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    Essential Information on an Essential Issue

    Letter No.134

    16 November, 2000

    Our regular Statistics That Matter feature based on the Household Labour Force Survey for the September Quarter

    The official unemployment rate has dropped to 5.9%, its lowest level for 12 years. The September figures show 37,000 more people employed compared to a year ago, and 86% of these new jobs have been in full-time employment. Our regular Statistics That Matter summary of the employment statistics is included in this issue of The Jobs Letter. Some highlights:

    — The number of people unemployed has dropped by 3,000 or 2.6% since June and 16,000 compared to a year ago. The labour market participation rate has increased by 0.3% to 65.5%.

    — Auckland accounted for about half of the overall growth in employment during the last quarter. Northland remains the highest region for unemployment with a rate of 8.7%, followed by Bay of Plenty at 8.1%.

  • Deputy PM Jim Anderton says that the 5.9% level of unemployment compares well with the 6.4% rate predicted by the previous government in its Pre-Election Economic and Fiscal Update. He says that the difference means that at least 10,000 more New Zealanders now have jobs. Anderton: "In a decade in office, the National Party never brought the level of unemployment this low. Not only that, but before the last election they were still promising to keep unemployment higher than it is now under the Labour-Alliance Coalition…"

  • Our Media Watch reports that most newspapers have treated the "good news" jobs figures with some caution. Economists interviewed in the media have questioned the jobs figures, noting that recent business surveys show firms planning to shed staff.

    Examples: The Institute of Economic Research's quarterly survey of business opinion has more firms reporting a fall than an increase in staff numbers over the September quarter, and expecting further cuts. The National Bank's October business confidence survey finds almost as many firms saying they would be shedding staff as hiring over the coming year. ANZ Bank chief economist Bernard Hodgetts says that the latest jobs figures are "completely at odds with most other indicators of what is happening in the labour market".

    Act's Dr Muriel Newman postulates that unemployment statistics reflect the state of the economy nine to 12 months earlier, as job growth or decline generally follows economic growth by this period. Newman: "While the overall statistics are a reflection of the strong economy a year ago, the current economic flatness is almost certain to see bleaker figures and a rise in unemployment during 2001."

  • Opposition parties have also pointed to the ethnic figures in the last survey which show that, despite a marked improvement in job creation, the Maori unemployment rate rose from 13% to 14.2%, and Pacific Island unemployment went from 10.8% to 11.3%. National's Employment Spokesman Bob Simcock: "That hardly qualifies as closing the gaps! For both those groups there are also a growing number of people who have given up on even trying to look for work with Maori and Pacific Islanders described as "not participating in the labour force" rising in the last three months."

  • Statistics NZ reports that employment in the Construction Industry has increased by 9,700 in the last year, and employment in Accommodation, Cafes and Restaurants is up 11,300. Employment fell by 13,400 in Agriculture, Forestry and Fishing.

    A curious figure: The employment data also estimates that 8,000 jobs were created in the Education sector in the last three months. ANZ economists describe this as "implausibly large", especially when you consider this would be the equivalent of the entire staff of two to three large universities.

    Sources — Statistics NZ Household Labour force Survey September 2000 Quarter; New Zealand Herald 3 November 2000 "Employment figures bring a ray of hope" by Brian Fallow; The Dominion 3 November 2000 "Unemployment dip puzzles econmists" by Mathew Brockett; Press Release 2 November 2000 Helen Clark "Good News For Economy"; Press Release 2 November 2000 Jim Anderton "Unemployment Falls To 12-Year Low"; Press Release 2 November 2000 Steve Maharey "Figures good - but Govt will continue jobs focus"; Press Release 2 November 2000 Bob Simcock "Nats welcome apparent turnaround in unemployment"; Press Release 2 November 2000 Dr Muriel Newman "Employment Figures Point to Future Concerns"; Hard News by Russell Brown 3 November 2000 _ "Bad News, Good News"; The Independent 8 November 2000 "Cool response to employment data deserves warming up" by Bob Edlin.

    "The fall in unemployment is very encouraging, particularly as the government is putting in place policies aimed at regenerating the economy and creating more jobs. It demonstrates that New Zealand has the base to build a sustainably growing economy, capable of producing sophisticated goods and services."
    Helen Clark, Prime Minister

    " Today's figures suggest the policies of the Labour-Alliance Coalition are on the right track. The last time unemployment was this low I was still in the Labour Party ...

    " There are still serious challenges facing the economy which the Government has to address. No one in the Government will be satisfied yet. There is still essential work to be completed to create more jobs and rising incomes for all New Zealanders, particularly in the regions."
    Jim Anderton, Deputy Prime Minister and Leader of the Alliance

    " The latest labour force data is positive but no cause for complacency ... the Government has no intention of easing off on our strategy to improve skill levels and to secure sustainable job growth. The figures show that to improve the economy we need to improve the performance of some regions and the job prospects of youth, Maori and Pacific Island peoples. The regionalisation of the Department of Work and Income to work with local employers and the Industry Training Review will target these areas..."
    Steve Maharey, Minister of Employment

    " The latest quarterly figures have reversed the negative trend of the first six months under Labour. However it will take a few more HLFS surveys to determine whether this represents a new improving trend, or a statistical hiccup. Either way, Labour still has a long way to go to match the 38,000 new jobs a year created on average for the eight years between September 1991 and September 1999 under National- led governments."
    Bob Simcock, National Party Employment Spokesman

    "The figures show there is more confidence in the employer community than is perhaps revealed in some confidence surveys..."
    Peter Conway, Council of Trade Unions economist.

    " The increase in the unemployment rate for Maori and Pacific Islanders, in a quarter where official unemployment has fallen is a serious warning, and an indication that the Government's closing the gaps on Maori and the rest has achieved nothing despite a year of rhetoric."
    Dr Muriel Newman, ACT Employment Spokesperson

    " This week's employment figure is so out of keeping with some other perceptions of the economy that it has already been suggested that it's a bung number. If it is genuine - and logic would seem to dictate that it should be more robust than your average business confidence survey - then it's extremely significant. It also calls into question exactly what it is that business confidence surveys measure.

    " Good economic news is always tricky for Opposition parties, but National received it with some grace. Act's Muriel Newman, however, went through the extraordinary contortion of finding bad news in the numbers by highlighting the slight rise in Maori and Pacific Island unemployment. That that number should rise while overall unemployment falls is indeed cause for concern. But to see Act sounding the alarm over the Gap it has spent all year insisting doesn't exist and therefore doesn't require closing is a tiny bit rich, don't you think?"
    Russell Brown, Hard News

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    The Mayors Taskforce for Jobs has met with seven government departmental heads at a special forum at the Wellington City Council on 3 November. The meeting is the last in a series of consultation forums that the Taskforce has held this year.

    Next week, the Taskforce will meet again in Wellington to workshop strategies for their local employment action plans. The Mayors will be both challenging and supporting each other to pursue the Taskforce's first goal that, by 2005, no young person under 25 years will be out of work or training in their communities.

  • The list of departmental heads who met with the Mayors Taskforce included: Christine Rankin, Winz CEO and Ray Smith, Winz National Commissioner; Max Kerr, General Manager of Skill NZ; Sue Mackwell, Senior Manager with the Ministry of Social Policy; Roger Wigglesworth, Ministry of Economic Development; Charlie Moore, General Manager of the Community Employment Group (CEG) and Geoff Bascand, General Manager of the Labour Market Policy Group (LMPG).

    The Taskforce meeting was chaired by Jill White (Mayor of Palmerston North), and also attended by Mark Blumsky (Wellington), Garry Moore (Christchurch), John Chaffey (Hurunui), Tim Shadbolt (Invercargill), Frana Cardno (Southland), Basil Morrison (Hauraki), Jenny Brash (Porirua), and Yvonne Sharp (Far North).

    One of the most publicly popular government initiatives this year has been the launch of the Modern Apprenticeships programme run by Skill NZ (see The Jobs Letter No. 121). The programme is aimed at young people under the age of 21, and engages a variety of organisations to offer co-ordination services to support employers in offering apprenticeship training.

    At the Mayors Taskforce meeting, Skill NZ General Manager Max Kerr reported that the programme will provide 3,000 apprenticeship training places by 2002, and will cost $4m this financial year, rising to $12m in 2001-2.

    Skill NZ has set itself strategic goals which are very similar to that of the Mayors Taskforce. The agency seeks to ensure that, by 2005, every young person leaving school will have access to a range of further education and workplace learning pathways, and every adult in the labour market will have the opportunity to participate in education and training leading to nationally recognised skills and qualifications.

    Max Kerr commented at the meeting that, in the early 1980s, there were 25,000 New Zealanders in apprenticeships ... although he doubted that his agency would be able to reach such numbers today. His guess is that a realistic target would be about 10-15,000 apprenticeships. He says that while the concept of apprenticeships was popular older generations, a problem is that apprenticeships haven't been promoted in schools as a viable pathway to further training and a career.

  • The other obvious challenge will be whether government will allocate enough resources to Skill NZ in order for the training agency to reach its strategic goals. Even with an allocation of $12m for 3,000 places (in 2002), the Modern Apprenticeships scheme will be very much the poorer cousin of the other Skill NZ schemes. The government financial allocations to Skill NZ for this year include: $65m for Youth Training (aimed at people under 18 yrs with low educational qualifications); $97m for Training Opportunities (for longer term unemployed people with low educational qualifications); and $70m for Industry Training (mostly provided in the workplace).
    Sources — The Jobs Letter editor Vivian Hutchinson, attended the Taskforce meeting of the Mayors Taskforce for Jobs 3 November 2000. "Background material for Mayors Taskforce for Jobs" by Max Kerr general manager of Skill New Zealand 3 November 2000

    The Trade Union Federation (TUF) has proposed an initiative for industry and employment development called "Unions for Jobs". The plan would see unions support economic and regional development policies which promote job growth. TUF President Maxine Gay has taken her ideas to the Council of Trade Unions, and hopes to present a joint proposal to the Government within a couple of weeks.

    Gay : " The Government needs to support workers and their unions to play a key role in this long-awaited economic reconstruction. Union officials and delegates are well placed to identify areas of job growth or barriers to growth in the firms and industrial sectors that they work in, to promote a job growth consciousness in their workplaces and communities and to provide early warning for firms in trouble."

    "Trade unions in New Zealand have had neither the history nor opportunity of consistent involvement in industry and employment strategies. This is markedly different to the role of unions in economic development in other parts of the world, especially Europe. It is in the interests of workers to ensure a growth in jobs, so that we move from a buyers' to a sellers' market for labour. Trade unions must ensure the jobs created by regional, economic and industry development policies are permanent and well paid, not casual and marginal."

  • The TUF plan for "Unions for Jobs" has six key objectives:

    — to ensure that unions are motivated, resourced and trained to play an active role in the Government's development and employment strategies

    — to help to identify and to train trade union representatives on regional development, industry sector and employment promotion bodies and projects

    — to identify appropriate regions, communities, sectors and firms that may require Government support

    — to harness the knowledge and ideas of workers, delegates and union officials for job creation initiatives and input into wider regional and economic development decisions

    — to help to ensure the outcome of Government initiatives and spending is good and sustainable jobs, and

    — to liaise with Maori, Pacific, women's, unemployed, business, local government and other sector groups active in the Government's strategies.

    Source — New Zealand Herald "Dialogue: Unions have vital role in economic reconstruction" by Maxine Gay

    The government has just released a summary of its overall "employment strategy". The document entitled Opportunity, Capacity Participation — Government Employment Strategy 2000 has been produced to bring together the myriad of government policies and programmes that impact on its employment goals.

    Employment Minister Steve Maharey says that the strategy is about a "whole of government" approach in which "policies are mutually reinforcing across portfolios". Maharey: "The strategy is part of a process by which policymakers and those tasked with implementing policies are required to continually bring one question to the fore: What will this intervention do to grow the economy and grow jobs?"

  • The document contains no surprises and comes with a fair dose of current public service jargon. It is essentially a summary of existing government programmes aimed at "minimising disadvantages" to people in the labour market and "maximising their potential" through education and training initiatives.

    What is new is that the Cabinet has decided to put in place a monitoring regime to assess the government's performance against its overall employment strategy. In future, any major policy proposals that impact on employment will include a clear assessment for Cabinet on how the policies will affect jobs. Progress on government actions and initiatives will be reported on at the end of June and December each year, and the actual employment outcomes from the strategy will be reported at the end of September.

  • A copy of the employment strategy document can be downloaded from Steve Maharey's ministerial website at
    Source — Opportunity, Capacity. Participation — Government Employment Strategy 2000 (September 2000) from Steve Maharey Minister of Social Services and Employment.

    Federated Farmers in the South Island estimates that 2,000 extra farm workers are needed as good weather and the low exchange rate create a rural boom on dairy, sheep and beef farms. The increased profitability on the land means that farmers who cut back on labour during several tough seasons are now looking to employ more staff. But many of the farm workers who had lost their jobs in recent years have found other work.

    Federated Farmers general policy manager Gavin Forrest says that the usual reliance on local young people coming through and going to work on farms isn't keeping pace with the demand for staff. He says that part of the problem is that young people have a poor perception of farming as a career. Forrest: "There are some good wages and in the dairy industry there is a good career structure and the ability to become a sharemilker and own your own farm. But its not the first career option that leaps out at people. We don't believe farming is portrayed in a good light by many of the schools."

  • The government's $5m Sustainable Farming Fund is helping train farmers to be good employers, paying for a study of employment conditions on dairy farms and funding school visits to promote farming as a career. However, Agriculture Minister Jim Sutton says that more improvements could be made to rural employment conditions with better housing and more time off for young workers.
    Source — The Christchurch Press 7 November 2000 "Rural lift creates 2000 jobs" by Seth Robson

    The Forestry industry is another sector facing staff and skill shortages after laying off many workers during the Asian currency crisis in 1997. Simon Collins, in the New Zealand Herald Jobs Challenge feature series, reports that trees maturing in the next six years could transform the two regions with the highest unemployment. But Collins says the industry is facing the consequences of years of under-investment in the roads required to get the logs to ports, under-developed opportunities in international markets, and a critical shortage of skilled labour, despite the forests being in regions "swarming with jobless workers".

  • On the East Coast, where 2,800 people were unemployed in the last census, the amount of maturing wood available for harvesting will quadruple by 2006. With continued planting and 60 per cent local processing, the Forestry industry says 19,000 jobs could be created in the region by 2030, almost doubling the region's present total employment.

    In Northland, where 5,000 people are unemployed, maturing wood available for harvest will more than treble by 2006 — enough to at least treble the region's 1,545 forestry and processing jobs.

    Trainees working in forestry companies have doubled in the past four years and 41 apprentices have been signed up since late July under the new Modern Apprenticeship scheme. But Forest Industries Training chief executive John Blakey says "we are running into a bit of a brick wall in terms of getting people."

  • In a hard-hitting submission to the Government, the East Coast Forestry Industries Group warns that if it cannot get trained workers through a proposed state-subsidised, fast-tracked scheme, it will seek to import labour from Fiji and the Philippines. The Forestry Group has asked the Government for $1.9 million to subsidise the wages of 80 silvicultural trainees for six months.

  • Geoff Fisher, a former forestry trainer and forest manager in Rotorua, argues that "the market" has not delivered a favourable situation to the long-term interests of either investors in the forestry industry, nor the workforce. He says it is time for the forestry owners to pay higher wages and create better career security.

    He notes that, at the rates of pay prevailing in 1999, a silvicultural worker might make as little as $300 for a hard week's work adding value to plantations of radiata pine. He says that affordable wages for skilled workers should be closer to $1,000 a week, while maintaining traditional rates of return on capital for forest owners.

    Fischer says that, in the Forest Service era (pre-1987), "woodsman" (a skilled forest labourer) and "ranger" (a forest technician) were coveted career positions which offered security, exposure to a wide range of forest types and operations, and the possibility of advancement to senior management positions. But under the prevailing short-term contract system today, there is little variety, less security and no clearly defined career path.

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  • Visit our "Jobs Challenge" page at for further links to articles in the New Zealand Herald special series.
    Sources — New Zealand Herald 4 November 2000 "Log-jam looms as jobs in forestry go begging" by Simon Collins; New Zealand Herald 10 November 2000 "Time for forest owners to pay for their profits" by Geoff Fischer.

    The recruitment agency Morgan & Banks says that Wellington is facing a "massive shortage" of information technology (IT) skills which will be exacerbated by news of a multi-million-dollar joint venture between Ericsson and Wellington software company Synergy. About 100 of the 150 new jobs in the venture will be based in Wellington, but the recruitment agency says that rapid growth in Wellington's IT and telecommunications sectors has outstripped the local labour supply. Many of the workers will have to be brought in from other cities around NZ, and from overseas.

    Morgan & Banks Wellington manager Paul Jury is also pointing to pay rates as a problem in attracting and retaining staff. He says, at the top end of the market, pay rates in NZ are often less than half of what skilled workers can earn overseas. The challenge for Wellington is to sell its lifestyle to IT workers "... because the income is often not as attractive."

    Source — Evening Post 7 November 2000 "We've got the jobs — but not the people" by Perry Williams.

    "Second Chance" jobs in the US. The United States is going through its longest stretch of economic growth ever — nearly ten years and counting — and the unemployment rate is at 3.9%, a 30-year low. American employers are so desperate for workers that they are now going out of their way to recruit people they wouldn't normally consider — ex-convicts, former gang members and recovering drug addicts.

    The Associated Press in Chicago reports that an increasing number of employers are posting fliers in halfway houses and offering college tuition reimbursements. Some companies, like the United Parcel Service, even have recruiting vans that roam city neighbourhoods in search of applicants. And among the more popular methods of recruitment are "Second Chance" Job Fairs, organised by state and private agencies, where employers are linked to hundreds of job seekers who are also ex-offenders.

    Source — Associate Press Chicago 10 November 2000 "Job Opportunities rise for ex-Cons" by Martha Irvine

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