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    Essential Information on an Essential Issue

    Letter No.144

    18 May, 2001

    Our regular Statistics That Matter feature based on the Household Labour Force Survey figures for the March 2001 quarter.

    New Zealand's unemployment figures have fallen to a 13-year low of 5.4%, largely attributable to a small decrease in labour market participation. Statistics NZ reports that labour market conditions are essentially unchanged from the previous quarter. Economic commentators are describing the business climate as "wait-and-see", in the light of the slowing US and Australian economies. Our regular Statistics That Matter summary of the employment statistics is included in this issue. Some highlights:
    — The 5.4%official unemployment rate is the lowest it has been since June 1988. This is a drop of 1% from March last year and a 0.2% improvement on last quarter's figures.
    — The drop means there were 3,000 fewer people registered as unemployed. It doesn't appear that these people necessarily moved into jobs, however, as the number of people in employment has remained the same over the last quarter. The indication is that these people left the "official" workforce.
    — There was a shift to full-time employment with 11,000 more people working full-time and 10,000 fewer people working part-time.
    — Despite the static employment growth this quarter, the number of people in employment grew 2.3% (or by 41,000 new jobs) over the last year.
    — There are now 12.0% Maori unemployed, down from 13.0% last quarter. The Pacific Island rate is down to 11.2% from 11.4%. The European/Pakeha rate went up to 4.2% from 4.0%.
    — Young people 16—19yrs continue to be the worst affected by unemployment with 16.9% out of work.
  • ANZ chief economist Bernard Hodgett predicts that unemployment will remain the same over the coming year. He says that a major factor is the low rate of growth in the working age population which grew by only 22,000 over the last year, well down from the growth of up to 60,000 a year during the 1990s. He says the economy only needs to generate 25,000 jobs per year to satisfy the labour market and hold unemployment at the present rate.
  • The working age population figure is particularly affected by emigration. Emigration from New Zealand is running at a ten-year high with a net loss in the last year of about 20,000 people. Australia remains the prime attraction for migrants — a net 5,000 people left for Australia in the March quarter alone. But National Bank economist Cameron Bagrie says that we may stem this so-called "brain drain" now that NZ's unemployment figures are lower than most OECD countries. He believes that the new policy of limiting NZ'ers eligibility for the dole in Australia will keep more people here, while the bursting of the "international IT bubble" will keep others from chasing high-paying jobs overseas.
    Source — Statistics New Zealand 10 May 2001 Household labour Force Survey; The Dominion 9 May 2001 Job figures could increase rate cut — James Weir; The Dominion 10 May 2001 Wages rise may prevent big cut in interest rate — James Weir; Press Release 10 May 2001 Act Party Time to review measurement of unemployment; NZ Herald 11 May 2001 Jobless rate hits 13-year low — Brian Fallow; The Daily News 11 May 2001 NZ jobless figures may spell end to brain drain to Aussie — Simon Louisson; The Dominion 11 May 2001 Job figures spur call for big rate cut — James Weir; The Dominion 11 May 2001 Unemployment at 13-year low — James Weir; INL Newspapers Website Bay of Plenty 11 May 2001 Unemployment hits 13-year low but job ads drop; Press Release Deutsche Bank 11 May 2001 ANZ job ads — April 2001 — Darren Gibbs;

    Our jobless rate remains lower that most countries in Europe and almost as low as Britain. Across the Tasman, firms have laid off more than 40,000 people in April, pushing up the Australian unemployment rate to 6.8%.

    Meanwhile, American businesses shed 223,000 jobs in April pushing the US unemployment figure up to 4.5%. The "help-supply", or temporary workers, have taken the brunt of the job losses with 108,000 lay-offs. The manufacturing sector also lost 104,000 jobs, but this is only slightly more than the 93,000 jobs per month this sector has been losing since early 1998. The big change is that there has been no increase in jobs in the service sector, which had previously been balancing the losses in manufacturing.

    Job losses in the US information technology sector are severe as many companies continue to announce redundancies. In the last four months, these have included: Cisco 8,000; Compaq 5,000; Dell 4,000; Ericsson 12,000; Hewlett-Packard 3,000; Intel 5,000; JDS Uniphase 5,000; Kodak 3,500; Lucent 16,000; Motorola 22,000; Nortel Networks 5,000; Philips 7,000; and Texas Instruments 2,000.

    Source — The Dominion 7 May 2001 Big US job losses fuel fears of recession — Reuters; The Dominion 23 April 2001 NC axes jobs; The Independent 18 April 2001 Yahoo fires 420; The Independent 18 April 2001 Giant chops jobs; Weekend Herald 21-22 April More profit warnings and cutbacks — Independent; Sunday Star Times 29 April 2001 "IT sector fears slump will worsen" - Liam Dann; NZ Herald 9 May 2001 Dell gets its job axe out again — Reuters; The Daily News 11 May 2001 NZ jobless figures may spell end to brain drain — Simon Louisson;

    " Today we saw the trough in the unemployment rate."
    Stephen Topliss, BNZ Bank economist

    " The figures are consistent with an economy in wait-and-see mode. Growth is happening but it is pretty moderate. Firms are waiting to see how bad the slowdown in the United States and Australia will be, and how commodity prices hold up..."
    Anthony Byett, ASB Bank economist

    "All the signs point to unemployment continuing to reduce over the long term. There is no room for complacency. There have been reductions in unemployment amongst Maori and Pacific peoples but the rate still remains too high.
    " Regional employment growth also remains patchy. The government is right to be focussing on regional economic development to ensure that New Zealanders living in the towns, as well as the cities, benefit from a growing economy and the security of paid employment..."
    Steve Maharey, Minister of Social Services and Employment

    " The Household Labour Force Survey results are becoming increasingly divorced from reality because the survey methodology has not kept up with changing trends. The latest HLFS survey would have us believe there were just 104,000 people unemployed in the March quarter. Yet in March, official government figures show that nearly 143,000 people were on the dole. Clearly this figure makes a nonsense of the HLFS survey result.
    " The HLFS survey was applied here at a time when there was virtually no such thing as inter-generational unemployment. It simply does not measure people who have long ago resigned themselves to not looking for work and languishing on the dole..."
    " The `official' measure has become so disparate with reality that the Australian chief statistician now wants anybody who has worked less than 10 hours in a week recognised as unemployed. Adoption of this here would more than double our rate of unemployment as measured by the HLFS and provide a much truer picture. I believe it is high time our Government Statistician considered supporting this stance."
    Muriel Newman, Act Party Employment Spokesperson

    With the recent cost-of-living rise for beneficiaries, the government has raised the threshold of eligibility for the Community Services Card so that 1,270 superannuitants and 40 beneficiaries will still qualify for the health care subsidies. However, the new thresholds now mean that 48,000 workers who earn less than these beneficiaries are ineligible for the card.

    PM Helen Clark has criticised her Ministers and their departments for not informing her of this anomaly and not mentioning that all beneficiaries qualify for the cards automatically anyway. However, she has since pointed out that no one is worse off and she will not change her mind and include low-income workers in the scheme.

    Community Services Cards were introduced in 1992. They entitle the holder to subsidies for doctors' visits of $15 for adults and $20 for children and subsidised prescriptions. There are approximately one million Community Services Cards in circulation and between 25% and 30% are held by people not on benefits. The eligibility threshold for cards for single beneficiaries is now $19,100 but the threshold for workers is $18,500.

  • The government dismissed opposition claims that low-income workers were being encouraged to quit their jobs, go on the dole and receive subsidised health care. However, it seems the bottom line for this government is that the year's Budget is already over-spent and it is unwilling to put up the $14 million more dollars it would take to include the low-income workers. Minister of Health Annette King considers the Community Services Card a "blunt instrument" for providing low-income earners access to health care and said it would be replaced soon, anyway. "Soon" turns out to be the 2002-03 financial year.
  • Green MP Sue Bradford has called for the immediate scrapping of the Community Services Card. Bradford argues that health care should be provided as a right of citizenship and not just targeted at low-income earners. However, Bradford says her party was unable to convince the government to include the low-income workers in the interim. Bradford: "I'm really upset but the Greens are not about to bring down the government over this issue when the alternative — a National-Act coalition — has a disastrous track record in its treatment of beneficiaries and low income workers."

    "It is unfair and wrong for the government to say to two poor people on exactly the same income that one will get help and one will not, on a totally arbitrary basis."
    Jenny Shipley, National Party Leader

    "The government is sending a signal to 48,000 people who are in work that they'd be better off on a benefit."
    Richard Prebble, Act Party Leader

    "We're not cutting anything out for people who have got something now. What we are not going to do is to lift it to take in a whole lot of other people when we'd rather look at the community service card itself."
    Annette King, Minister of Health

    "Every time a new threshold is set, another group will lose out. The only way to overcome this inherent unequity of targeted benefits is to move to universality."
    Sue Bradford, Green MP

    Source — NZ Herald 27 April 2001 "Clark puts card woes down to bad advice" — Audrey Young; The Daily News 24 April 2001 "Lift in income level for community cards"- Nick Venter; The Dominion 24 April 2001 "New health rules hard on workers"- Nick Venter; NZ Herald 24 April 2001 "Workers miss out on cheap healthcare" by Francesca Mold; NZ Herald 25 April 2001 "Govt won't budge on card users" by Francesca Mold; The Dominion 27 April 2001 "Springing the poverty trap - editorial"; The Dominion 27 April 2001 "Failing to keep the bastards honest" - Chris Trotter; NZ Herald 26 April 2001 "Card increase adds to the poverty trap" - editorial; The Dominion 28 April 2001 "Maharey backs his officials over card gaffe" - Tracy Watkins; NZ Herald 26 April 2001 "Greens seek turnaround on card decision" - Vernon Small; Sunday Star Times 29 April 2001 "National criticises card fiasco" - Kim Newth; NZ Herald 1 May 2001 "PM tells sidekicks to sharpen up" — Francesca Mold; The Dominion 30 April 2001 "Cards fiasco a public relation disaster for the Government " — Nick Venter; Press release NZ government 26 April 2001 "Community Card Changes Only Affect Superannuitants"; Press release National Party 27 April 2001 "Cabinet's cruel card trick"; Press release Green Party 26 April 2001 "Scrapping Community Card Only Way to Equity"; Press release Act Party 27 April 2001 ACT "Will Fight Moves to Abolish Community Card"; Sunday Star Times 6 May 2001 "Clark reluctant to pull the red card over bungle" — Guyon Espiner.

    The amalgamation of Winz and the Ministry of Social Policy has been criticised for its haste, but New Zealand Herald columnist Colin James argues that it is not just an elaborate strategy to dump the present Winz CEO Christine Rankin. He describes the new Ministry of Social Development as the forerunner of a fundamental change to the NZ public service. James: "The merger is being done in the context of a strategy for the state sector as a whole. The move is more remarkable for having been done without — or with minimal — advice from officials. It is major policymaking by amateurs, namely politicians."

    Colin James describes the new Ministry as the "social" equivalent of the Treasury — testing all policy against social criteria the way the Treasury does against fiscal and economic criteria. The new Ministry will also act as a balance to Jim Anderton's Ministry of Economic Development.

    These changes should be seen in the light of the state sector reforms of 1988 which separated policy advice from the government's delivery and regulatory services. This seperation was intended to sharpen managers' focus, provide efficiencies and improve effectiveness. While this was generally considered successful, the side effect is that NZ now has 39 departments operating independently on behalf of their particular goals. What the government is now attempting to do is to get a cohesive body of departments who compliment each other. The new Ministry of Social Development will give the government a clearer view of the actual effects of its policies. The jargon in Wellington describes this as a "whole-of-government" or "joined-up government" approach.

  • The job description for the CEO of the new Ministry is being described as a person who can "…think strategically and analytically about the government's roles in relation to social policies and the delivery of services". This extraordinary individual "must demonstrate the analytical and conceptual skills to lead and advance debate" on social wellbeing, policy responses and auditing social policy generally, and to "lead production of timely, innovative, relevant and intellectually rigorous policy advice integrating the broad range of social policies..."

    Colin James: "It is almost certain that the government will not pay enough to get this intellectual and managerial Hercules. As a useful adjunct, Ms Rankin's capabilities fall far short ..."

    Source — NZ Herald 24 April 2001 "Forget Rankin, superministry is the real story" — Colin James

    A guide to how local authorities can get more involved in economic development activities has been published by Local Government New Zealand. "Unleashing the Economic Development Potential of our Communities" is specifically aimed at elected representatives and staff at local government level, and it argues for councils being more involved in economic development activities. The guide has been written by Mark Goodchild, Sarah Russell and Kel Sanderson of Business & Economic Research Ltd (BERL).

    In the guide, Dunedin Mayor Sukhi Turner (who is chair of the Economic Development Working Party) describes an "explosion of interest" by central government over the past year in the concepts of local economic development. She says that this has, in turn, inspired many of local authorities to review their efforts, or, if the council's active involvement was negligible, to now get involved.

    Turner: "It is our job as the leaders of our communities to be pro-active and acknowledge our essential role in the local economic development process. There is more to economic development than just understanding, or being aware of the principles. It is also about putting these principles into action and about our councils committing resources for the long-term to develop sound strategies and effective initiatives. The regional statistics show that many parts of the country are still very undeveloped and that our national economy is much poorer for this. This shows there is still a lot of work for us all to do to grow our local economies..."

    edguide.gif - 3402 Bytes
    — The Guidebook can be downloaded from the Local Government New Zealand website at

    the full report.

    41pg PDF

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