Bradford says is the OECD recommended level of 68%.

    Bradford: "Our current minimum wage is grossly exploitative. It is simply unjust for employers to pay people less than it costs to live, let alone support a family... Just as Greens believe those who pollute must face the true costs of their action, so we believe that the social costs of low-pay must be faced up to by business rather than passed on to the community and the taxpayer.

    "The core of ensuring an adequate minimum income is ensuring that we create an economy that is rich in jobs and uses resources sparingly. We must accept the challenge of creating work with dignity rather than McJobs..."

    Source — Policy launch from The Green Party "Minimum Wage must go up, say Greens" press statement 11 November 1999

    Internet bookmark. The Jobs Research Trust has created a special Election 99 Website containing summaries of each of the main parties and their employment and training policies, plus a full directory of Statistics That Matter for each electorate.

    This can be accessed at

    With the Labour Party pledging to scrap the current Community Wage scheme, many community organisations are starting to think about what may take its place. The Unite! beneficiaries union has been a leading critic of the work-for-the-dole scheme saying that it displaces workers, contributes towards lowering wages and conditions, punishes the unemployed, and does nothing towards alleviating poverty.

    What would Unite! do instead? Secretary Caroline Hatt told the NZ Council of Social Services Conference that the scheme should be replaced by a fully-subsidised, voluntary, part-time (20 hrs a week) scheme, with workers receiving at least the minimum wage, the protections and rights of any other worker (eg being eligible for family support and guaranteed minimum income). Hatt: "Such a scheme would do away with the blaming and punishment that make up the lot of unemployed and beneficiaries on a daily basis and be a recognition that work in the community is real work "

    Source — Caroline Hatt speech to NZ Council of Social Services Conference 1 October 1999, published in UNITE! Newsletter October 1999

    This electorate contains 20,382 households, of which 56% have household incomes below $30,000 per year before tax. This is 27% above the rate for the country as a whole. There are 29,004 adults aged 20-59 in the West Coast Tasman electorate, of whom 59% are in paid, full-time work. Another 13% are in part-time work. Unemployment in the electorate is equal to the national average. Localities in the West Coast Tasman electorate which have high levels of deprivation are: Granity, Hector-Ngakawau, Blackball and Cobden. ( Electorate statistics compiled by Judy Reinken, and based on 1996 Census).
    Source — Judy Reinken, statistics based on 1996 Census of Population and Dwellings

    The government hopes to solve doctor shortages in rural areas by recruiting overseas-trained doctors whose qualifications the medical Council has refused to recognise. A $4.9m package announced last week aims to give the immigrant doctors training and registration in return for accepting remote GP postings that are being shunned by NZ doctors.

    The government estimates that there are about 200 overseas-trained doctors who have gained residency in NZ, but can't practice here. The doctors are among many skilled immigrants who are on the dole, or trapped in low-skilled jobs as they wade through the qualifications and registrations red tape. Earlier this year, the Race Relations Concilliator Dr Rajen Prasad threatened an inquiry into how doctors from Asia, the Middle East and eastern Europe were being encouraged to come to NZ, and then left in a professional limbo at a high personal cost.

    The areas facing shortages of GPs are largely poor, rural or isolated in parts of the West Coast, East Cape and King Country. The Rural GPs Association welcomes the government programme, but warns against "bunging a doctor in to fill a hole..." Deputy chairman Dr Howard Wilson estimates that there are about 30 vacancies in rural areas, and says the jobs are lower paid, and sometimes involve being on-call 24 hrs a day with little back-up. Wilson: "You can't force people into these areas, because they won't stay. You'll find there is a rapid turnover..."

    Source — New Zealand Herald 3 November 1999 "Govt to give foreign doctors rural jobs" by Deborah Diaz

    "Hard Times" is an annotated bibliography of poverty research in New Zealand compiled by Marc Elliot, Dr Jo Barnes and Dr Robin Peace of Waikato University. The bibliography covers the years 1990-1999, and is designed to be a useful starting point for people interested in conducting research on poverty in NZ. It gives an overview of the research that is available and identifies the different ways that poverty is being discussed in the 1990s.

    "Hard Times" can be downloaded in acrobat (.pdf) format from Waikato University at

    Source — "Hard Times an annotated bibliography of poverty research in Aotearoa/New Zealand 1990-1999" compiled and annotated by Marc Elliot, Dr Jo Barnes and Dr Robin Peace (1999)

    All eyes will be on Seattle at the end of this month for the third ministerial meeting of the World Trade Organisation (WTO), the most powerful trade body in the world. The WTO delegates at the meeting will be discussing a new round of trade liberalisation talks the Millennium Round in areas such as investment, agriculture, forest products and government services. What happens in Seattle will define the trade, environmental, development, education and health agendas of the 134 member countries into the new century.

  • Also gathering in Seattle will be members of environmental, human rights and labour activist groups who are co-ordinating a global campaign to highlight issues arising from the WTO's agenda. These groups accuse the WTO of being an undemocratic organisation that puts the interests of corporations above everything else.

    The WTO was set up in 1995, and its agreements provide legally binding rules for international commerce and trade policy. Any disputes between countries are settled by three unelected WTO trade experts, operating in secret. If a law is found to be an unfair trade barrier, the WTO can authorise the imposition of trade sanctions to force a change in the law.

  • The activists say that the WTO has already used this power to rescind laws which protect the environment, health and labour rights of various countries. Examples: The WTO ruled in favour of commercial interests against dolphins protected by the US Marine Mammals Act and turtles protected under the US Endangered Species Act. It also ruled in favour of US banana interests in Central America which objected to Europe buying bananas from small-scale Caribbean producers. It ruled against the EU, which did not want to import US hormone-treated beef because of its links to cancer. A law passed in Massachusetts against working with companies investing in the repressive regime in Burma has also come under attack at the WTO.

  • The use of biotechnology is also a concern to activists, and will be one of the main issues discussed at Seattle. Any measures by Europe to stop the import of genetically modified food will probably be ruled a violation of trade by the WTO.

    Activists are also concerned that the Seattle meeting will be used by business interests to push for the further privatisation of public services. This may change the future of public education, the minimum wage and national health services all of which could face anti-trade rulings by the WTO.

    David Korten, author of the bestselling book "When Corporations Rule The World" comments: "What is wrong with the WTO is that it is totally representative of the interests of corporations and money and the richest one-tenth of 1%of people on the planet. In that sense it is contrary to life, the principles of life and everything we need to get a world that works both for people and planet"

    Veteran consumer advocate Ralph Nader agrees. He sees the WTO as now threatening to roll back social policies won after decades of citizen activism, and describes the WTO's five-year record as "a quiet, slow-motion coup d'etat against democratic and accountable policy-making and governance worldwide"

    Nader: "In the WTO forum, global commerce takes precedence over everything democracy, public health, equity, the environment, food safety and more. Under this new system, many decisions affecting people's daily lives are being shifted away from our local and national governments and, instead, are being made by a group of unelected trade bureaucrats sitting behind closed doors in Geneva"

  • Activists in Seattle feel that a momentum for change is behind them, and point to two recent anti-free trade victories: the Multilateral Agreement on Investment (MAI) has been stopped, and President Bill Clinton's "fast track" of the North American Free Trade Agreement has also stalled. Their focus at Seattle will be around an "international day of action" planned for 30th November 1999.

    The WTO is starting to get worried about the public backlash on the free-trade agenda. It has launched a public relations offensive, led by the New Zealander who is also the new director-general of the WTO, Mike Moore. Moore promotes the WTO as creating " a new world run by democratic rules and institutions."

    Moore told The Press that New Zealanders opposed to the WTO have lost the plot: "We're a democratic society and they are entitled to their views, but it's laughable. The WTO is not a plot to make the world safe for the Dairy Board or McDonalds. Companies like McDonalds are great for New Zealand, which provides all their beef, cheese and even the stainless steel for their kitchens in Asia. What are we going to do eat all our own cheese, burn our own timber, drink our wine? We need customers and from that comes jobs and revenue"

    Moore believes that the Seattle meeting will have vital implications for New Zealand: "It will set the framework for the shape of the next century. One in three jobs in New Zealand is related to exports and one third of the expenditure in health and education comes out of those jobs. We need partners that prosper so we can prosper. If we can lift the living standards of our neighbours, it is good for New Zealand"

    Internet bookmarks:
    The Official WTO website is at

    The WTO has published a booklet called "Trading into the Future" which is a guide to the organisation and its agreements. This can be downloaded in acrobat (.pdf) format from

    The Global Trade Watch run by Ralph Nader's Public Citizen is at

    Public Citizen also has a "Citizens Guide to the WTO" available which can be downloaded from

    Sources — The Guardian Weekly 14 October 1999 "Faceless in Seattle" by Andy Rowell; The Dominion 9 November 1999 "Moore burns midnight oil as trade talks loom" by Seth Robson; "The Future Of International Trade In Services" Speech by Mike Moore, Director-General WTO at The Third Debis Services Conference, Berlin 21 September 1999 from

    "These figures confirm we are having a job-rich recovery. Employment levels are now at their highest ever. Over the last year there were 25,000 new jobs created in New Zealand - that's nearly 500 each week. Significantly, all of this increase was in full-time employment, which tells us that people are moving from part-time jobs into full-time jobs.

    "The figures are a timely reminder of the importance of building on an economic policy that focuses on growth, and that has flexible labour markets based on the ECA, because the real pay-off from this framework is jobs. There is no better thing a government can do for people than deliver more employment ..."
    Bill English, Treasurer

    "The growth in the number of Maori in work demonstrates that by walking alongside people and empowering them to take charge of their lives, we're helping them break out of the welfare trap. In the past 12 months we've created another 26,000 full time jobs with our management of the economy, and every one of these jobs is giving someone a chance to improve their situation..."
    Roger Sowry, Minister of Work and Income

    "New Zealanders can be confident that there are plenty more jobs coming. With unemployment, we are now nearly the same as Ireland, lower than Australia, and lower than Finland. It's a very good result, which shows we are entering a job rich recovery.

    "I'm very proud of the fact that this is an economy in which hard working New Zealanders can make progress. With low interest rates, tax rates coming down, and the Employment Contracts Act, we've got just the right mix to get the new jobs..."
    Jenny Shipley, Prime Minister

    "The employment statistics are no triumph for National. Any improvement in the unemployment rate is welcome, however slight, but employment remains a major election issue and the numbers give no cause for complacency. New Zealand still has 123,800 people out of work.

    "Three years ago, when this Government took office, unemployment was at 6.0%. Now it is 6.8%. A drop of 0.2% in the last quarter is nothing to crow about. Long-term unemployment at 48,300 is still unacceptably high. Maori unemployment at 14.8% is still scandalous.

    "The number of people who have given up hope of employment is too high. Part of the slight improvement in the unemployment figure is due to people leaving the labour force. Participation is only at 65.2% of the working-age population.

    "The real story about jobs in New Zealand is that bright young people are finding better ones overseas. The brain drain is taking away our best and brightest as they flee student loan debts and head for economies that make better use of their talents..."
    Steve Maharey, Labour employment spokesperson

    "If this is as good as unemployment gets under National and Act, it is nowhere near good enough. Treasury says that under National-Act policies we will have the same rate of unemployment for the next fifty years. Small statistical changes in the unemployment rate cannot obscure the facts. The number of new jobs in the last quarter has barely kept pace with the growth in the labour force..."
    Jim Anderton, Alliance leader

    "The improvement will not last, and unemployment will rise again when school leavers come onto the job market..."
    Winston Peters, NZ First leader

    "The employment figures are a death blow to the credibility of the gloom and doom election campaign promoted by the Labour-Alliance coalition. Unemployment falling to 6.8 per cent puts New Zealand's jobless rate below Australia's and well below that of the European countries that the Alliance is so fond of quoting to support their weird economic policies.

    "The figures show that our economy is recovering from the ravages of the erratic economic administration of Mr Winston Peters in his time as Treasurer and give credibility to the Government's claim that we are on the right track..."
    Richard Prebble, ACT leader

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