|No.178||24 January 2003||Essential Information on an Essential Issue|
of key events over the last few weeks.
MINIMUM WAGE AND APPRENTICESHIPS
BUSH TO CONTRACT OUT GOVERNMENT JOBS
Index to Features
11 December 2002
BERL forecasts NZ’s annual employment growth will be 50,000 to 60,000 new jobs per year through to 2005.
If all the Auckland police officers currently taking leave without pay came back to work, there would be no police staffing crisis in Auckland, according to the NZ Herald. Unpaid leave figures for police are twice as high in the Auckland area as they are in the rest of the country.
A Code of ACC Claimants’ Rights will come into effect in February 2003. Minister of ACC Ruth Dyson says the code was designed to restore public confidence in the Accident Compensation Corporation.
France Telecom plans to cut 22,000 jobs. The US unemployment rate rises to 6%. The country has lost 1.5 million jobs in the two years George W Bush has been president.
12 December 2002
Beneficiary advocate Ian Ritchie resigns from the Palmerston North District Council Low-Income Sub-Committee. Ritchie says that previous support for his Poverty Action Group had been replaced “in most cases by active opposition”.
Treasury figures show the government has a positive operating balance of over $900 million. Minister of Finance Michael Cullen cautions that the current surplus is nothing to get excited about and does not indicate the government will go on a spending spree.
Australian unemployment rises to 6.1%.
13 December 2002
The deadline has been extended for another three months for people seeking back-pay or debt-wiping due to Winz incorrectly identifying them as being in a relationship in the nature of marriage between 1996 and 2000.
The US and Chile are poised to sign an agreement that abolishes all import tariffs. Chile has similar agreements with the EU, Canada, Mexico and South Korea.
16 December 2002
The Poverty Indicator Report says that as many as 90% of the people who use foodbanks are in debt, most often to Winz.
17 December 2002
Growth forecasts: Wespac Bank predicts the NZ economy will grow by 3% over 2003. The BNZ says the figure will be 2.8%. BERL forecasts 3.5% to 4%.
Nearly half of full-time Australian workers are doing unpaid overtime according to an Australian survey. On average, those doing overtime say they are putting in one extra day of work each week.
18 December 2002
In the UK, tax and pension rules that discourage people from working after they turn 65 years old are being scrapped. Faced with unaffordable pension obligations, the British government is altering legislation with the intention of encouraging people to augment their pension income by continuing to do paid work.
19 December 2002
The minimum wage is to rise from $8 to $8.50/hr for adults and from $6.40 to $6.80/hr for young workers.
Treasury predicts the unemployment rate to be 5.3% during 2003/04. It also forecasts the government will achieve financial surpluses for the next several years.
Minister of Finance Michael Cullen indicates that tax cuts may be made for low and middle-income families. However, he says any tax cuts would not be made before the 2004 budget and they would have to be preceeded by consistent government surpluses.
Demand for skilled labour in Australia is 7.7% higher than it was at this time last year, according to the Australian Department of Employment.
The World Bank warns that there is a significant risk that the global economy is sliding into recession.
20 December 2002
The NZ GDP figures for the September quarter indicate there has been 3.9% increase in economic activity in NZ over the last year.
25 December 2002
27 December 2002
Brenda Archer of the Public Health Association argues that Family Support and the Child Tax Credit should be updated and adjusted for inflation. Archer: “We inflation adjust state pensions for people over 65 years of age, why don’t we apply the same rules to children?”
The first grants under the Industry Cluster Development Programme are announced. Industry NZ is partly funding industry grouping to engage facilitators in the following areas: kumera growing; wood processing in Northland; boat building Northland; film production attraction in Auckland; fashion design; organic agriculture in Waitakere/Rodney; computer technologies for the diabled, aged and educational markets; agricultural biotechnology in Waikato; timber processing and furniture manufacturing on the East Coast; wool growers of the Central North Island; value-added timber product exports in the Hawke’s Bay; oil and gas technologies in Taranaki; textile, apparel, carpet and footwear companies in Kapiti/Horophenua; a centre of design-led engineering in Wellington; seafood industries in Nelson Marlborough; small software companies in Canterbury; the export of functional foods from Aoraki/South Canterbury; bio-technology Otago; forest growing and wood processing in Otago/Southland; and to develop international leadership for the sustainable use of natural resources in Canterbury.
1 January 2003
New Years Day
2 January 2003
Central Otago orchardists are having difficulty finding reliable staff to pick and process their harvests, according to Anne Hanning of the Central Employment Trust.
6 January 2003
Australian job ads dropped 13.7% between November and December and are at the lowest point in six years. ANZ Bank chief economist Saul Eslake says the slump points toward a significant slowing in job growth in Australia during the first few months of 2003.
7 January 2003
China is phasing out guaranteed lifetime-employment for its 30 million public servants. In a huge change to Chinese employment policy, the 1.3 million state-owned institutions are to draw-up employment contracts for all workers.
8 January 2003
Australian phone company Telstra may cut another 1,000 jobs from its NDC engineering and maintenance division. Telstra has shed 40,000 jobs over the past six years.
AT&T, America’s largest toll-carrying telephone company cuts about 3,500 jobs.
The combined unemployment rate in the EU remains at 8.4%.
10 January 2003
90 United Airlines staff will lose their jobs as the airline announces it is ending its New Zealand service in March.
12 January 2003
Taupo has a chronic shortage of cleaners. Glenda Reid of the Taupo Accommodation Association says every motel in town is struggling with worker shortages.
14 January 2003
Pipfruit orchardists in the Nelson region are concerned they will not have enough workers to harvest their bumper crop. There are about 1,700 registered unemployed people in the Nelson-Tasman region, about one-third of the number of staff that orchardists need.
The NZ economy imported $987 million more in goods and services than it exported in the year to November.
15 January 2003
ACT MP Muriel Newman accuses the government of failing the long-term unemployed. Newman says there are now 6,166 people who have been unemployed for over ten-years, an increase of 10% since Labour has been in government.
Minister of Employment Steve Maharey explains the rise in the number of long-term unemployed by saying that half of the people had not been unemployed for ten years but had been on non-work tested benefits such as the domestic purposes or sickness benefits. Maharey reports that 92% the long-term unemployed are currently involved in some activity designed to support their return to the paid workforce.
16 January 2003
Sealord, NZ’s largest fishing company appears unlikely to keep its promise of creating 700 jobs within five years. The new jobs were part of a promise Sealord made to government to gain approval for the sale of 50% of the company to Japanese seafood company Nissui. Two years on, Sealord has created only 150 jobs.
A drop in numbers on the unemployment register in the Hawkes Bay has the region’s Fruitgrowers Association concerned about labour shortages for the upcoming harvest. The association has appealed to the Minister of Immigration to allow foreigners on visitors visas to legally work in the region’s horticultural industry, a concession that was granted last year.
17 January 2003
188 previously unemployed Northlanders have been placed locally in seasonal fruit harvesting work, according to Winz Northland.
The Australia rises unemployment rate from 6.1%to 6.2%.
GLOBAL TRADE IN SERVICES — THE LOCAL IMPLICATIONS
The General Agreement on Trade in Services (GATS) is an agreement which seeks to open up the “services” market of every World Trade Organisation (WTO) member. In doing so, the agreement limits what national or local governments can do in a particular service sector.
The GATS rules apply to 160 service sectors, many of which are the responsibility of local government. Examples affect local government powers to give preference to local employment, buy locally made goods or favour local suppliers and regulate services such as waste disposal, building control, water supply, roading and transport.
Many other essential social services are also covered by the GATS agreement — including education, health, electricity supply, telephones, prisons, postal services, and banking. There are widespread concerns that the agreement will over-ride any national or local regulation that is deemed to obstruct trans-national providers of these services.
The Christchurch City Council says it is wrong that local government has not had a chance to influence the talks and how they are being approached. It believes local services and rules about essential services should be made locally and that the government must exclude all public services from any GATS agreement.
The Christchurch Council wants the government to slow down and take another look at the way World Trade Organisation (WTO) deals have been working so far. It also wants the Government to try to make sure the WTO has no ability to overturn New Zealand laws and practices that protect health, the environment, development and human rights.
— A report on the implication of GATS written for the Christchurch City Council by Social and Economic Policy Analyst Mary Richardson can be downloaded (PDF document, 9pg, 61kb) from here
Christchurch Councillor Alister James, chairman of the Council’s Strategy and Finance Committee, says that as new sectors are added to the GATS agreement, the government can limit the amount of access overseas providers have. James: “But all limits and exceptions must be set when a country initially offers a sector. After that, you can only get new limits if you negotiate compensation with all the countries which have a right to enter that market. That would be virtually impossible, so you can see it’s really important to get it right before a sector becomes part of the GATS system.”
North Shore City Strategy and Finance Committee Chairperson Tony Holman says the council is “far from impressed” with the lack of government consultation so far. Holman: “GATS is anti-social, anti-environmental and anti-triple bottom line, not to mention anti-local enterprise, ownership and sovereignty. We don't need to look too far to see the folly of many free-market experiments in our community...”
Local Government NZ: “It is inconceivable that local regulations, adopted and applied in a transparent and objective manner should be subject to international agreements that might have the effect of thwarting the decisions of communities about how they wish their town or city to develop...”
LGNZ’s concerns were sparked when a sister organisation in Canada, the Federation of Canadian Municipalities (FCM), said that it had legal advice which suggests that GATS may constrain municipal regulatory powers and delivery of public services, particularly where public-private partnerships, contracting out, or other commercial elements are involved. The legal advice also suggested that the agreement’s “transparency” objective may also require delay and effort in order to justify local authority regulatory decisions.
All Australian opposition parties, Australian Labour Party, Democrats and Greens now have policies critical of GATS, and have called for a Senate inquiry into GATS and for the details in the agreement negotiations to be made public.
Source – Christchurch City Council Press release 13 December 2002 “Chch City Council concerned about global Trade in Services deal”; Press Release 13 December 2002 “Arena applauds growing resistance to GATS by local government”; Local Government NZ briefing paper to Minister of Foreign Affairs and Trade, Phil Goff (August 2002) “The General Agreement on Trades and Services”;
KELSEY TO LAUNCH REPORT
Professor Kelsey is author of a series of books about New Zealand’s experience of globalization, including the best-selling “The NZ Experiment”. She is a trustee of the free trade watch-dog group Arena (Action, Research and Education Network of Aotearoa) which argues that the GATS agreement will lock-open New Zealand’s services to foreign transnational companies.
Kelsey: “ Unsurprisingly, corporations have been the driving force behind this agreement. The service industry is big business and heavily dominated by multinationals based in rich countries. These companies want to operate freely within every country of the world. But many services sectors are still owned and regulated by governments. Opening up the trade in services will provide a bonanza for those businesses.”
“ The GATS agenda threatens affordable access to basic services. It is linked directly with the new fashion to promote public private partnerships (PPP) for essential services. If multinationals are seeking to make a profit out of water, health and education, people without purchasing power are likely to lose out. Recent water privatisation in Puerto Rico has meant that poor communities have gone without water while US military bases and tourist resorts enjoy an unlimited supply. A system governed by people’s ability to pay will not bring desperately needed services to the world’s poorest people...”
— “Serving Whose Interests?” by Jane Kelsey, available from Arena, P.O.Box 2430, Christchurch ($20 per copy) or can be downloaded from the Arena website at www.arena.org.nz
Source – Arena newsletter Spring 2002; Press Release from Arena 21 January 2003; Jane Kelsey paper “GATS —- What’s a Global Agreement on Services Got to do with Local Government in NZ?”
DETAILS OF “REQUESTS” TO NZ LEAKED
Running to over 1000 pages, the leaked documents represent a wish-list of the rules and regulations that EU corporations want eliminated to ease their entry into service markets worldwide. The document asks that the 29 countries open up their postal services, water supplies, finance and banking, electricity generation and supply and telecommunications services to European transnational companies. The EU also wants all these countries to lower or abandon their vetting of foreign investments in all services sectors.
According to these papers, the EU's specific “requests” of New Zealand include:
— removing the right to prefer local purchasers in any future privatisations, such as NZ Post, TVNZ, Kiwibank or universities;
— not giving preference to New Zealanders engaged in research and development work in natural sciences, social sciences and humanities and interdisciplinary areas, including rights to government subsidies;
— no limits on security operators, such as private prison companies, in establishing their businesses, buying land or having full control of such activities;
— committing postal and courier services to full, private international competition and ownership
— removing the limit on any single overseas company owning more than 49.9% of Telecom
— no restrictions on foreign ownership or access to contracts for water collection, purification or distribution, waste water, refuse disposal, sanitation
— no preference for local owners or providers of maritime transport and port services, rail transport maintenance, air transport sales and marketing and ground handling.
MIMINUM WAGE AND YOUNG PEOPLE
The new legislation also removes the exemption of employers having to pay the minimum wage to employees who take 60 or more credits of training per year. This exemption also included apprentices.
Knowles also says that increasing the pay rate for unskilled people reduces their incentive to up-skill themselves. She claims that research shows that every increase in the minimum wage is accompanied by a drop in employment, and that the situation is compounded for young people, who are most likely to be unskilled and most afflicted by unemployment.
Federated Farmers also cautions the government that raising the minimum wage is no substitute for growing the skills base of young NZ’ers. Vice-president Charlie Pedersen says the government needs to focus on the skill shortages of young NZ’ers entering rural industries. He says Federated Farmers would never support employees being underpaid but there needs to be a stepping-stone into rural industries that encourages employers to carry the risk of employing and training staff. Pedersen says farmers are crying out for skilled young workers and that no amount of tinkering with the minimum wage is going to help that.
Sources — New Zealand Herald 19 December 2002 “Minimum wage increases, Govt ratifies bargaining convention”; Scoop press lease by New Zealand Council of Trade Unions $8.50 minimum wage welcome, but still too low; Scoop press lease by Business NZ 19 December 2002 “Minimum wage change hurts employees; New Zealand Herald 18 December 2002 “Business attacks wage bill” by Keith Taylor; Scoop press lease by Federated Farmers 20 December 2002 “FFNZ: government must focus on skill shortage”
The number of people training to be teachers has risen but the newly qualified candidates are only beginning to come through. McCutcheon points out that although teaching training numbers are up, many teachers do not stay in the profession. 30% of the new teachers hired in 1999 had quit by 2001.
Sources — New Zealand Herald 15 January 2003 “Not enough teachers at the chalkface” by Jo-Marie Brown; The Daily News 15 January 2003 “Nats blame Govt over teacher shortage” NZPA
NATIONAL TOUR ON UNIVERSAL INCOME PROPOSAL
The tour of free public workshops, demonstrations and displays will visit Christchurch, Dunedin, West Coast, Wellington, Taupo, Tauranga, Hamilton, Manukau City, Auckland Central, Hawkes Bay and Palmerston North throughout February and March. The presenter is Patrick Danahey, a researcher and author from Nelson. For more information, visit the Universal Income Trust website at www.geocities.com/caeruit or contact Patrick Danahey at email email@example.com
Source – email from Sarah Ayre of UIT 16 January 2003
UNITED NATIONS KEEPS FOCUS ON YOUTH EMPLOYMENT
To this end, the UN Secretary-General Kofi Annan has joined with the heads of the World Bank and the International Labour Organisation (ILO) to bring together a high-level panel of 12 eminent people drawn from private industry, civil society and economic policy. Last week, this expert group met in Geneva, Switzerland, to continue their work to develop and promote national strategies for creating jobs for young people.
In a background paper prepared for last week’s group meeting, the expert panel points out that employment creation policies have often been neglected in favour of macroeconomic policies aimed at stabilisation, fiscal prudence and budgetary balance. The panel doesn’t disagree that sustainable, long-term economic growth is the best way to create employment ... but it points out that “improved economic growth in and of itself is often not enough, particularly when special groups such as youth are concerned.”
The panel recommends that added attention needs to be paid to increasing the employment intensity of economic growth, especially in the rapidly expanding sectors of the economy. It says that governments should consider putting in place incentive structures that would promote employment-intensive growth through directing investment to sectors that are most employment intensive.
The paper: “Public works projects have traditionally been an important source of new jobs, particularly for vulnerable groups such as youth. Moreover, labour-intensive public works, which have been used for both regular infrastructure development and as a means of responding to crisis situations, have been demonstrated to have a positive impact on economic development. For example, labour-intensive public works projects have been shown to be cost-effective and competitive when compared with equipment-based methods in the rehabilitation, maintenance and development of infrastructure, including rural roads, environmental rehabilitation, irrigation and urban slum upgrading schemes.
“ A potential area of concern, however, is that the construction, rehabilitation and maintenance of infrastructure in some countries has been taken over by multinational public works enterprises which use more capital-intensive rather than labour-intensive methods, resulting in a loss of domestic capacity and employment.”
— UN Expert Group Meeting Background Paper: Jobs for Youth (17 December 2002) by the Department for Economic and Social Affairs, United Nations, available for download (11pg, 125kb) at www.un.org/esa/socdev/poverty/youth_back.pdf
Source – United Nations Website on Expert Group Meeting on Jobs for Youth www.un.org/esa/socdev/poverty/youth_egm.htm
ALEXANDRIA YOUTH EMPLOYMENT SUMMIT AND DECADE OF ACTION
On September 11, 2002 — a year after the terrorist attacks on New York — the delegates at the Youth Employment Summit issued “The Alexandria Declaration”, a summary and statement of principles arrived at during the five-day conference.
As the Egyptian Minister of Youth Dr Aly Hillal commented at the closing ceremony: “A year ago, a nightmare took place ... but a year later the youth of the world gathered in Egypt to dream of a better world in which peace, justice and democracy prevail. Youth are asking that their voices be heard, and that their role be recognized as active actors rather than beneficiaries ...”
Thong is keen to develop a network of young people who want to contribute to the Alexandria Summit’s “Decade of Action” on youth employment. He particularly wants to make contact with other young people involved in Youth Councils around NZ. (email firstname.lastname@example.org)
As part of his ongoing involvement with this initiative, Thong has developed a website to gather resources for promoting youth employment initiatives in NZ. It can be found at http://projects.takingitglobal.org/nzykr
Source — Youth Employment Summit website www.youthemploymentsummit.org; vivian Hutchinson interview with Sen Thong Wellington December 2002
BUSH PLANS UNPECEDENTED CHANGE TO GOVERNMENT JOBS
Business leaders say the new initiative will revitalize the entire “outsourcing industry”, which has been hit over the past year by sluggish growth and overcapacity. Peter Bendor-Samuel, CEO of the Everest consulting group in Dallas: “The scale of this is beyond anything that’s been contemplated before ... this is a quantum leap forward in the size of the outsourcing market.”
Harnage sees the new policy as a major expansion of a trend that has been taking place in US government at all levels for the last two decades. State and local governments as well as Washington have been hiring private companies to pick up trash, run prisons, collect traffic tickets and do much of the other mundane business of government. He argues that federal employees have almost always had more expertise and experience than outside contractors did in the jobs that are put up for bid. And there have been many cases in which private contractors either drove up the costs to the government or failed to do the job well.
Other US academics point out that while there can be some real short-term gains from privatisation, research shows that this is usually only true for relatively simple goods and services. Professor Robert Jensen, from the University of Texas, says that the savings do not hold true in the majority of cases. Jensen: “Often short-term savings evaporate quickly once competitors drop out. Contractors who underbid to win a contract are free to raise rates later, often leaving governments with little choice but to accept. For complex contracts, oversight costs are high, or inadequate oversight leads to corruption. State and local experience suggests that in services such as vehicle and highway maintenance, privatisation may end up costing taxpayers more...”
Source – New York Times 15 November 2002 “Government Plan May Make Private Up to 850,000 Jobs” by Richard Stevenson; Philadelphia Inquirer 24 November 2002 “President Bush plans an unprecedented shift” by Prof. Robert Jensen of University of Texas at Austin; USA Today 25 November 2002 “White House plan could give boost to outsourcing” by Stephanie Armour and Del Jones