Towards An Employment Strategy

from The Jobs Letter No.130 / 8, September 2000

Extracts from the report on the uncompleted national employment strategy being developed last year by Professor Ian Shirley, Peter Harris, Ganesh Nana, Dennis Rose and Kel Sanderson.

ON AN EMPLOYMENT STRATEGY
When seen in the context of comparative countries, New Zealand does not have a coherent employment strategy, nor does it administer an effective set of action plans for employment at a regional level. The broad economic direction pursued over recent years has treated unemployment as an `adjustment' problem while the agencies engaged in promoting employment at the local level seem preoccupied with what is essentially a welfare focus rather than a programme aimed at expanding employment opportunities.
The purpose of an employment strategy is to maximise the employment capacities of the country as a whole rather than concentrating on one section of the population or a narrow set of policy measures. A general strategy aimed at boosting the capacity of the national economy is essential because, in the case of Maori for example, the level of Maori employment and unemployment rises and falls with the overall level of employment. This does not mean ignoring Maori unemployment in the interests of a national employment strategy. A specific strategy is needed for Maori because the unemployment rate for Maori tends to rise and fall at approximately three times the rate of general unemployment.
Similarly, there is little value in seeing an employment strategy as a series of measures aimed at getting the unemployed into work, if the economic policy environment is based on the assumption that a 6% rate of unemployment is acceptable. An economic strategy that finds a 6% unemployment rate as acceptable inevitably implies that an unemployment rate for Maori of between 15% and 20% is equally acceptable.
ON MACRO POLICIES
There is clearly a need for a shift in the macro economic policies of government so as to foster an environment that encourages production and growth and this emphasis on a growing economy needs to be reflected in a wide range of initiatives that enhance the productive potential of the regions and

" It seems evident to us that a statutory base is required for employment in the same way that we have a statutory base for controlling inflation."
— The Report

the capabilities and capacities of the people. An employment strategy should provide a coherent framework for linking these various measures so that there is general agreement on the overall goals being pursued.
It seems evident to us that a statutory base is required for employment in the same way that we have a statutory base for controlling inflation.
Consideration should be given to the appointment of a Governor or Commissioner for employment, with responsibility for the monitoring and evaluation of an employment strategy. The employment strategy should be a public document as well as an action plan to be administered by the Commissioner/Governor of Employment.
Specific targets should be set for employment and unemployment over a 3 to 5 year timeframe. In this respect, we propose a reduction in the general unemployment rate by 2% over a period of 3 years. A specific target for Maori unemployment also needs to be established following the development of an employment strategy for Maori.
ON EXCLUSION
Exclusion from the paid workforce has placed increasing pressure on immediate and extended families and where households have been unable to provide this support government has become the primary means of support. In 1985, 8% of working age people were in receipt of a benefit - by 1996, the percentage had risen to 21% of working age people, or 400,000 individuals. In 1985, 12% of children were living in households receiving a benefit - by 1996, 30% of children were in government assisted households, with Maori more than twice as likely as non-Maori to be reliant on government benefits as the main source of income.
It becomes clear that this pattern of development will not change unless there is a clearly articulated strategy to pursue alternative outcomes, with widespread support from the government and private sectors. As labour market projections prepared for the Maori Employment and Training Commission reveal, employment and labour force growth through the period 1996 to 2011 is likely to remain unchanged. In other words, based on two different scenarios, and in the absence of any significant policy changes, the labour market outcome over 15 years to 2011 is likely to result in a standstill - both employment (as fulltime equivalents) and labour force growth is likely to be the same and this means that the current mix of policies and priorities is unlikely to produce any sustainable reductions in the level or composition of unemployment. The Employment Task Force made a similar observation in 1994.
ON REGIONAL DEVELOPMENT
Another factor that reinforces the need for an employment strategy concerns the regional variations in employment and unemployment and the dominance of metropolitan centres, especially Auckland. On the basis of projections prepared for the Maori Employment and Training Commission, the low growth scenario reveals that 60% of the projected change in the total New Zealand labour force between 1996 and 2011 will occur in the Auckland region.
The regional variations as exemplified by Auckland, illustrate the importance of policy options and the need for a coherent employment strategy in much the same way that the population growth strategy for Auckland has provided a framework for regional planning. In this respect the employment strategy becomes, in effect, a national action plan based on social and economic realities and on the achievement of clearly defined outcomes that are subject to evaluation and review.
The physical infrastructure of the country is crucial to economic development but in some regions a deterioration in the physical assets and utilities has become a barrier to business development and employment. Auckland provides a graphic illustration in that traffic congestion, the provision of water, the need to upgrade sewerage systems, and the overloading of electricity supply systems, have all been identified as barriers to regional growth. Other regionally specific barriers include the water supply in Hawkes Bay, electricity costs in Canterbury, and roading in Northland. Addressing these deficiencies is of fundamental importance in developing an employment strategy with an effective regional base.
One of the most consistent themes to emerge from the regional studies and workshops centred on the opportunities that could be released by enhancing the productive sectors of the economy and by expanding the capacities of the people. Although the realisation of these opportunities requires investment in people, in industry, in business, and in the natural and physical resources of the country, it also requires a shift in the policy environment and in the attitudes of the community.
In terms of policy, it means increased and continuing attention to the medium term goals of sustainable economic growth, the promotion of exports, and the creation of employment opportunities. In attitudinal terms greater recognition needs to be given to cooperative and collaborative approaches that foster partnerships between public and private sectors. Subsidiary should be the guiding principle of these partnerships, meaning that central bodies and authorities should only perform tasks that cannot be effectively carried out at a local level by territorial authorities, enterprises and individuals.

ON GOVERNANCE
Governance is a major issue at the regional level where there is confusion as to the respective functions of local, regional and central government, and considerable uncertainty as to who should carry responsibility for economic development and employment. The Resource Management Act prevents Regional Councils from actively promoting economic development and yet these bodies have substantial physical assets as well as personnel capacities that could be used more effectively in promoting the development of the regions.

In Hawkes Bay for example, the Regional Council owns 92% of the Napier Port, substantial forest holdings, water control systems and significant areas of residential land - yet the Resource Management Act prevents the Regional Council from getting involved in economic development. In Auckland, the Regional Growth Strategy represents a significant step forward in terms of regional development but in this case the `growth strategy' is essentially a set of population and spatial projections without economic underpinnings.

" Subsidiary should be the guiding principle of these partnerships, meaning that central bodies and authorities should only perform tasks that cannot be effectively carried out at a local level by territorial authorities, enterprises and individuals."
— The Report

The different layers and responsibilities of government need to be renegotiated. Central government should statutorily define its own role in a manner that complements the powers and responsibilities of territorial authorities and while this could be achieved in a variety of ways, we favour the appointment of Regional Commissioners with responsibility for facilitating a regional approach to governance based on the principle of subsidiarity.
ON A NEW DEAL
We suggest a `new deal' for particular populations and groups who are most affected by unemployment. These active labour market measures would require:
every unemployed young person (under 25 years) being offered a new start before reaching six months of unemployment, in the form of training, retraining, work practice or a job. (Particular emphasis needs to be placed on young people who have left school and are not employed).
every unemployed adult (over 25 years) being offered a fresh start before reaching 12 months of unemployment. The fresh start could include a similar range of provisions as outlined above with particular emphasis on the contribution that older workers could make to economic and social development.
The development and implementation of an employment strategy for Maori cannot be separated from the economic and social development of Maori in both rural and urban areas. Although the development of a national employment strategy will have a positive impact on Maori employment, a specific strategy for Maori is an urgent priority.
The foundations of this strategy are evident in the economic development plans of Maori Trusts and Urban Maori Authorities. Other elements are evident in the work of Te Puni Kokiri and the Maori Commissions. Now that the preliminary work in developing a strategy for Maori has been initiated by the Maori Employment and Training Commission, the drafting of a an Action Plan in consultation with Maori Urban and Rural Authorities is the major task remaining.
Source — "The Development of an Employment Strategy —A Summary Document for the Maori Employment and Training Commission" (January 2000) by Ian Shirley, Peter Harris, Ganesh Nana, Dennis Rose and Kel Sanderson.

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Source — "The Development of an Employment Strategy —A Summary Document for the Maori Employment and Training Commission" (January 2000) by Ian Shirley, Peter Harris, Ganesh Nana, Dennis Rose and Kel Sanderson.