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No.181 3 March 2003 Essential Information on an Essential Issue

OUR DIARY
of key events over the last few weeks.



WAR

DROP IN DAIRY INCOMES

MAHAREY AND BRASH ON RADIO

SKILL SHORTAGES

JOHN TAMIHERE ON WELFARE REFORM

TIME AND A HALF PLUS A DAY

VOLUNTEER NOW



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Key

4 February 2003

The first comprehensive report to analyse the economic contribution Maori have made to NZ has been produced by Te Puni Kokiri and NZIER. The Maori Economic Development report says that although small, the Maori economy is more profitable than the general New Zealand economy. The report is available at www.tpk.govt.nz/
publications/docs/
maori_eco_summary.pdf

11 February 2003

Prime Minister Helen Clark says that additional support for low-income NZ'ers will be included in the upcoming Budget, and more help is planned for the 2004 Budget round.

12 February 2003

Dairy farmers will earn $1.9 billion less this year. Dairy company Fonterra, says low international commodity prices and the appreciation of the NZ$ have contributed to its payout to farmers falling from $5.30 per kg last year to $3.60 this year.

48 jobs go as the Big Fresh supermarket in Dunedin closes. The company is also reviewing the future of its stores in Nelson and Christchurch.

Hundreds more Australian jobs will be lost as phone company Telstra continues to shed middle management jobs. Spokesperson Michael Herskope says there is no target number for staff cuts and no timetable for completion of the process.

British Airways is on target to reduce staff by 23% or 10,000 people by March 2003.

According to the Guardian Weekly, 180,000 illegal foreign workers in Israel have replaced nearly all Palestinian workers over the last few years. Filipino, Thai, Chinese, Moldovan, Romanian, Latin American and South African workers are now doing jobs that Israelis will not usually do — generally for less than the minimum wage and outside the income tax system.

13 February 2003

The government announces nine Mauriora ki te Ao scholarships to assist Maori gaining tertiary qualifications in resource management, environmental planning, law and science. Associate Minister of Maori Affairs John Tamihere says the scholarships indicate the government's commitment to increasing Maori participation in the public service.

266 local Telecom staff are transferred to French equipment maker Alcatel and US network specialist Lucent as it follows a policy of contracting out the management of network development and operation . Telecom says the staff will remain in their same offices and will be doing the same work but will have new bosses.

The Australian unemployment rate drops to 6.1%. The number of new jobs created in Australia has jumped by the largest monthly increase in over 11 years. Tony Meer of Deutsche Bank says the rise in job numbers is hard to believe and "out of whack" with every other indicator of the Australian labour market.

14 February 2003

Act MP Muriel Newman discounts New Zealand's 4.9% unemployment rate as misleading. Newman says that 6.2% of NZ workers are on unemployment benefits. She argues that the 9.7% "jobless" figure estimated by the Household Labour Force Survey is the most accurate indicator of unemployment.

16 February 2003

Millions of people around the world protest against a US-led war on Iraq.

17 February 2003

The National Party caucus identifies its main issues for this year: economic growth, welfare dependency, one standard of citizenship and education.

Sovereign Yachts, which in September 2000 promised to create 500 boat-building jobs, has begun to lay off staff after completing its first boat. The company has only employed up to 60 staff and 30 subcontractors.

The government will invest $500,000 in an IT research facility that is a joint venture between the University of Canterbury and the University of Washington in Seattle. Minister of Economic Development Jim Anderton says the Human Interface Technology Lab hopes to create job opportunities and spin-off businesses.

A new Farmers department store in Christchurch employs 65 staff.

About 2% of Wellingtonians commute to work by bicycle.

International financial information agency Reuters is to cut 3,000 more jobs over the next three years.

18 February 2003

The Mayors Taskforce for Jobs in Dunedin launches Dunedin's Year of the Apprenticeship.

Job losses at Ericsson, the worlds largest maker of mobile phone networks based in Sweden, may go even higher than the 45,000 staff that are scheduled to be cut by the end of 2003.

19 February 2003

Knowledge Wave 2003 _ The Leadership Forum begins. 450 people including 100 young "emerging leaders" attend the three-day conference. Opening speaker John Hood from Auckland University says that the government has not put policies in place that would see a step-up in productivity rates, wealth creation and economic growth that would move NZ into the top half of the OECD.

A shortage of logging truck drivers is reportedly forcing trucking companies to look overseas for workers. The Forest Owners Association and Forest Industries Council warn that by 2010 there will be a shortfall of 8,000 logging truck drivers.

More training and higher wages for NZ'ers, rather than bringing in migrant workers, will better solve the shortage of truck drivers, according to the Council of Trade Unions. President Paul Goulter says that employers who exploited vulnerable immigrant workers were using a short-term solution that did nothing to address the skills shortage issue in NZ.

The Sydney Morning Herald claims that Qantas Airways has contingency plans to cut up to 2,500 staff as the airline anticipates bookings to drop by 15% - 20% if there is an invasion of Iraq.

Getting a correct "work-life balance" is the number one challenge for Australian and NZ managers, according to a survey by the Mt Eliza Business School.

20 February 2003

PM Helen Clark is dismissive of a number of the proposals at the Knowledge Wave 2003 conference. Clark: " Decoding the rhetoric generally reveals discredited and discarded agendas of the 1980s and 1990s which produced growing inequality, social fragmentation and despair in many quarters."

A 20-week Specialist Youth Services Corps programme is set to start in eight centres including West Auckland, Hamilton, Gisborne, Rotorua, New Plymouth, Palmerston North, Christchurch and Invercargill. The programme, for 15 _ 17 year old offenders, aims to lower the re-offending rate through participation in education, training or employment.

The Tertiary Education Commission takes over the tertiary resourcing responsibilities formerly held by Skill NZ and the Ministry of Education. The new TEC will allocate funding for all tertiary level institutions.

US presidential hopeful Democrat Richard Gephardt says he would cancel the Bush Administration's proposed tax cuts and use the money to help provide health insurance to the millions of workers who have none. Gephardt also proposes a global minimum wage to help reduce the flight of jobs from the US.

21 February 2003

Director for Employment, Labour and Social Affairs of the OECD John Martin speaks to the Knowledge Wave on research into the effect of labour market policies on job creation.

US academic Robert Putnam tells the Knowledge Wave how club memberships and group outings have declined dramatically in Western cultures. Putnam says this worrying trend accompanies a loss of social capital that affects governments, crime levels, education levels, the economy and even people's health.

Peter Saunders of the Centre for Independent Studies in Australia criticises NZ for not adhering more to American social and economic models.

"Emerging leader" Oliver Driver tells the Knowledge Wave: "You have called us emerging leaders, but outside this room there are a million more of us _ a generation that are drug users by 15, drinkers by 16, pregnant by 17, in prison by 18 and dead before we are 20. My generation is in trouble, and it's your fault!"

22 February 2003

PM Helen Clark tells National Radio that the Knowledge Wave proposals to move NZ into the top half of the OECD were totally unrealistic. Clark: "If that's the flavour of the conclusions, they'll be put to one side of the desk."

Minister of Employment Steve Maharey and National party finance spokesperson Don Brash discuss their employment policies on National Radio. (see extracts in this issue)

25 February 2003

The "Loyal" flags, being sold as fundraisers for the Team NZ defence of the Americas Cup, were made in China. Green MP Mike Ward says that not having the flags made locally was "an abysmal lack of loyalty to our community".

25 February 2003

Ngai Tahu leader Mark Solomon says that too many Maori are enrolling in tertiary institutions that are of questionable value. Solomon says tertiary institutions that focus on issues of access and participation gloss over the deeper issues of quality. Solomon challenges tertiary institutions to embrace the "discomfort" of a new partnership model with Maori that better acknowledges the diversity of Maori and centrality of iwi.


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WAR: HOW IT WOULD AFFECT THE NZ ECONOMY

  • War in Iraq will have a negative impact on the New Zealand economy, according to new Treasury advice to the New Zealand government. But Treasury advises that, if the war doesn't last any longer than six weeks, most firms will be able to absorb the costs.

    Treasury says that war would mean a drop in demand for New Zealand products, and import prices would rise. Petrol is expected to rise by 9c a litre, which would in turn raise production costs for farmers and other exporters. War would also curb tourism — an $11 billion industry — as well cutting the inflow of international students.

    Treasury is more concerned about the prospect of a long war, or a war in which the conflict spreads beyond Iraq. If this happens, Treasury predicts that oil price hikes would further increase the costs of producing goods and result in a sustained drop in demand for New Zealand exports. Consumer confidence would fall, affecting domestic spending. Together, these factors would see unemployment rise as businesses shed jobs.

    Source — New Zealand Herald 27 February 2003 "Iraq war will put petrol up 9 cents a litre, govt warned" by Vernon Small; INL Newspapers 27 February 2003 "Treasury say NZ could weather a short war with Iraq"

    DROP IN DAIRY INCOMES

  • Fonterra, the dairy company that buys, processes and sells 95% of New Zealand's milk production, has announced its pay-out to farmers will be down 32% on last year. This is predicted to mean an average drop in income of $127,000 for each of the country's 13,000 dairy farms.

    That's not all the bad news: insufficient rain this summer will force most farmers to dry off their cows early due to lack of adequate feed for milk production. So with farmers having less milk to sell, and expect to receive less for the milk they do produce ... combined with war looming and the price of production rising ... an economic downturn is widely expected in the rural sector.

  • The economic downturn could result in farmers being unable or unwilling to employ farm workers and contractors. Federated Farmers say that they are currently getting "unprecedented" numbers of farmers ringing with inquiries about how to lay-off staff, which often indicates efforts to try keep farm budgets from going into the red. Manawatu-Rangitikei Dairy Farmers chairperson Elliot Cooper says he would not like to think it will come to that: "Goodness knows we have enough trouble attracting staff to the industry as it is."

    The Ministry of Agriculture is predicting the current declines in agricultural export earnings will be short-term, and predicts that dairy export incomes will continue to fall through 2004 but will rebound to last year's levels by 2006. The National Bank's rural manager Charlie Graham comments that farming always follows cycles and he does not believe the current bleak prospects reflect any long-term problems in the agricultural sector.

    Source — New Zealand Herald 13 February 2003 "Fonterra faith wavers" by Phillippa Steveson; The Dominion Post 13 February 2003 "Fonterra slashes payout forecast" by Andrea Fox; New Zealand Herald 14 February 2003 "Wallets snap shut down on the farm" by Gregg Wycherley; The Daily News 17 February 2003 "Milk, money pledges toru sour" by Melanie Carroll; MAF Rural Bulletin February 2003 "MAF's latest SONZAF report"; The Daily News 15 February 2003 "Norgate pay may take a nose-dive" NZPA; The Dominion Post 14 February 2003 "Furious farmers call for blood" by Andrea Fox; New Zealand Herald 21 February 2003 "Farmers look at sacking staff" by NZPA; The National Business Review 26 February 2003 "Ag sector still health, says bank".

    MAHAREY AND BRASH DEBATE ON RADIO

  • Earlier this month, Minister of Social Services and Employment Steve Maharey and National Party finance spokesperson Don Brash had a rare face-to-face discussion on employment issues for "Focus on Politics" on National Radio. Even though joblessness is at its lowest levels in 15 years, their conversation showed that employment issues are in no danger of slipping off the political agenda.

    brash.jpg - 5410 BytesDon Brash points to the 134,000 people still on an unemployment benefit — describing it "a scandal" that we still have such large numbers of people on the dole despite employers throughout the country being desperate for staff. Having recently suggested abolishing the dole in favour of compulsory work programmes, Brash says that he raised the issue at this time precisely because unemployment is now lower than it has been for some time. Brash: "I think that people who want to work should have the opportunity of doing so. People, who don't want to work, shouldn't expect taxpayer funding."

    Steve Maharey, while welcoming the fall in joblessness, maintains that employment issues are still very much on the top of his agenda. The Minister says the real challenge for the government is to ensure that people have the right skills, that they stay employed throughout their life, and they are able to look forward to a rising income. Maharey: "For the ordinary New Zealander, earning an income and having a future that is based upon having a good secure position to go to each day is still very much on people's minds. We understand we have to keep unemployment down ... but also focus on the quality of the jobs people can get."

  • Don Brash says his proposal that employment should be offered through local government work schemes is based on a similar and successful system operating in Switzerland. Maharey, in turn, argues that the Swiss approach is based on its "canton" system of regional and local government. Maharey: "The Swiss canton system provides a sort of home base where you go back to and you have extensive rights because you come from that particular canton. For some reason the Swiss have been able to maintain that into the modern era ... but it is not able to be reproduced outside Switzerland."

    • So what is the thrust of employment policy at this time of 4.9% unemployment? For Steve Maharey, the focus needs to be on developing "human capital" which will ensure that unemployed people have what it takes to be able to go out and get a job.

    maharey02.jpg - 5641 BytesMaharey: "This means three things: Opportunity is number one —making sure that there are opportunities out there — and we have been actively working with firms all over the country trying to improve job opportunities, working with industries like tourism to do that. Secondly, we have to make sure that people have the skill and can take those jobs. We have a lot of people who don't have the skills or are just in the wrong place. And thirdly, we have to run very active services to match the person to the job. That's what I focus on in terms of my contribution to ensure that all NZ'ers are able to get the kind of job they want."

    Don Brash argues that there is enough demand in the economy to ensure there are jobs available, but we need to make certain that the skills are there. Brash: "For me, this is as much about basic literacy and numeracy, which we need to get right in the primary school, not subsequently. I think we do need to reduce the risk employers' feel they take when taking people on. And I think we have to give people encouragement to get off a benefit and get into those jobs. Even if the payment isn't very good, initially."

    Focus on Politics" interview by Radio New Zealand political editor Kathryn Ryan with Steve Maharey and Don Brash 22 February 2003. The entire interview is available on cassette tape from Replay Radio, P.O.Box 123, Wellington, or can be ordered from their website at www.radionz.co.nz

    VOICES

    Maharey: "Unemployment is at the lowest point in 15 years for a variety of reasons. Some of them have to do with the fact we have had very good commodity prices, and our dollar has been strong in the sense of creating growth and jobs. I think the one thing that government has to take a look at is what can they do to contribute to this. We want to carry on contributing through regional development, through skills development, modern apprenticeships, getting kids coming from school and not going on a benefit but getting them into something. We want to make sure we are identifying all the policies we feel are contributing to this and continue with them."


    Brash: "I think most of the policy changes the government has introduced have actually be detrimental to the level of employment, and have increased the risks employers face in hiring people, increased the compliance cost businesses face in hiring people. I think what has helped unemployment come down has been external factors. We've had a very strong upsurge in net immigration since September 11 with security concerns overseas which have brought people back to NZ and have brought foreigners to NZ. A weak world economy has contributed to that. All of those factors have lead to quite to quite strong demand. And I might say that, in 2001, the Reserve Bank aggressively cut interest rates from 6.5% to 4.75% which has certainly provided a strong stimulant through last year."

    Brash: "How many of the 134,000 people who are on unemployment benefits can realistically get into work is a function of their skill level. I think the basic task of the state in this area is to improve the skills of people ... and I mean not just the technical skills but basic literacy skills. A lot of people are unable to get jobs because they can't read. I think it is also a function of the disincentives that employers face in hiring people, the risks they take on hiring people increased recently by the health and safety and employment law, making employers liable for various risks. If you make welfare benefits relatively easy to get hold of, then people are less inclined to take fairly unskilled jobs which don't pay very much better than the dole."

    Maharey: "Despite all the arguments about lifting the minimum wage leading to unemployment, the evidence I read has argued for a long time that there is no direct relationship between lifting the minimum wage and unemployment. It depends one what sort of rate you set it at and what sort of labour market. And we've found that in this country we have consistently lifted the youth rate and adult rate and at the same time the unemployment rate has come down. So we feel pretty comfortable that you can introduce these kinds of policies in pursuit of quality and still get unemployment down."


    Brash: "There wouldn't be an economist anywhere who would accept the proposition that an increase of the minimum wage has no effect on the unemployment rate. I think the general belief is that an increase in the minimum wage, like the increase in the price of anything, reduces the demand for it. Now if you do it in small lumps, it's pretty hard to detect the change, but there is no doubt at all about the direction of the impact."


    Brash: "People need the opportunity to work. I think that is hugely important to their sense of well being. But it is also important to say to those who don't want to work: Sorry, friend, but the taxpayer is not going to fund you indefinitely to do nothing at all. What do we do with people who do not have the skills now? Certainly we can try to train them. But I'm saying people who don't have many skills shouldn't have the option of doing nothing. They should have the opportunity of doing something because the best way of getting into a good job is to start off in, perhaps, a less good job. Certainly it is better than being unemployed."


    Maharey: "You do need a carrot and a stick. My own view, clearly, is that you need a lot more carrot, because my view is that the majority of people actually do want to get on with their lives and will take opportunities when they are presented to them. But all systems, like our own one now, maintains that there are some people who are difficult to move and therefore you maintain sanctions and you always maintain the ability to encourage people by saying "You must: this situation can't go on forever". And there are sanctions in the law that say that a person can be removed from the benefit."

    JOHN TAMIHERE ON WELFARE

  • tamihere03.jpg - 5849 Bytes Cabinet Youth Affairs Minister John Tamihere has found himself having to apologise to cabinet colleagues after distributing a speech about welfare reform at the Knowledge Wave conference. Tamihere (who is ranked 19th in the Cabinet) used the prestigious forum to share his views that the current welfare system was trapping people into dependency, and was "killing people with kindness".

    Tamihere used to be the chief executive of the West-Auckland-based Waipareira Trust, and has had an extensive background in community-based delivery of social services. He would like to see the responsibility for all welfare payments given to private or community organisations whose case managers would pay the basic costs of accommodation, power and food on behalf of individuals and families ... ensuring that they at least received the necessities of life. The balance of the benefit would then be transferred into the beneficiary's bank account to be used for discretionary spending. This would enable case managers to negotiate bulk discount deals on basic items, and would also send a clear message to beneficiaries that they have a responsibility to help move themselves away from welfare dependency.

    Tamihere later told a Sunday newspaper that Social Services Minister Steve Maharey was failing in his desire to steer a middle course for the welfare system between the extremes of state control and the free market. Tamihere: "He is going to have to get away from statism and bullshitting under the name of third way-ism because he is not practising third way-ism. No, no, he is practising old left."

    Judge for yourself: "The Reform Of Welfare And The Rebuilding Of Community" by Hon. John Tamihere, prepared for the Knowledge Wave forum, Auckland, 21 February 2003, has been reprinted in this issue of The Jobs Letter.

  • The media and opposition parties have had a field day with Tamihere's comments ... seeing them as a significant crack in Cabinet unity.

    Prime Minister Helen Clark has since made it clear that a close watch would be kept on the Youth Affairs Minister, including the vetting of future speeches (... the offending speech having been removed from the government's website). Clark has warned Tamihere to stick to his own portfolio, and has advised him to keep a low public profile in the immediate future.

    Clark says that Tamihere's attack on the Social Services Minister has been particularly unfair because Maharey was already a "committed devolutionist". She says the government was debating the issue of devolution all the time, but it is a difficult area because the media are quick to condemn failures of accountability, such as in recent cases of iwi housing, Maori health and education trusts. Clark: "There are pitfalls ... you have to be very careful. And even being very careful doesn't guarantee results. When it comes to whether you then extend what you pay out to entrusting people's benefit money to community organisations, I think that's a leap of faith I would not be prepared to take at this time..."

    Sources _ "The Reform Of Welfare And The Rebuilding Of Community" by Hon. John Tamihere, speech prepared for the Knowledge Wave forum, Auckland, 21 February 2003; New Zealand Herald 24 February 2003 "Tamihere in dog box for blasting Maharey"; The Dominion Post 224 February 2003 "Tamihere apologises to Clark for outburst" by Ruth Berry; New Zealand Herald 25 February 2003 Tamihere on notice to tow party line" by Francesca Mold; and "New boy Tamihere feels the rod" by Vernon Small; The Dominion Post 25 February 2003 "Clark tried to stop Tamihere" by Ruth Berry;

    SKILL SHORTAGES

  • More firms are saying that a lack of labour is their main constraint on expanding production. The latest Labour Market Policy Group quarterly report has found that the shortage of skilled labour is still rising and continues to affect company growth. 16% of firms say difficulty in finding suitable staff is the dominant factor holding them back from expanding their business — up from 12% last quarter. The number of firms saying they had difficulty finding skilled staff rose from 37% to 39%. And firms still can't find enough unskilled staff, a trend that began in late 1999.

    — the construction industry is the most affected by shortages of both skilled and unskilled workers. Over half of constructions firms say they lack skilled workers and over a third say they lack unskilled workers.

    — skill shortages are more acute in the South Island with 48% of southern firms saying they have difficulty finding skilled staff.

    Source _ Labour Market Policy Group "Skills shortages _ December 2002 quarter"; Media Statement from the Minister of Social Services and Employment 27 February 2003 "Skills shortages reinforce imperative to focus training on productive sectors"

    TIME AND A HALF PLUS A DAY

  • Workers will be better paid when they work on statutory holidays when a simplified Holidays Act becomes law later this year. All people who work on any of the 11 statutory holidays will be paid time-and-a-half their normal rate and also given a subsequent day off on normal pay.

    Minister of Labour Margaret Wilson says changes are needed because the complexity of the existing legislation is a constant source of confusion in the workplace. Wilson says that worker/employer conflicts about holidays account for three-quarters of the complaints brought to labour inspectors.

    The new legislation also separates sick and bereavement leave entitlements, which are currently combined to a total of five days. The Bill will allow five days for each and allows sick pay to be accumulated for up to 15 days. The government reiterates that minimum annual leave provisions will remain at three weeks during this parliamentary term, even though a Bill by Progressive Coalition MP Matt Robson for four weeks annual leave will be considered by the select committee at the same time.

  • The Council of Trade Unions is clearly pleased with the proposed changes to the Holidays Act. President Ross Wilson says that it restores some entitlements workers lost during the Employment Contracts era. Business New Zealand executive director Anne Knowles agrees it streamlines the current legislation but believes the changes will add 1% to annual wage costs.
    Source _ New Zealand Herald 18 February 2003 "Fresh deal on leave rolled out" by Angela Gregory and NZPA; The Daily News 18 February 2003 "Employees to get extra pay on holidays" by NZPA; New Zealand Herald 19 February 2003 "Holidays Bill vexes business" by Kevin Taylor; The Dominion Post 19 February 2003 "Workers may get more for public holidays; The Daily News 19 February 2003 " Employees' public holidays pay set to rise"; The Daily News 19 February 2003 "Sowry: business will pay for holiday laws"; Press Release NZ Government 18 February 2003 "Holidays Bill introduced to House"; INL Newspapers 26 February 2003 "Holidays legislation gets airing in Parliament"; Press release Business NZ 19 February 2003 "Holidays Bill"; Press release NZ Council of Trade Unions 18 February 2003 "New holidays bill will benefit workers and employ"; Press release NZ National Party 18 February 2003 "Employers to wear new costs in Holidays Bill"; Press release NZ Council of Trade Unions 25 February 2003 "Nats back with more scare tactics";
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    VOLUNTEER NOW

  • Volunteers needed. "Young seniors" are being targeted to apply their skills and experience to the community sector. Alison Marshall, chairperson of Volunteering New Zealand says they are appealing to people between 55 and 65 years of age to try out volunteering. She says that there are many people in this age group who may not have, or want, full-time paid work ... but still want to remain active and share their skills. Marshall: "We believe engaging the skills and experience of these people will be of huge benefit to the country.."

    At the Knowledge Wave conference last month, a national volunteering website and 0800 number was launched. The website lists contact information for affiliated Volunteer Centres around the country, and the 0800 number automatically transfers calls to nearest volunteer centre.

  • for further contact , Volunteering NZ website is at www.volunteernow.org.nz or phone 0800 VOLCNTR or 0800 865 268
    Source _ Press Release Volunteering NZ 21 February 2003 "Wisdom of `young seniors' sought"

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