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    Essential Information on an Essential Issue

    Letter No.129

    18 August, 2000

    Statistics from the June Quarter Household Labour Force Survey

    The official unemployment rate fell to 6.1% for the June 2000 quarter, down from 6.4% in March and 7.0% a year ago. The number of people employed has also dropped by 0.2%, or 4,000 people, over the same period. This drop in the level of employment is the second quarterly drop after five consecutive quarters of growth. We include our regular Statistics That Matter feature in this issue of The Jobs Letter. Some highlights:

    — Compared with a year ago, labour market conditions show a clearer improvement. The number of unemployed people has dropped by 16,000, and the numbers in employment has grown by 17,000.

    — According to the figures, Maori employed have increased by 25,000 over the last year while the number of unemployed decreased by 6,000. These movements mean that the Maori unemployment rate has fallen by 5.2% to a level of 13.0% the lowest level since June 1988 when it was recorded at 12.1%.

    — The highest unemployment rates in the June quarter were recorded in Northland (8.8%), Bay of Plenty (8.6%) and Taranaki (8.0).

    — The lowest unemployment rate was recorded in Southland at 4.6%. But this masks the fact that the number of employed Southlanders has also dropped by 5,100 in the last year ... accounting for more than half the total drop in employment nationwide. These figures do not take into account the pending job losses from the Mataura Paper Mill and the Flemings Flour Mill.

  • How can we get a drop in both the unemployment and employment figures at the same time? It is because the numbers of "people not in the labour force" increased by 1.5% (or 15,000 people) over the same period. This has meant that the participation rate of the labour force has dropped to 64.8% per cent — its lowest level since June 1995.

    The participation rate has a big impact on how the official unemployment rate is constructed. The unemployment rate is the proportion of the labour force all those of working age (15 years and over) not in paid employment and actively seeking work — and the size of this labour force has been declining over the last two quarters. Although the number of people employed has fallen, the drop in numbers has been more than offset by the contraction of the overall labour force.

    Darren Gibbs, Senior Economist with Deutsche Bank, reports that if the labour force participation rate had remained at the same level as it was in the March 2000 quarter, then we would have an unemployment rate of 6.8%.

  • Why are the labour force numbers declining? Economic commentators can really only guess at the reasons. Joanna Smith of the NZ Institute of Economic Research (NZIER) says that although some of the decline may be due to jobseekers becoming discouraged, people exit the labour force for all sorts of reasons — such as retirement, study and raising a family.

    Migration flows can also influence the size and composition of the labour force, but NZIER reports that last quarter's net migration outflow " does not appear to have had a discernable impact on the working age population, which has continued to grow."

    How robust are all these figures? The Household Labour Force Survey is derived from a large sample of 15,000 households representing about 30,000 people. But there is still a considerable margin of error around the statistics — often larger than the changes that drive the headlines. When Statistics NZ, for example, reports a drop of 12,200 in the number unemployed in the last quarter it is really saying it is 95% certain the number dropped somewhere between 800 and 23,600 people. (The sampling error in this example is calculated at +/- 11,400 people).

    In the case of the 25,000 increase in Maori employment over the last year, the sampling error means that Statistics NZ is 95% certain the number of Maori in jobs increased somewhere between 14,000 and 36,000 people. (The sampling error here is calculated at +/- 11,000 people).

    Jacinda Dalziell of Statistics NZ says we can expect these levels of sampling errors, because the survey is not based a census of the total NZ population. Statistics NZ reports that a change in the figures between quarterly periods is only "statistically significant" if the numbers are larger than the sampling errors.

    Sources Interview by Vivian Hutchinson with Jacinda Dalziell "Hot off the Press" editor at Statistics NZ; Statistics and Press Release from Statistics NZ for June 2000 quarter; Press Release from Deutsche Bank 3 August 2000 "Household Labour Force Survey"' ; New Zealand Herald 4 August 2000 "Jobs cheer as exports boom" by Warren Gamble, and "Jobless down but so are those in work" by Brian Fallow; The Dominion 4 August 2000 "Warning over fall in jobless" by Mathew Brockett; The Southland Times editorial 8 August 2000 "Job figures alarming"

    "We have lift-off."
    Jim Anderton, Deputy Prime Minister and Minister of Economic Development

    " I am confident that the medium term prospects for the economy are strong. What is required now is strong and sustainable employment growth, and the Government remains committed to policies that will underpin that growth, and to working with the business community and local government to this end ..."
    Steve Maharey, Minister of Employment

    " In spite of strong economic growth, 4,000 jobs have been lost in the June quarter, following the 6,000 jobs that were lost in the March quarter. This is unprecedented in a time of strong economic growth, and can only be linked to employers being fearful of employing staff under this government's anti-employment agenda.

    " The rate of official unemployment has only fallen because people are dropping out of the work force altogether. The 64.8% labour force participation rate is the lowest in years. It should send a loud warning to this Labour Government that their anti-employment policies are costing jobs."
    Muriel Newman, ACT Employment spokesperson

    " Six months of Jim Anderton's "Job Machine" and we've got 10,000 fewer people in work ... The latest Household Labour Force Survey figures indicate that many people have either given up on the chance of finding a job, or left our shores."
    Bob Simcock, National's Employment Spokesman

    The core group of the Mayors Taskforce for Jobs will be meeting in Wellington later this month with members of the former Maori Employment and Training Commission. The meeting is being convened by Wairoa Mayor Derek Fox, and will be a chance for the Taskforce members to review the purpose and outcomes of the former Commission and discuss any implications for the work of the Mayors Taskforce.

    The Commission had been set up by the previous government as a short-term "think-tank" to develop initiatives for accelerating Maori development in employment, training, and economic development. Before it was dis-established, the Commission was working with Professor Ian Shirley of Massey University to create a multi-party plan for job creation.

    The Canterbury Development Corporation (CDC) is presently negotiating with the Department of Work and Income (Winz) to try and gain more effective case management of unemployed Christchurch young people. The CDC has adopted goals (similar to the Mayors Taskforce for Jobs) that by 2002 all 18 and 19-yr olds will gain "full participation" in their community ... and that by 2005 this will also apply to all young people under 25 years. The CDC defines "full participation" as being in employment, training and education, or involved in voluntary work in the community.

    The CDC Employment Services, backed by Christchurch Mayor Garry Moore, want to extend their Actionworks service aimed at case-managing all 18 and 19-yr olds into "full participation". To do this, they want to work with Winz to run a Canterbury-wide pilot based around case managers who are specialised in youth issues, and who also have a significantly lower caseload. At present, the average Winz case manager has a caseload of around 300 people each. The Actionworks proposal is to get this caseload down to 125, and focus it on the young people.

  • To move in this direction would be quite a change in policy for Winz. It will cost them about $730,000 to put the extra staff and services into Canterbury for such a scheme. And Winz does not currently employ youth specialists — the present staffing emphasis is on "multi-skilling", where case managers are required to know the details of every type of benefit.

    CDC Employment Services Manager Brigid Lenihan: "There's just so much to know. What we are saying is that we need specialised case-workers who can connect directly with the young people ... and make the service more responsive to youth needs. A lot of these young people haven't had anyone take the time to get to know them and explain the options open to them in the labour market, as well as further education and training. We also need people who can also plug young people into community networks..."

    The CDC already pours $600,000 into its Actionworks strategy, out of the $2.4m it spends on employment programmes and $800,000 on economic development initiatives. It is getting good results with about a 50% better local placement rate with its existing scheme, compared to the Winz national averages.

  • The proposal to extend Actionworks has also attracted solid support from the Canterbury local authorities, and the Chamber of Commerce. Mayor Garry Moore says the new scheme would stop unemployed 18 and 19-yr olds from feeling hopeless about their situation or just accepting it and prepare them for the jobs which are opening up in Canterbury's growing economy. Moore: "Young people should not be paid to sit around and do nothing. This scheme will give young people a sense of hope and be reassuring for their parents and families."

  • Employment Minister Steve Maharey is also very interested in seeing the programme happen. Maharey: "We're very keen on local involvement in a programme which targets unemployment. The Christchurch City Council is taking the lead with this, and the CDC have very good employer contacts and a better appreciation of local needs. If the model works we will be trying it elsewhere..."
    Source interview by Vivian Hutchinson with Brigid Lenihan CDC 16 August 2000; The Christchurch Press 14 August 2000 "No dole for nothing plan" by Mike Crean

    The Wellington People's Centre did not produce a joint report with the Downtown Community Ministry on the Special Benefit, as reported in the last issue of The Jobs Letter. They produced separate reports, which used different methodologies yet are broadly compatible and reach similar conclusions.

    The Wellington People's Centre report charges that, since 1995, there has been a deliberate policy by Income Support, and later Winz, to reduce spending on Special Benefits. The report says that, since 1995, the eligibility criteria for Special Benefit has become progressively more relaxed and the number of people who qualify has increased ... yet the number of people actually receiving special benefit has dropped by more than 70%.

    The report: "The consequence is that the families who have been denied their correct benefit entitlements have been forced further into debt with the Department in order to meet their most basic and essential needs such as accommodation."

    Special Benefit Report 1995-2000 by the Wellington People's Centre, available from P.O.Box 9491, Te Aro, Wellington phone 04 385-8596 email

    Source letter to The Jobs Letter by Stephen Ruth 6 August 2000

    The Special Benefit controversy will no doubt be a major item on the agenda of a three-day national conference later this month involving fifty beneficiary advocates and government officials. The conference is being held at Tatum Park, Otaki, and is a joint venture between the advocates, the Ministry of Social Policy and Winz. The programme will consist of a number of forums on beneficiary issues, as well as a presentation on the linkages between benefits and jobs.

    Social Services and Employment Minister Steve Maharey says that the meeting will build on the "constructive discussions" officials have established with the Beneficiary Advocates Reference Group since January this year. Maharey: "As the Reference Group is not representative of all beneficiary advocacy groups, the national conference is seen as a worthwhile opportunity to meet a wider group for a discussion on increased incentives and opportunities for beneficiaries to move into work..."

    Source Press Release 1 August 2000 Steve Maharey "Opportunities for beneficiaries to be discussed"

    "With regard to Mr Maharey's `single benefit' proposal we would like to express our scepticism about this idea. We do not see it as a means of simplifying the benefit system as it is targeted at main benefits which are not, and have never been, the problem as far as the benefit system is concerned. The complications within the benefit system arise out of the "top-ups" known as second and third tier assistance. Mr Maharey's proposal seems hell-bent on introducing yet another tier. Under this proposal beneficiaries will need to apply for top-ups for having children or spouses, top-ups because they are permanently and severely disabled (i.e. currently they would qualify for the higher paying invalid's benefit), etc.

    "Further, [...] Mr Maharey has not given any guarantee that after the introduction of the single benefit new applicants will receive at least as much as they would under the current system. In other words, they are very likely to receive less. Given the Labour party's rejection of the Alliance's proposal to increase benefits by $20 per week, it is very unlikely that the single benefit will be at the level of the invalid's benefit. Thus it is likely that new applicants who would have qualified for invalid's benefit, widows benefit, transitional retirement benefit, DPB for the care of the sick or infirm, will be worse off under this proposal.

    " Apart from the rate of benefit under the proposal, there is also the issues around how one qualifies for a benefit. We have yet to see how this issue will be addressed by the single benefit proposal. Also, the abatements for benefits vary. If no one is to be worse-off under this new proposal then it will need to incorporate the most advantageous abatement rate.

    " It is distinctly odd that Mr Maharey is repealing the community wage, a prototype single benefit system, while at the same time he proposing the single benefit idea. Unfortunately the "single benefit" proposal is, in our view, the continuation of the agenda DSW had been working on throughout the 1990s. Under this agenda we have seen the DPB becoming progressively more work-tested in the last 4-5 years while its abatement system has become harsher.

    " One should not confuse the `single benefit' proposal with the idea of a universal basic income. The two ideas are philosophically and practically quite distinct. It is very unlikely that Mr Maharey has the UBI as his model for the single benefit."
    Stephen Ruth,the Wellington People's Centre

    The Jobs Letter goes "free to air". This issue of The Jobs Letter marks a significant change for us at the Jobs Research Trust. Earlier this year, after seven years of building up a track record with this project, our trustees set themselves the goal of enabling The Jobs Letter to be more freely available to all New Zealanders concerned about employment issues.

    We are pleased to announce that the trust has now gained enough support to enable a wider distribution. From now on, The Jobs Letter will be freely available on our website at the time of publication ... and we can now also give our readers full permission and encouragement to copy and redistribute our resources.

    The funding support to enable this to happen is being provided by the Mayors Taskforce for Jobs with the Ministry of Economic Development, Caritas Aotearoa NZ, the Cathy Pelly Maungarongo Trust, and the koha/donations of many individual supporters. Our thanks go to all of you for this ongoing support.

    We are also now distributing a PDF (Adobe Acrobat) version of The Jobs Letter which can also be downloaded directly from our website, or emailed directly to you. This will also be a free service. We are still producing the regular paper, posted edition of The Jobs Letter ... however, this service continues to be available only by subscription.

    We have also substantially upgraded our website to cope with an expected increase in demand for our new free services. The website now includes all our diary and back-issues back to 1994, links to the Mayors Taskforce for Jobs project, an improved "hotlinks" section pointing to other internet resources, and an online bookstore (in partnership with

    Check out these new sections out at

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