Essential Information on an Essential Issue
20 August, 2001
Our regular Statistics That Matter feature based on the Household Labour Force Survey figures for the June 2001 Quarter
- STATISTICS COMMENTARY
New Zealand unemployment continues to drop and the number of people working has increased. The official unemployment rate is now at 5.2%. This is the lowest rate since March 1988 and an improvement on the 6.1% recorded at this time last year. There are also 16,000 more people working this quarter than last, and 57,000 more people in jobs now than there were in June last year. Both the decreasing unemployment and increasing employment figures favour women workers, although most of the new jobs were part-time. There are now about 100,000 people officially unemployed in NZ. This is some 3,000 fewer unemployed than last quarter and 14,000 fewer than this time last year. Statistics NZ estimates there are now 1,820,000 people employed in NZ.
- Our regular Statistics That Matter summary of the employment statistics is included in this issue. Some highlights:
Unemployment has decreased again this last quarter and is now 12.3% lower than it was this time last year.
Employment has grown this quarter and is now 3.2% higher than at this time last year.
Of the 16,000 jobs created this quarter 14,000 of these were part-time.
The overall labour force participation rate has increased by 1% during the last twelve months.
The unemployment rate for Pacific peoples has dropped to 9.1% from 11.2% last quarter. The quarterly unemployment rates for both Maori and European/Pakeha dropped slightly to 11.9% and 4% respectively.
There are 3,000 fewer women registered as unemployed this quarter. And of the 16,000 new jobs created last quarter, women took 14,000 of them. Over the full year, women have been employed in two-thirds of all the new jobs.
The number of underemployed people, that is workers who are employed part-time but say they would prefer to work more hours, remained about the same at 106,200.
Longer-term unemployment (over 2 years) is down to 6,800 people.
The regions with the highest and lowest rates of unemployment are the same ones as last quarter. Bay of Plenty (7.6%) and Northland (6.6%) recorded the highest rates although these figures for both districts have reduced since last quarter. The lowest rates of unemployment were in Nelson/Tasman/West Coast/Marlborough (2.5%) and Wellington and Southland (3.2%).
- The financial markets were taken by surprise by the strongest growth in job numbers in five years. Brian Fallow of the New Zealand Herald said that the 0.9% employment growth was three times what the market had been expecting. Most economists are not making a decisive call on how the current slump in international economic growth will effect NZ next year. Fallow says that NZ exports are 20% higher now than they were last year but points out that the average economic growth of our top 14 trading partners is only half of what it was last year. One encouraging sign is that while our unemployment rate is among the lowest in the OECD, the unemployment rates of Britain, the US, Japan and Australia (those countries in the 4% to 6% range) are trending upwards while the NZ unemployment rate has been trending down.
Source – Statistics NZ Household Labour Force Survey June 2001 quarter; Deutsche Bank press release 9 August 2001 "Household labour force survey (Q2 2001)” by Darren Gibbs; HSBC press release 9 August 2001 "Q2 labour force survey strong as they come” by Grant Fitzner; NZ Government press release 9 August 2001 "Maharey welcomes reduction in unemployment rate”; New Zealand Herald 10 August 2001 "Job rise beats predictions” by Brian Fallow; The Dominion 10 August 2001 "Jobless figures lowest for 13 years” by Nick Venter; Council of Trade Unions press release 9 August 2001 “Fall in unemployment is good news – CTU”; The Daily News 10 August 2001 “Job advertisements soar to record high” by NZPA; The Daily News 10 August 2001”Jobless fall puts Aussie to shame” by Nick Venter
- Australia, NZ’s biggest trading partner, has lost a record number of full-time jobs in July. The latest figures reflect an Australian trend away from full-time and towards part-time jobs. Over the last six months, Australia has lost 117,000 full-time jobs while gaining 122,000 part-time jobs. John Burgess of the University of Newcastle says the huge fall in full-time jobs highlighted a worrying long-term trend. He says that much of the employment growth in Australia over the last decade had been in sectors favouring part-time and casual work while increased outsourcing and contracting had discouraged full-time employment. The overall loss of 12,600 jobs in July left the unemployment rate unchanged at 6.9%, indicating a decline in the number of people looking for work.
The Melbourne Age 10 August 2001 “Record slump in full-time jobs” by Josh Gordon; New Zealand Herald 10 August 2001 “Record 79,000 jobs lost in July” Reuters;
- TOWARDS AN INCLUSIVE ECONOMY
A paper released at the end of last month outlines Treasury advice to government on how to keep the economy on track while including an increasing number of people in any economic advance. Towards an Inclusive Economy is Treasury’s first major policy document for this government. While it says it was not its purpose to develop detailed policy recommendations, the paper does provide specific views on how Treasury believes the government can reconcile those things that are often seen as competing elements: economic growth and social equity. Vernon Small, of the New Zealand Herald, says Towards an Inclusive Economy is being touted as “a sea change from Treasury’s tinder-dry, efficiency-driven approach of the last two decades.”
One shift in culture the report makes is its departure from the prevailing economic theory about the sustainable rate of unemployment. During the last two decades, it had become a “fact” that 6% to 6.5% unemployment was necessary in order to keep inflation low and the economy growing. This Treasury paper says that recent international examples demonstrate that countries with 4% to 5% unemployment are not suffering inflationary pressures or loss of productivity because of their tighter labour markets. Treasury now says there is evidence that lowering the unemployment rate by drawing more people into the workforce from the low-skilled end of the labour market may actually be beneficial to economic growth.
Following this same vein, the paper encourages government to concentrate on raising the skills level of people at the bottom end of the income scale as a more effective way of addressing poverty than trying to redistribute wealth through taxation or other regulations. It says that raising the achievement level of people in the two lowest deciles, will have the biggest effect on improving incomes which in turn improves health, reduces crime, lifts disadvantaged communities, increases trust and increases community and political involvement.
- Some of the key points made in The Treasury paper:
The well-being of NZ’ers is vitally linked to the country’s ability to achieve and sustain a steady growth rate and a rising level of income per person.
Educational achievement is related to people’s earning capacity. One extra year of education is associated with 5% to 15% increase in an individual’s earnings.
The cost of unemployment is much greater than the personal loss of income to individuals and to their communities. Job loss and unemployment have direct, negative impact on mental health and is clearly associated with increases in drug and alcohol abuse, crime and teenage motherhood.
Policies and programmes should target the long-term unemployed. Incorporating the long-term unemployed into the workforce will reduce the “sustainable” unemployment rate and does not risk raising inflation.
Providing subsidies directly to people in disadvantaged groups, more so than to their employers, may be a better way of encouraging people to take up jobs where low wages are the major barrier to moving off a benefit. This may be especially effective for solo parents, so long as child-care and transportation costs barriers are addressed as well.
Benefit administration should be more rigorously applied. NZ administers its work test requirements and sanctions more gently than other countries and the tougher approach is more effective. People should be required to take up jobs even though the job, or its location, may not a person’s ideal.
The primary focus of Winz should be on getting beneficiaries into jobs rather than training. Overseas programmes have found that work, not training, is the more efficient way to get and keep people off benefits. Providing training opportunities while people are already in work is a more effective way of helping them keep the job they have and to move on to more skilled positions.
The larger cities, and Auckland in particular, are a critical force in NZ’s long-term economic development. Subsidies should be made available for individuals who are willing to shift from places of high unemployment to cities where there are jobs. Downsides to this are the further depletion of the regions as these people leave and the creation of ghetto neighbourhoods in the cities where they arrive.
Towards an Inclusive Economy
by Treasury Working Group
( 88 pg, published by New Zealand Government 2001)
available from NZ Treasury at www.treasury.govt.nz/
download full document
PDF file (88 pg, 335 KB)
Source – Towards an Inclusive Economy July 2001 by The Treasury; Sunday Star Times 29-30 July 2001 “Pay people to move to larger cities says Treasury report” by Nicholas Maling and Ruth Laugesen; The Dominion 1 August 2001 “Plan to pay beneficiaries who get jobs” by Tracy Watkins; New Zealand Herald 1 August 2001 “Treasury calls for action to reduce widening income gap” by Brian Fallow; The Dominion 2 August 2001 “A jarring note in the poetry of life” by Rosemary McLeod; Weekend Herald 4-5 August 2001 “Tina proving hard t leave behind” by Brian Fallow
- CLOSING THE GAPS FINISHED
It came as news to the Maori Affairs select committee that the quarterly Closing the Gaps monitoring reports had stopped being produced by government departments. Closing the Gaps was a high profile Labour Party campaign slogan that was a call-to-arms to rectify the perceived economic and social disparities between Maori and Pakeha. In launching Closing the Gaps in January 2000, Prime Minister Helen Clark said that she would chair the Closing the Gaps Cabinet committee and that public service chief executives would have their pay docked if they failed in their responsibilities to close the gaps. Initially all 39 government departments furnished quarterly reports on the 70 Closing the Gaps policies, but a spokesman for the Prime Minister now says the reports were “a bit of a waste of time”. The Prime Minister’s Gaps committee has now been subsumed into the social equity committee chaired by Steve Maharey. The new reporting arrangement, according to The Dominion reporter Jonathan Milne, only requires a summary table setting out progress on initiatives by the five key social service agencies. Milne also says that these contain no performance or accountability information.
Source – The Daily News 8 August 2001 “Govt U-turn on monitoring” by Jonathan Milne; New Zealand Herald 8 August 2001 ‘Gaps’ monitoring changed; The Dominion 9 August 2001 “Closing the Gaps reports dropped” by Jonathan Milne; The Daily News 10 August 2001 “Horomia admits gap in monitoring funds” by Jonathan Milne; The Dominion 11 August 2001 “Horomia puts the record straight on Gaps reports”
- SIMCOCK’S SPEECH REVISITED
In his speech to the National Party Conference last month, the party’s Social Welfare spokesman Bob Simcock did not directly say he would “bring the hassle back for teenage mothers” as reported in the last issue of The Jobs Letter. Nor were comments made by researcher Helen Wilson dispelling stereotypes of people on the Domestic Purposes Benefit published in direct response to Simcock’s speech. Bob Simcock writes to The Jobs Letter: “At no point in my speech did I even refer to the DPB, or to hassling teenage mothers.” Simcock says that his speech was “an argument in favour of getting all New Zealanders into the jobs they need”.
The speech did contain themes on teenage motherhood as well as his view that “... we have to be honest enough to say that some life choices are dumb and need to be discouraged.” He stated that, “For people who are stuck on welfare, for people who are poorly motivated, for people who have other sources of income, and for people who are just too comfortable on the benefit, National will be bringing the hassle back.” Many media reports at the time took this to be a clear signal that the National Party would get tough on the DPB.
Sources — Letter to the Editor of The Jobs Letter by Bob Simcock 4 August 2001, and Bob Simcock Speech to the National Party Conference 20 July 2001
- WINZ LOSES OVER LACK OF ENTITLEMENT DISCLOSURE
Winz has lost a High Court appeal that, had it won, would have put the onus on people to find out for themselves exactly what they were entitled to before applying for a benefit. Winz had appealed against a Social Security Appeal Authority decision that had ruled that Winz should pay six years of arrears to a beneficiary who qualified for a special benefit but had not known about it at the time and therefore had not applied for it. When she found out about her entitlement and applied for it in writing, Winz said that it could only be enacted from that date, not retroactively. But High Court justice Doogue ruled that the department should have made the woman aware of her entitlement from when she applied for an accommodation benefit and that people should not have to seek independent advice in order to obtain their full entitlement. Doogue: “The so-called policy reasons put forward on behalf of the chief executive in support of an argument for formality of applications wither away entirely when the circumstances of the case are looked at.”
Source – The Dominion 4 August 2001 “High Court dismisses Work and Income appeal”; The Dominion 6 August 2001 “Court ruling in line with Maharey directive” by Leah Haines
- ON THE STATISTICS
"Around two-thirds of the reduction in the level of unemployment over the past year has been met by a reduction in those persons classed as long-term unemployed (unemployed for 6 months or longer). This suggests that the structural rate of unemployment is likely to have fallen over the past year..."
Darren Gibbs, senior economist Deutsche Bank NZ
"Along with last week’s lift in wage growth and yesterday’s solid Q2 (second quarter) retail sales, it seems clear that – at least for now – the New Zealand economy is looking decidedly perky"
Grant Fitzner, senior economist HSBC
"There’s now every reason to think that New Zealand’s unemployment rate will fall below 5% over the next couple of quarters."
Bernard Hodgetts, chief economist ANZ
"The gains in employment have, in the main been shared across regions, age groups and ethnic communities. However, while I welcome the reduction in the unemployment rate for Maori and Pacific peoples, the reduction is not a statistically significant one. More remains to be done to ensure that all members of our society participate in the benefits of a growing economy.
In summary, this is good news – but it is good news because there is every sign that the rate of improvement in the labour market is a sustainable one, and that we have a balance between labour market demand and supply."
Steve Maharey, Minister of Social Services and Employment
"It is good news to see unemployment falling and wages gradually rising in the context of economic growth. However, there is no room for complacency with 100,000 New Zealanders officially unemployed, another 106,200 seeking more hours of work and a total number of jobless of over 170,000."
Peter Conway, Council of Trade Unions economist
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