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    Essential Information on an Essential Issue

    Letter No.139

    12 February, 2001

    Our regular Statistics That Matter feature based on the Household Labour Force Survey figures for the December 2000 quarter.

    Unemployment figures have continued to fall, giving a much-needed boost to the policies of the coalition government. Many leading economists, however, regard the good jobs figures with some caution ... particularly in the light of a slowing international economy and massive job cuts in Australia and America.

    The official unemployment rate has dropped to 5.6%, the lowest rate recorded since June 1988 when it was 5.2%. (Unemployment reached a peak of 10.9% in September 1991). The December figures show the number of unemployed has dropped to 108,000 people. This is 3,000 less than at September 2000. The numbers employed have increased by 20,000 in that time, and 70% 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. Some highlights:
    — Unemployment has dropped by 11,000 (9.2%) and employment has grown by 36,000 (2%) over the last year. The labour force participation rate has increased by 0.5% in that time.
    — All ethnic groups have shown declines in their unemployment rates. Current figures show a rate of 13% for Maori, 11.4% for Pacific peoples, and 4% for European/Pakeha.
    — Long-term unemployment (over 2 years) is down from 41,700 people a year ago to 32,400 in December.
    — The region with the highest rate of unemployment was Northland (8.7%), followed by Gisborne/Hawkes Bay (7.4%) and the lowest rate was found in the Tasman/West Coast/Marlborough/West Coast and Wellington regions, both at 4.7%
    — An estimated 106,400 workers are employed part-time, but say they would prefer to work more hours. This "under-employment " figure includes one in every 28 male, and one in every 12 female workers.

  • The financial markets had been expecting very modest job growth of around 0.2%, but the official figures were more than double their most optimistic forecast. Many economists have expressed scepticism at the jobs figures, because they suggest that the NZ economy is faring much better than many of our trading partners.

    BNZ Chief Economist Tony Alexander says the jobless fall portrays a booming economy, yet this is "clearly not the case". He speculates that employers might be holding onto skilled staff, when they do not need them, in anticipation of improving conditions.

    Sources — Statistics NZ Household Labour Force Survey for December 2000 quarter; Commentaries on the statistics by Deutsche Bank and HSBC Bank; Press Release Steve Maharey 8 February 2001 "Maharey welcomes reduction in unemployment"; Press Release Jim Anderton 8 February 2001 "Unemployment falls again"; Press Release ACT Party "Government must give economy a helping hand" by Rodney Hide; The Dominion 9 February 2001 "We're on a job stats roll" by Mathew Brockett; also in The Daily News 9 February 2001 as "Unemployment at 12-year low, but economists doubt figures"; New Zealand Herald 9 February 2001 "Jobs rise here to stay — Govt" by Vernon Small; New Zealand Herald editorial 9 February 2001 "Jobs news tells us it's a hopeful time"; New Zealand Herald 9 February 2001 "Job growth against rate cut" by Brian Fallow.

    " Another surprisingly strong set of numbers ..."
    HSBC Bank

    "It does hammer home the fact that the economy is doing comparatively well, and certainly rather better than some of its trading partners appear to be..."
    Bernard Hodgetts, ANZ Chief Economist

    " These numbers should be welcomed by all sectors of the New Zealand economy. They indicate that the New Zealand economy is well placed to accommodate any weakening in the international economy. Under the economic stewardship of this Government the economy is nowhere near as exposed as it might have been to changes in the international economy.
    " It is still the case that unemployment is concentrated within particular groups in our society and within particular regions — the Government is committed to ensuring that all regions share in the economic recovery."
    Steve Maharey, Social Services and Employment Minister

    " In a decade in office, the National Party never brought the level of unemployment this low. If National and Act were in government today, the unemployment rate could be as high as 6.1%, on their own forecasts. That would have meant 11,000 more official unemployed, and 18,000 more jobless than under a Labour-Alliance coalition.
    " 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

    "A growing economy is always going to create new jobs. But I think the thing we need to look at is what's driving the growth. You have increased volumes of commodities being produced, you've got a reasonably strong market, and you've got a collapsed dollar. The only thing the government has contributed to that is the collapsed dollar, so I don't think we can say that it's a sustainable gain coming out of government policy ..."
    Bob Simcock, National Party Social Services Spokesman

    " The lower unemployment figures are good news for the unemployed, but the problem we have is that the Government has done nothing to help employers boost the economy — quite the reverse. It is now more costly to employ a person than it was a year ago. The Employment Relations Act makes it hard to sack an employee — which means they are less likely to be offered a job in the first place. To really beat unemployment and encourage sustainable economic growth, New Zealand needs to free up the labour market and drop taxes. This Government has gone the other way..."
    Rodney Hide, ACT Party Finance Spokesman

    "In this country the job figures tell a story of steady, unspectacular growth, which is much to be preferred to the boom and bust phases we had for too long. Both sides of Parliament can (and will) claim credit for the improvement. The drastic fall in the dollar after the change of government undoubtedly has also spurred the rural economy and tourism..."
    — New Zealand Herald editorial, 9 February 2001

    The good job news in New Zealand is in sharp contrast to the job losses being recorded in Australia and America. Australia shed more full-time jobs in January than in any month in the past ten years. The loss of 44,000 full-time jobs last month has pushed Australia's unemployment rate to 6.7%.

    Meanwhile, America's unemployment rate has climbed to 4.2%, its highest level in 16 months, after a dramatic slowdown in economic growth which has forced thousands of layoffs in the automotive and other manufacturing industries. Manufacturing in America lost 65,000 jobs in January, bringing total manufacturing losses to a quarter million jobs since June last year.

  • Is the US economy on the brink of a recession? The manufacturing layoffs may indicate that after almost nine years, the longest non-stop economic expansion in US history may be coming to an end. Almost every economic indicator is pointing to a significant downturn in American economic fortunes: retailers have experienced their worst Christmas in years, house and car sales are sluggish, and manufacturing output has fallen to its lowest level in a decade.

    The economic problems stem from the collapse of the companies in April last year (see The Jobs Letter No.123). At that time, investment in new technology companies drove their share prices to absurd levels in the belief that the internet was propelling the US into a "new economy" of permanently higher growth. The bubble burst. And in the last nine months the effects of that stock market collapse has spread to mainstream "blue-chip" companies, and to the banks that lent them money.

  • Why should this lead to a recession? The British media watch The Week points out that whatever happens in the stock market has a huge impact on the American public, as more than 45% of US citizens own shares.

    The Week: "Eight years of soaring stock market wealth have encouraged US investors to run down their savings and spend wildly. Many borrowed heavily to do so. As a result, the average minimum monthly payment Americans owe on their debts has reached its highest level since 1987, while the ratio of personal savings to income is the lowest for 78 years. But now that the markets are falling, consumers are cutting back on their spending and many may try to rebuild their savings. If they continue to do so, it will further undermine corporate profits and lead to yet more job losses and factory closures..."

    Sources — New Zealand Herald 2 February 2001 "US Firms rush to downsize" by Ross Finley; Associated Press 5 February 2001 "Unemployment rate hits 4.2%" by Jeannine Aversa; The Dominion 7 February 2001 "Job losses plague US manufacturing but all is not lost"; New Zealand Herald / Bloomberg 9 February 2001 "Job losses hit ten year high"; The Week "Briefing" 13 January 2001 "Is the US economy on the brink of recession?"

    The government has announced it will increase the annual number of skilled and business migrants approved to enter New Zealand. It will now allow a total of 27,000 people a year — a 60% increase on last year's figure of 17,000 migrants. Immigration Minister Lianne Dalziel says that the new target is aimed at ensuring the NZ economy has the skills and entrepreneurial base to develop the high-value industries and services it needs.

    The government has also announced it will:
    — grant open work permits to the spouses and partners of work permit holders
    — ease the English language test requirements

  • Dalziel also announced that the government is looking at other immigration policy initiatives which will introduce a linkage between work permits and residence specific to the regions. These moves come after local government leaders have asked the government explore options for the regions.

    Local Government NZ President Basil Morrison says that migration is one of the keys to successful local economic development initiatives. Morrison: "Being able to get the right people, in the right place at the right time, with the right skills and drive is fundamental to the success of local economic development. Both LGNZ and the Mayors Taskforce for Jobs have been very concerned that past migration policy simply didn't deliver what we needed. The government's announcement is an important step in the right direction..."

  • National's Immigration spokesperson, Marie Hasler, argues that the latest announcement is an example of the government "covering its own embarrassment" over the increasing numbers of skilled New Zealanders leaving the country. Hasler: "The government shouldn't just focus on replacement. It must start to focus on rewarding effort and achievement. The government boasts about developing a knowledge economy and then, contrary to all reason and common sense, reduces the level of education and skill, such as English language pre-requisites, required to build such a learning-based economy..."
    Sources — Newsroom 9 February 2001 "Business Migrant Quota Boost" by Patric Lane; Press Release NZ Government 9 February 2001 "Government to increase skilled migrant numbers"; Press Release Local Government NZ 9 February 2001 "Immigration Changes Welcome"; Press Release National Marie Hasler 9 February 2001 "Govt moves to cover embarassment"

  • WORKFORCE 2010
    Watch for: The Labour Department's report on Workforce 2010, which it hopes will stimulate debate on labour market issues and the future of work in New Zealand. The report is based on current labour market trends, their forward projections, and includes occupational patterns, participation rates, and expected areas of skill demand. It is being produced by the Labour Market Policy Group (LMPG), and is likely to be released late this month or early March.

  • LMPG have also done a "literature review" on the social and qualitative aspects of the future of work. This review looks at key trends on issues such as the impact of technology on the workforce, the ageing workforce, changing attitudes to work, job tenure and security, the over- and under-worked, inequality of incomes, the changing social contract between employers and employees, and other issues. A draft paper on these trends was completed as background to Workforce 2010.
    Source — "Summary of Current Future Work Projects" 24 January 2001 by LMPG (report for Mayors Taskforce for Jobs)

    National party leader Jenny Shipley has announced a re-shuffle of her policy spokespeople. List MP Bob Simcock has gained the most rapid rise in prominence, joining National's front bench and taking on the social services, employment and work and income shadow portfolios. As such, he will be "locking horns" with Social Services Minister Steve Maharey.

    Simock is a second-term MP and a former vice-president of the National party. He is a trained clinical psychologist, with a master's degree in social science and psychology. He says his immediate priority is to tackle Maharey on the performance of the Department of Child, Youth and Family Services, which he says is "drowning" in a flood of child abuse notifications. Simcock: "We cannot succeed as a society unless we do a better job with our kids and make sure they get a decent start to life. At the moment it's not just happening..."

    Source — New Zealand Herald 1 February 2001 "New front-bencher sets sights" by Oskar Alley.

    The junior coalition partner, the Alliance, has detailed its priorities for 2001. In a "State of the Nation" speech given at the Orongomai Marae in Upper Hutt (see Voices, this issue) leader Jim Anderton outlined several key social and employment proposals which his party will be urging Labour to also undertake. These include:
    — ensuring that no-one under the age of 20 is on the dole
    — ensuring adequate financial support or employment for students over the summer holidays
    — working with industry to ensure free access to some tertiary courses
    — looking at wiping the debt for science and engineering students if they work in New Zealand for a number of years after graduation
    — cutting welfare abatement rates to make it easier for people to move off benefits and into paid employment.

  • PM Helen Clark's reaction to the speech is that it contains many "good ideas". Clark: "We'll put them into the Budget process and see how we go..." She told the New Zealand Herald that cutting benefit abatement rates is "desirable", but ministers were juggling priorities within fiscal limits.

    Tertiary Minister Steve Maharey says that the idea of a student "bond" for scientists and engineers may also be discussed as part of this year's Budget round. Maharey: "It is an important suggestion but I do think before I would want to commit myself to major spending in this area, we would need to get better evidence."

    Maharey is sceptical that a "brain drain" of scientists and engineers in fact exists in NZ at the moment. Maharey: "There seems to be no evidence of a lift in the number of students going off overseas with their skills and not coming back. This does not mean, however, that New Zealand will not find itself competing with Australia and other countries to offer young IT professionals jobs in the future.."

    Sources — New Zealand Herald 7 February 2001 "Alliance pushes stand on welfare" by John Armstrong; The Dominion 7 February 2001 "Anderton proposes student bond" by Leah Haines; Jim Anderton Waitangi Day speech "The Year Ahead" Orongomai Marae, Lower Hutt, 6 February 2001.

    scottandeton-sm.gif - 11225 Bytes

    " Employment must surely be our highest priority. I want to work towards ensuring that we have no one under twenty on the dole. There are no magic wands. But if the whole country adopted that goal, we would find a way to ensure young people would be guaranteed a place in education, training or in paid work.
    " If we didn't consign our young to the dole, what responsibility would we be prepared to take as a community?
    " There will always be a welfare safety net. But we have created a net that can trap people in poverty — partly because we don't provide enough high quality jobs for everyone who wants to work.
    " We also need to make it easier for people to move off benefits and into paid employment. We can lower the rate at which social welfare benefits are reduced as a person earns money from other work. So we don't penalise beneficiaries who try to get work.
    " I know the Government is not going to halve abatement rates immediately. So we might think about a trial in a region. We could ask regions to nominate themselves. We could say to regions: "What are you prepared to do if the Government's contribution is to make it easier for beneficiaries to move back into the workforce?" We could trial something like this in a geographical region and then examine the results.
    " I'm a pragmatist. We should be prepared to try things. If they work, we should do more. If it doesn't work, throw it out and try something else.
    " We want to give our young people security and opportunity. A major influence on their future life is the opportunity they have for a high quality education.
    " I would make education free. Get rid of fees. Pay young people an allowance to study. But I also have to acknowledge that our society has repeatedly refused to vote for free education.
    " But I think New Zealanders do want to see some improvement. At the very least we need to ensure adequate support or employment is available for students over summer. More importantly, we need to explore new policies.
    " I would like to see a scheme where students could pay off their student debt by agreeing to work in New Zealand for a period after they graduate.
    " I want to work with industry to look at the advantages of making access to some courses free. If we want lots more high-income jobs for New Zealanders, we need to start producing a lot more scientists and engineers. So we could look at wiping student debt for science and engineering students, or for graduate students, if they agree to stay in New Zealand for a certain number of years after graduation.
    " Jobs and education. These are the keys to security and opportunity for our young people. The pathways to success for New Zealand."
    — Jim Anderton, Deputy Prime Minister and leader of the Alliance, from his Waitangi Day "State of the Nation" speech at Orongomai Marae, Upper Hutt, 6 February 2001.

    Another key goal for Jim Anderton and the Alliance this year will be the establishment of a "People's Bank" — offering lower fees and a full range of banking services through the NZ Post's branch network. Media reports speculate that senior Labour Ministers have set aside their reservations about the new state-owned bank, and will approve the proposal at Cabinet this week. If so, the bank could be up and running by October.

  • But it is not only Labour politicians that have reservations about the proposal. Green Party MP Sue Bradford, who was one of the founders of Auckland's People's Centre, says she has "serious doubts" about what could be achieved by Anderton's proposal. Bradford: "At this stage, it appears to be merely a poor people's bank based on massive government support, but with no direct ownership by local people, and with no concept of a role in supporting community economic development."

    Bradford points to the successes of the growing network of Bendigo Banks in Australia, where small rural communities have successfully developed their own banking facilities where local people own the building, and pay the staff, in partnership with a hub bank.

    greenbradford.jpg - 10214 BytesThe Bendigo partnership model (see The Jobs Letter No.105) involves the community creating a trust which attracts hundreds of local investors to become the shareholders of the local bank. All profits are split 50-50 between the bank and the local community.

    Sue Bradford says the key to the success of the Bendigo model has been the large numbers of local people who switch their personal banking to the new bank because they have a stake in its success. She doubts whether the Anderton "People's Bank" will be enough to encourage people to actually change banks when the time comes.

    Bradford: "Studies overseas show that account holders are often resistant to moving banks, unless they are highly motivated. Anderton's bank does not involve ordinary people except in their traditional and distant role as customers. I fear that the "People's Bank" in which so much hope and government money will be invested will in the end be a costly exercise in futility at the expense of other more fruitful and potentially more cost-effective options."

    Source — New Zealand Herald 10 February 2001 "People's Bank over hurdle" by Vernon Small; vivian Hutchinson interview with Sue Bradford 31 January 2001; The Listener 3 February 2001 "Global Village Idiots" — Summer Soapbox by Sue Bradford.

    Student leaders have vowed not to let another summer break go by without students having access to the Emergency Unemployment Benefit (EUB). The New Zealand University Students Association has resolved to launch a nation-wide campaign demanding the reinstatement of the income support.

    President Andrew Campbell says the government needs to realise that their pre-election talk of being a student friendly government is "starting to ring hollow". Campbell: "Without the EUB, students are in the unenviable position of being the only group in society not entitled to financial support from the government whilst unemployed. We note that Labour is the only party in the government and its supporters that opposes this fundamental right. We intend to make this clear to students on campus and the wider community..."

    Campbell says that universal access to the EUB was withdrawn by the former National Government in 1998. He says that, at the time, when Steve Maharey was Opposition spokesperson on Tertiary Education, he promised students that a Labour Government would restore the EUB.

    Source — "Students Target Labour On Summer Allowance" 5 February 2001 Press Release by New Zealand University Student's Association


    The inaugural Conference of the Social Entrepreneurs Network (Australia and NZ) is being held in Sydney this week (15-16 February). The conference aims to raise the profile of social entrepreneurship and its implications for communities, business, corporates, policy-makers and the welfare sector.

    The network being launched at the conference is modelled on the UK-based Community Action Network (CAN) which offers practical advice, technical support and access to expertise for communities wanting to think and act entrepreneurially.

    Invited speakers include Andrew Mawson from CAN, Peter Kenyon from the Centre for Small Town Development, and NZ'ers Cliff Colquhoun, Lindsay Jeffs and Bruce Hamilton. For further information: the conference website is at or contact Vern Hughes at Hotham Mission email

    Globalisation or Localisation — Reclaiming the economy for the community is to be held at Tapu Te Ranga Marae in Wellington on 3rd March. Speakers include Edward Goldsmith, editor of The Ecologist; Sohail Inayatullah, political scientist from Queensland; Sue Bradford, Green MP; and Warren Snow of Envision NZ. Conference website, or contact Bruce Dyer phone 03 548 7284

    Local Government New Zealand is convening an Economic Development Forum on 5-6 April in Wellington. It is being held in partnership with EDANZ, with sponsorship from BERL. The Forum will showcase examples of successful economic development initiatives being used around the country, with in-depth workshops on funding/partnerships, clustering, and measuring the success of initiatives. For further information: brochure is on website at, or contact David Barnes LGNZ phone 04-470-0015 email

    The first NZ Social Auditing Conference will be held in Wellington on 21-22 May. It is being organised by COMMACT Aotearoa on behalf of Social Audit NZ Ltd and the Australasian Institute of Social and Ethical Accountability, and will include speakers from NZ and overseas. For more information contact

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