Comments on Wall Street's biggest one day crash in history
The official unemployment rate has risen to 6.4% for the March 2000 quarter, up
from 6.3% in December. The number of people employed has fallen 0.3%. These figures have
surprised the financial markets which were expecting the unemployment rate to drop to 6.1%, and
employment to rise by 0.5%. They represent a slow-down of the strong employment growth seen in
the second half of last year. We include our regular Statistics That Matter feature in this issue of
The Jobs Letter. Some highlights:
Most of the drop in employment has been in the loss of part-time jobs, where the
December quarter's rise of 10,000 jobs has been reversed.
Full-time jobs, however, continued to rise by 5,000 jobs or 0.4%. This is the fifth
consecutive increase in the level of full-time employment, bringing the level to an all-time high of
1,366,000 full-time jobs.
Over the last year, the overall level of employment has increased by 1.4% or 24,000 jobs,
with male employment increasing by 16,000 and female employment by 8,000.
The working-age population was 2,889,600 at the end of March. This was up 6,100 from
December and up 18,100 from a year ago. The number of people "outside the labour force" at
the end of March was 1,002,000, up 5,000 from December, and up 9,000 from a year ago.
The two youngest age groups in the statistics recorded the highest unemployment rates
in the last quarter. The 15-19 year age group now has an unemployment rate of 18.3%, and the
20-24 year of group has an unemployment rate of 11.9%.
The 15-19 year age group, however, has had a significant movement into
employment (up by 7,100) in the last year. Its continuing high unemployment rate is explained by an
increase in the labour force participation rate of these young people to 54.7%, a rise of 3.2%.
In the last year the numbers of young people classified as "not in the labour force" is down
The highest regional unemployment rate at the end of March was in Taranaki
(9.8%) followed by Northland (9.0%). The lowest unemployment rate was recorded in the
West Coast/Tasman/Nelson/Marlborough region (4.9%) followed by Canterbury (5.9%)
Over the last year, the unemployment rates for each of the ethnic groups has
decreased, with the most significant decrease being in the Maori group, which has fallen from 19%
to 14.6%. In the last year, the numbers of Maori in the working age population has increased
by 20,600, while the numbers of Maori in employment has increased by 25,500.
VOICES: ON THE JOBS FIGURES
"In spite of the recent volatility in part-time employment, the labour market remains
David Drage, ANZ Bank economist
" The Government welcomes today's information because it reveals that unemployment
is tracking at significantly less than for the same period last year. There is certainly no
suggestion, from these figures, that there are any medium-term risks of the economy overheating.
"Unemployment continues to be a blight on our younger population. This provides
further evidence of the need for the Government's focus on providing opportunities for young
people to upskill themselves for the modern workforce. Much more work has to be done in this
area. The Government remains committed to reducing the rate of unemployment and this can
be achieved without compromising our other economic objectives ..."
Steve Maharey, Minister of Employment and Social Services
" The unemployment figures revealing a rise in unemployment for the first time in 15
months are an early wake-up call for the Labour-Alliance Government. While the rise in
fulltime employment is welcome - the outlook for the future is being thrown into uncertainty by
the Government's policy programme.
" Employers are saying they will be reluctant and unable to take on more staff as they
grapple with the changes under the Employment Relations Bill, ACC reform and general policy
uncertainty. The New Zealand labour market is already facing skill shortages without having
the added rigidities this Government is imposing. This Government is turning a booming
economy into a collapse in confidence among businesses..."
Bob Simcock, National Party Employment Spokesman
" With unemployment currently institutionalised in New Zealand, punitive measures such
as work for the dole and means testing and suspensions of benefits are simply exacerbating a
vulnerable and volatile sector of the society. These measures are making the problems of high
unemployment worse and the Green Party wants the government to abolish them immediately.
" Today's unemployment levels need to be addressed by a government committed to zero
unemployment. This is not impossible and the government must begin now to make a substantial
commitment to hands on employment creation..."
Sue Bradford, Green Employment Spokesperson
" This government seems determined to pay back its union masters through the
Employment Relations Bill and paid parental leave, without considering the effect this has on young
New Zealanders who will be denied their first job. The Alliance's election promise to young people
was that no one would leave school and go straight on the dole. Jim Anderton could honour this
by letting businesses grow and create jobs, but instead, he seems hell-bent on destroying any
hope that our youth will succeed..."
Clint Heine, President of Prebble's Rebels
" The New Zealand University Students Association (NZUSA) rejects Act's senseless stance
on youth employment, which fails to address the real issues concerning youth. We do not agree
with Dr Muriel Newman's view that long term unemployed youth should be made to search for
work 40 hours a week in return for the dole. The statistics of youth unemployment are
distressing, however young people need real jobs and open educational opportunities ... and not to be used
as pawns in petty politics.
" Youth unemployment is a result of worsening employment opportunities and increasing
barriers to our education system. After nearly a decade of being ignored, we hope that the new
Labour-Alliance Government along with the Green party will put more time and energy into listening
to the voice of New Zealand's young people and their concerns for their future..."
Tanja Schutz, Co President NZUSA
Sources - Statistics NZ Household Labour Force Survey March 2000 quarter; New
Zealand Herald 5 May 2000 "Interest rates to rise as jobs fall off" by Brian Fallow; The Daily News 5
May 2000 "Unemployment figures increase" by Nick Venter; The Dominion 5 May 2000
"Unemployment climbs to 6.4%" by Nick Venter; The Daily News 9 May 2000 "Taranaki
Unemployment worst in New Zealand" by Rochelle Warrander; Press Release 4 May 2000 Steve Maharey
"Employment Trends Welcome"; Press Release 4 May 2000 Bob Simcock "Wake up call in job
figures"; Press Release 5 May 2000 Prebbles Rebels "Government hits youth hardest"; Press
Release: ACT New Zealand 4 May 2000 "Jobs Disappearing Under Labour"; Press Release:
Green Party 4 May 2000 "Focus On Job Creation Urgently Required"; Deutsche Bank artcle 4
May 2000 "Household Labour Force Survey- Q1 2000"; Press Release NZ University Students
Association 27 April 2000 "Act Sensationalises Youth Unemployment".
FOCUS ON YOUTH UNEMPLOYMENT
The political and media spotlight is starting to turn to the high levels of youth
unemployment. The Mayors Taskforce for Jobs have set youth unemployment as their top priority (see
last issue), and the Act party and its youth group "Prebbles Rebels" are provoking debate on
the "anti-business policies" of the government which are "having their worst impact on young
Act employment spokesperson Muriel Newman points out that the youth unemployment rate
for the 15-19 year old age group is at its highest level since 1994. Newman: "Labour
Department advice to the new Government said that raising the minimum wage and the youth wage
would increase unemployment. They said introducing the Employment Relations Bill would
increase unemployment. They have warned that the Paid Parental Leave Bill will cause the loss of at
least 1000 jobs, yet this Government continues with a legislative programme which they know will
cost jobs. Unless the Government changes its anti-business agenda, rising unemployment and
poor growth will be the norm. For the young people of New Zealand, that spells disaster..."
Minister of Employment and Tertiary Education, Steve Maharey, accepts that the
unemployment rates of young people is a critical concern, and he is focussing his attention on
providing better skills for young unemployed. His goal: within three years, no young person will
leave school without options in education, training or employment.
This week Maharey spoke to the City of Manukau Education Trust (COMET) forum on
school-to-work links . He reported that he is working on an education and leaving age strategy
designed to encourage young people to stay in education and training until they have completed a
Maharey: "The strategy I am working on will bring together a number of initiatives designed
to prepare young people for a successful transition to adult life. We must ensure that we
make available to these young people real opportunities to broaden their skills and to prepare
themselves for lifelong learning and the world of work."
The Maharey initiatives will include:
school to work business partnership programmes which give young people "live"
experience in real workplaces
improved careers planning and advice
a review of the STAR programme to ensure that it effectively enables young people to
begin nationally recognised qualifications while still at school, and
the establishment of a new Gateway programme which will increase the number of
vocational and training options for senior secondary students.
Sources - Press Release 9 May 2000 Steve Maharey "Young people in education and training until 18"; Press Release Act
New Zealand 4 May 2000 "Youth Unemployment Highest since 1994"
US UNEMPLOYMENT AT 30-YEAR LOW
At the end of April, unemployment in the United States fell to 3.9% ... the first time in
thirty years it has fallen below 4%. Joblessness in the US now also stands at its lowest peace-time
level since 1957.
Sung Won Sohn, chief economist of Wells Fargo & Co describes the rate falling below 4%
as passing "a real psychological threshold". US economists are now worried that the job growth
is pushing the outer limits of the pool of available workers, and this is also sparking fears that
Wall Street will now have to contend with higher wages and higher interest rates.
Sohn: "The amazing story of this recovery is that we've been able to find bodies to
support economic growth so far. Workers have basically been coming out of the woodwork. We're
using not just the traditional labour supply, but also prison labour, more mothers, more teenagers
and the disabled. The economy has been trying to find as many bodies as we can, across the board,
but its becoming more difficult..."
The strong US economy has succeeded in spreading the benefits of the robust job market
to more American workers, with jobless Latino and African Americans at their lowest levels
on record. The figures: The official unemployment rate for Latinos is now down to 5.4%, and
for African Americans it is down to 7.2% the lowest level in the 28 years that the government
has been keeping these statistics.
Employers and employment agencies around the US continue to complain of labour
shortages, and, in response, are changing their hiring strategies. Many employers are offering
signing bonuses and stock options to attract new workers. Example: high-tech workers and
mid-level bosses with good management skills are in great demand ... and a $10,000 signing bonus from
a prospective employer is not out of the question.
Sources - Los Angeles Times 6 May 2000 "US jobless rate at 30-year low of 3.9%"; Chicago Tribune 5 May 2000
"Many struggle to find positions in today's hot job market" by Stephen Franklin.
INDUSTRY NZ LEGISLATION
Legislation establishing Industry NZ (INZ) as a crown entity was introduced to
Parliament last week, fleshing out a few further details of Jim Anderton's "jobs machine". The legislation
sets up INZ as the implementation arm of the government's economic development initiatives.
The government has already announced that this new agency will be spending $100m a year in
the next three years ... but we won't know how or in what form this money will be spent until
announcements are made in the next Budget.
The functions for the new agency are described in the legislation as:
managing the government's initiatives for industry and regional development
working with the Ministry of Economic Development to develop the detail of programmes
allocating funds and delivering services for industry and regional development
facilitating co-operation and co-ordinating the delivery of government business assistance.
Jim Anderton says he won't be involved in the day-to-day running of INZ. But the
legislation ensures that the agency will have to obey written directions from the Minister of
Economic Development. These directions will have to be gazetted and tabled in Parliament.
A Board for INZ of between five and nine people will be appointed by the Minister, and
this Board will then appoint the chief executive. The Independent reports that the front runner for
the job is Rick Hart who is currently acting as establishment manager. Hart has returned to NZ
after doing a similar job in Victoria, Australia.
Pete Hodgson, Minister for Small Business, says that the Ministry of Economic
Development has been moving as quickly as possible to build up new resources for economic
development. Hodgson: "We've applied CPR to the few remaining officials with expertise in that area
... Contrary to what became the conventional wisdom in this country, it is possible for government
to help businesses grow. Most other countries do it as a matter of routine and this country
became something of a Western world freak when it abandoned all efforts."
Hodgson is cautiously pointing out that INZ will not be getting into heavy and expensive
intervention in the economy: "We're not going to spend huge amounts of money like Ireland to
lure high-tech multi-nationals here. We're not going to put up a billion dollars in venture capital
as Singapore has done. We're definitely not going back to the lunacy of Think Big and having
something like the DFC speculating with public money on the property market. There is a middle
way and a modern way in these things. We've learned from the past and our aims are modest. "
Hodgson told the "Venture Capital" conference, run in New Plymouth last week by
Venture Taranaki, that Industry NZ will be the agency government will use to help boost sources of
venture capital. He outlined several ways this might be delivered, including straight venture
capital investment; development finance; pooled development finance in partnership with the
private sector; and "angel networks", which link small investors with small companies.
Hodgson also reports that one of the first programmes Industry NZ will deliver is the
Incubator Development Programme. This is designed to work with universities and local
economic development agencies who are teaching innovators how to develop their ideas to the
investment stage. Government officials have reviewed existing incubation services and found that support
for start-ups was "thin" compared to other developed economies ... and Hodgson expects INZ
to invest over $2m in these initiatives over the next year.
Examples of business incubators have been springing up around NZ. The University of Otago
and the Dunedin City Council are currently building the Centre for Innovation. The Canterbury
Development Corporation's has ICAN, or Innovation Canterbury. Victoria University has the
Innovation Greenhouse. Unitec in Auckland has a Centre for Innovation and Entrepreneurship
and Massey University has an incubator at its Albany campus in Auckland. Typically, these
incubators supply workspace on favourable terms and back the new ventures with various levels of
business planning or managerial advice. The centres will often have office facilities available and access
to finance, accounting and legal services.
Source - Press Release NZ Government 4 May 2000 "Industry New Zealand Bill introduced"; The Independent 10 May
2000 "Jim's job machine cranks up" by Ian Llewellyn; Hodgson speech to Taranaki Venture Capital conference 4 May
2000 Plymouth International Hotel, New Plymouth.
THE RIMU DEBATE
Deputy Prime Minister Jim Anderton and Finance Minister Michael Cullen have
offered West Coast Mayors hope that the existing eight-year rimu contracts on the West Coast will run
to their full term as part of the government's $120m development package for the region.
This is quite a turn-around for Michael Cullen, as only eight months ago he was jostled
and splattered with eggs at a pro-logging rally in Greymouth. Buller Mayor Pat O'Dea and
Grey Mayor Kevin Brown now describe Dr Cullen as "a friend of the Coast" and have even offered
to pitch in to buy Cullen a new suit. The job for Cullen and Anderton now is to put the case for
the rimu contracts before their cabinet colleagues in the face of adamant government policy
commitments to stop all native forest logging on Crown land.
Representatives of the wood sector of the National Distribution Union have met with
Jim Anderton to plead for the retention of the rimu contracts. The Greymouth Evening Star
reports that union secretary, Jim Jones, is pointing to both the green movement and the timber industry
as being "guilty of playing the emotional hand rather than dealing with facts". The union
believes that sustainable management of Crown-owned native timber should be allowed ... pending
an independent, well-qualified research report on whether the current regime of rimu harvesting
was sustainable or not. Jones: "Timberlands has been recognised worldwide as having
developed innovative sustainable harvesting techniques ... do we want to lose that?"
Native Forest Action disputes Timberland's claims that its logging operations are
indeed sustainable. NFA: "The claims that logging North Okarito and Saltwater are "sustainable"
have never been tested under the Resource Management Act or any public or independent process.
The concept of sustainable, in terms of a forest's well-being, refers to ecological sustainability
the extent to which the forest will retain its ecological integrity and biodiversity. Timberlands
have neatly redefined the term to refer to economic sustainability the extent to which they can log
the forest without destroying its potential to be logged in the future. It is a fraud. Felling and
removing 10,000's of centuries old forest giants dramatically alters the ecology of the area. In terms
of plant and birdlife the effects are far-reaching and non-reversible..."
Native Forest Action is especially concerned that allowing the rimu logging to continue while
also paying out a $120 million compensation package, amounts to the West Coast getting "both
the money and the bag". NFA: "What is the point of giving $120 million to a region of 30,000
people unless there are major conservation gains for the whole country? $120 million is a hell of a lot
of money in the same league as the $170 million Ngai Tahu and Tainui settlements which
were compensation for large areas of land and long-term and very major historical grievances. The
only reason it is being offered to West Coasters is to bring the logging to an end. There would not be
a package otherwise. It will look mad if the government gives all that money but still allows
logging in forests that were supposed to be protected..."
The Furniture Association is also lobbying government to retain Timberland's supply
of rimu ... which the association says is its mainstay timber and a unique point of difference
for exports valued at $85m. The Association claims that if the government moves to curtail
rimu logging on the West Coast, this will mean the loss of 4,000 jobs. (Furniture Association
executive director Marcia Dunnett told The Independent that she arrived at the 4,000-job figure
which represents more than 40% of the industry's 9,592 workers after "consultation with a couple
of major industry players".)
Native Forest Action says these job losses are being wildly over-stated. NFA: "New Zealand
is not short of timber. There is a rapidly increasing supply of native timber from private
forests, there are special decorative exotic timbers available for furniture and many furniture
manufacturers are now choosing to use pine. Although Timberlands has orchestrated a few rimu users
to lobby Ministers on its behalf, there has not been a single company that has said that it would
have to reduce staff if Timberlands rimu ended. Of course companies using rimu would prefer not
to change. But claims of thousands of threatened jobs are politically motivated and untrue..."
The end effect of stopping the rimu logging on jobs will depend on whether furniture
manufacturers will use other timbers or leave the industry. Bruce Nimmo, a director of JL
Lennard, supplier of specialty timbers, says the main NZ-grown alternatives for rimu furniture
are macrocarpa, specialised joinery-grade pine and eucalyptus. Nimmo: "Most timbers are
substitutable. The issue is really heritage and fashion." Nimmo notes however that, with the exception
of pine, consistency and supply of alternative timbers is a problem.
But the furniture industry does not presently use all the rimu currently on the market.
Grant Carruthers, co-owner of Westco Lagan, processors of 90% of Timberlands' sawlogs,
estimates that only 60% of his rimu supply goes to furniture makers, and the remaining 40% to
outfitting kitchens, making door jambs and flooring. His sawmill plans to re-focus on pine next year
without a loss of jobs.
Sources - The Christchurch Press 4 May 2000 "Cullen now friend of the Coast: Mayors" by Paul Madgwick; John
Howard article 5 May 2000 "Time to end emotive bull over West Coast logging"; The Independent 10 May 2000 "Furniture
makers demand Timberlands rimu resurrection" by Jo Mackay; Native Forest Action comments from website www.nfa.org.nz.
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