 No.162 15 March 2002
BACK
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“ Unemployment today is less about why you lost your last job and more about why you did not get a new one. ”
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We Should Try for Full Employment
The Household Labour Force Survey for the December quarter of last year shows
that employment growth remains strong despite the sluggish world economy and the events of
September 11th. Employment increased by 16,000 over the quarter and 41,000 over the year.
This is positive news and raises the question of how large the labour market might grow. Could we achieve full employment, defined by William Beveridge as "a state of affairs in which the number of unfilled vacancies is not appreciably below the number of unemployed persons, so that unemployment at any one time is due to the normal lag between a person losing one job and finding another"?
The answer is that we should try. The maintenance of high and stable levels of employment should be a government responsibility. However, no one should pretend that achieving this goal is straightforward or just a matter of repeating old policies.
• Full employment in a modern economy can only be achieved if it is recognized that the world of work has changed fundamentally for men and women. In the 1950s, full employment involved full time, life-long employment for men. Today it means men and women changing jobs frequently, part-time as well as full-time work, self employment, time out caring for children or parents and periods in education.
A full employment policy must ensure a steady supply of new (and better) jobs that fit the needs of the modern labour market. And it has to ensure that people remain employable. Job security can't be guaranteed, but the opportunity to be employed can be. Unemployment today is less about why you lost your last job and more about why you did not get a new one.
• The coalition government's employment policies begin with a commitment to growth. It is sometimes argued that growth does not lead to more jobs. This is wrong. Without a growing economy the conditions for employment, investment and innovation do not exist.
In the context of a globalising economy, growth can only be maintained if New Zealand is able to work at the international level to create a stable climate for finance and trade. That is why we must lobby for nations to agree on a new economic order and why we need to enter such agreements as that recently signed with Singapore.
At home the aim over the last two years has been to shift from a consumption led to an investment led economy. Growing regional economies have been a sign of this strategy and the newly announced innovation framework is an effort to bring together policies needed to improve our productive base.
• While greater productivity is essential, it does not in itself guarantee a growing number of jobs. In fact the experience of other nations is that higher productivity can go hand in hand with fewer jobs as firms seek to become more competitive. The French, for example, found that jobless growth was a reality.
The answer to the possible conflict between productivity and employment lies in ensuring we transmit the wealth earned in the tradeable sector of our economy into other areas. For example, through infrastructure development (including housing and education), personal services (like health care) and leisure services. These areas are job rich because, for the most part, the work cannot be done off-shore and people, not technology, fill the jobs.
The non-tradeable sector of our economy offers the possibility of work for all New Zealanders, but there is still the need to distribute opportunities fairly. A quick look at the Household Labour Force Survey reveals that unemployment is higher among such groups as Maori, Pacific Island peoples, young people and mature workers. Only a commitment to policies that promote job opportunities for those who are currently last in line will solve this problem.
• Policies being put in place by the government include six main areas of action:
— First, Work and Income has been focused on employment and re-employment. The service has been regionalized and managers have been required to link their activities to local economic and employment plans.
— Second, investment in training is central to the government's strategy. Funding has been lifted substantially, new legislation impacting on training is before parliament, and programmes such as Modern Apprenticeships have been introduced.
— Third, an emphasis on entrepreneurship and micro-business is being developed through new programmes as diverse as Community Employment Organisations, social entrepreneurs and the work of the new Incubator Development Unit within Industry New Zealand. The aim is to create an environment where people create new opportunities for themselves and others.
— Fourth, policies are being implemented which make work a practical option for people who have to juggle family responsibilities. Legislation related to Domestic Purposes Beneficiaries and Widows is currently before Parliament and this will be supported by policies to support sole parents make the transition to work. For example, more funding will be made available for child care.
— Fifth, it is essential to build a bridge into work. The Tairawhiti Forestry project focuses on getting young people the skills they need to work in the forest. New pilot programmes that will assist people with an illness or a disability to return to the workforce are being piloted. Wage subsidies are being used in increasingly imaginative ways to open up job options.
— These policies will help distribute opportunities to get work. Alongside them we need an effort to deal directly with discrimination. It is, for example, no use having an immigration policy if the skills of new migrants are not put to good use. As our economy internationalises it will be an advantage for us to have a diverse workforce that can relate directly to our markets.
• A final point is that achieving full employment is not enough. New Zealanders need jobs that pay living wages and conditions of work that equal the best in the world. If this does not happen New Zealand will not be attractive to those all important skilled employees.
For this reason that advances in the minimum wage, the new Employment Relations Act with its focus on good faith bargaining and higher standards of workplace safety are essential.
An innovative high quality economy is not one that encourages employers to compete over wages and conditions. Instead there needs to be a careful balance of cooperation and competition between firms that places the emphasis squarely on being the best.
Source — Steve Maharey "Third Way" column in National Business Review 15 February 2002.
Young People and Today's Labour Market
When we look from the vantage point of the labour market back at the population of our young people what do we see?
We see that approximately 20% of all 15-19s have very low or no qualifications and there is a marked ethnic dimension to the problem: in 2000, 35% of Maori left school with no/low qualifications, compared to 26% of Pacific Island students and 14% of Pakeha/Europeans.
Census data show that, in 1996, more than a quarter of all 16 year olds (around 14,000) were outside education and full-time employment. Remarkably, only 5% of 16 year olds were in full-time paid work. For Maori 16 year olds, the data show that more than a third (3,700) were outside education and full-time employment.
Of all 17 year olds, a quarter (12,700) were outside education and full-time employment. Just 14% of 17 year olds were in full-time employment. For Maori 17 year olds, just under a third (3,200) were outside education and full-time work.
Even allowing for the likelihood that some part-time employment will lead to full-time jobs over time, these data indicate that a quarter of all 16 and 17 year olds (26,700 young people), including a third of Maori 16 and 17 year olds (6,900 young people) were outside education and full-time employment, and arguably, at risk of failing to make a successful transition from school to adult life. They are the group most likely to have no school qualifications and no prospects of improving their circumstances without sustained intervention.
• It is evident that the labour market cannot readily absorb the present volume of low skilled school leavers. Relatively few 16 and 17 year olds can realistically expect to leave school and get a full-time job. Some of them might be lucky enough to get a job with a formal industry training agreement and Modern Apprenticeships will create more opportunities over time. But, even with the growth in prestige pathways like Modern Apprenticeships, too many may be left behind.
However, significant numbers of low-qualified young school leavers will continue to be consigned to the margins of the labour market and may need income support and other forms of social assistance for extended periods. The marginalisation of these individuals and ultimately, their social exclusion will be the outcome unless concerted preventive action is taken.
• Many of these currently unqualified and unskilled young people would have the capacity to undertake higher skilled and hence more productive work if they had the appropriate learning opportunities. While many of those who leave school at the earliest opportunity later attempt to undertake further education, their lack of school qualifications may become a significant barrier to accessing tertiary education.
While senior school is appropriate for many students, who generally should be encouraged to stay on at school and try to improve their qualifications, there is a significant group who require an alternative learning environment in order to succeed. Moreover, there is a marked ethnic dimension to this with Maori students particularly over-represented. In recent years, the need for alternative education approaches has been recognised by schools and in education policy and a number of initiatives have been developed.
• Gateway is now being piloted in 24 decile 1-5 schools in 2001. It aims to integrate learning in senior school with formal workplace learning and may lead on to Modern Apprenticeships for some participants. Gateway is intended to provide a wider spectrum of learning opportunities for a broad range of school students.
Currently, Gateway caters for 1,000 students. An interim process evaluation of the pilots is shortly to be released. I have seen a draft of that evaluation and it indicates a high level of success, and a very positive endorsement from students, from schools, and from employers. It is, in essence, a very effective partnership initiative.
I firmly believe that we need far more coordination and consistency of approach than we have seen to date _ that is why I am so keen on formal relationships between schools and businesses like Gateway. That is why I believe that schools should be consulting with Industry Training Organisations and with tertiary education and training providers to ensure that what is taught in schools (for example through STAR funded unit standards) articulates with other learning and employment opportunities.
