|No.191||22 August 2003||Essential Information on an Essential Issue|
of key events over the last few weeks.
UNEMPLOYMENT AT 15-YEAR LOW
MORE on JOBS JOLT
MACPAC TO CLOSE NZ MANUFACTURING
BOOST TO WORKPLACE TRAINING
BONDED “STEP UP” SCHOLARSHIPS
ENCOURAGING NEW MIGRANTS TO WELLINGTON
GOVERNMENT GUARANTEES FOR HOME MORTGAGES
US RECESSION OFFICIALLY OVER
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Index to Features
24 July 2003
Members of the NZ Association of Migration and Investment will take some convincing that the government's goal of 45,000 new immigrants per year is achievable. The changes to immigration policy in the "skills" category require applicants to obtain a relevant job offer, register their interest in relocating to NZ and then wait for an invitation to apply. Association of Migration and Investment chairperson Bill Milnes says the system will be inherently complex, time-consuming and unwelcoming and forbidding for most people.
25 July 2003
The NZ trade deficit reaches the second highest level since records began being kept in 1960. For the twelve months to June, NZ imported $2.883 billion more in goods and services than it exported.
27 July 2003
The future of the 225 staff at the Waipa sawmill, one of Rotorua's largest employers, is in doubt. The sawmill is temporarily being operated on behalf of the mill's receiver, but no buyer has yet come forward and the temporary arrangement is only in place until the end of September.
28 July 2003
The Commonwealth Bank of Australia confirms it is cutting 600 of its retail staff. Spokesperson Paul Rea says further jobs cuts are possible.
290 Australian jobs are lost as the Japanese owned Furukawa company halts production at its Australian copper smelter.
29 July 2003
Photographic equipment maker Eastman Kodak cuts 6,000 jobs worldwide. Kodak chief Daniel Carp says that consumers switching to digital photography, as well as reduced international travel, had affected the company's film and processing business.
30 July 2003
Taranaki's two biggest energy employers are cutting staff as the supply of Maui gas begins to run out. Methanol manufacturer Methanex is cutting 40 jobs and Shell Todd Oil Services will cut as many as 60 jobs. 500 contractors work for Shell Todd and work for these people could also be affected.
Adults who are unemployed are three times more likely to commit suicide than those with a job. A study by Dr Tony Blakely of the Wellington School of Medicine finds that unemployment could exacerbate the financial problems and mental illness that can precede suicide.
ACT MP Muriel Newman believes the number of people registered as unemployed for more than four years has jumped by 61% to 17,003 in the four years of the current government. A government spokesperson says Newman's figures are not reliable because they came from the Winz jobseeker register which includes people who may already be working but wanted a change.
31 July 2003
Hundreds of jobs are at risk as Moana Pacific and Sealord fishing companies negotiate a merger. The new company, Aotearoa Fisheries, is expected to shed duplicate middle management and corporate positions.
The government looks likely to pass a new Holidays Bill that will entitle workers to four weeks of annual leave but will not be implemented until after the election. Labour had said it would not introduce four weeks annual leave during this term and National MP John Key calls the move a "crafty" way to keep union support at the next election.
Directors at Britain's largest companies have, over the last decade, had average salary rises of 92% to $US938,000.
1 August 2003
Dwindling numbers of male teachers is contributing to the academic failure of boys, according to Association of Boys' Schools chairperson Paul Baker. Baker says that male teachers are needed to convince boys that the acquisition of skills, knowledge and understanding is a healthy attribute. The association is lobbying government to consider providing scholarships to encourage more men into teaching.
3 August 2003
Migrant professionals who have been forced to take-up low-skilled jobs are being sought for a study being carried out by Massey University researcher Patrick Firkin.
One-out-of-ten, or half a million, jobs in the US computer services and software industry may shift to lower-cost locations over the next year. Gartner, the world's largest high-tech forecasting firm, says many companies are shifting to lower labour cost regions such as Russia, India and South East Asia.
Former Enron workers seek to recover $72 million in bonuses paid to 286 senior executives in the hours before the energy company declared bankruptcy.
4 August 2003
The increased unemployment rate for Wellington is not for lack of new jobs. The Wellington region had job growth of 2% this year, but this has not kept pace with the 4% (twice the national average) influx of working aged people moving to the city.
British Airways is to cut 13,000 jobs over the next two years.
Profits at electronic manufacturer Sony Corporation fell 98% during the first quarter of this year.
5 August 2003
Christchurch-based Jade Software is cutting 80-100 staff.
Federated Farmers tells a parliamentary committee that a fourth week of worker annual leave would cost farmers an average of $1,000 per employee each year.
The US annual GDP lifts to 2.4% on the back of a 44% increase in military spending. The military cost of the Iraq occupation is reported to be costing $US4 billion per month.
The US economy has slashed jobs for each of the last six months. Unemployment is at 6.2% and 9.1 million Americans are out of work.
7 August 2003
Australian unemployment lifts to 6.2%. Seasonally adjusted figures found the economy lost 55,200 jobs in June, nearly all of them part-time. The Australian economy has lost jobs for five of the last six months.
8 August 2003
US aircraft manufacturer Boeing is cutting 5,000 jobs in Washington State. Boeing had already cut nearly 35,000 staff over the last two years.
11 August 2003
The annual number of working holiday visas available to young NZ'ers to work in the UK has more than doubled from 7,000 to 16,000 per year.
A distance learning alliance between the University of Otago and the University of Sydney will allow radiation therapists to study for higher qualifications without having to leave the country. Karen Coleman, head of radiography at Otago, welcomes the alliance saying that the lack of graduate education opportunities in NZ has contributed to radiographers leaving the country.
Over the last six months the US economy shed 486,000 jobs. Since Low interest rates are yet to affect joblessness in the US "jobless recovery".
Singapore experienced its worst ever economic contraction last month. GDP fell by 11.4% in the June quarter as a result of the reaction to the SARS epidemic.
12 August 2003
Confection manufacturer Nestle adds 65 jobs as it opens a new factory at Wiri, in Manukau City.
The Ministry of Youth Affairs is to be renamed the Youth Development Ministry and re-situated within the Ministry of Social Development. Youth Affairs had been a stand-alone Ministry and all staff except the chief executive are to be offered jobs in the MSD.
15 August 2003
Levin clothing manufacturer LR Wishart announces it will close with the loss of 38 jobs. The company says tariff reduction over the years and uncertainty over the government's future tariff policy led to the closure.
The new steering group is to ensure that government agency research and policy development on the issue is co-ordinated. It will also co-ordinate public consultation (due to take place from October to December) before reporting to Cabinet early next year.
Green MP Mike Ward comments that New Zealand has become a "desperately unhappy society" as people worked longer and harder. Ward: "Lack of time is the greatest impediment to balance and any move towards saner lifestyles ... we desperately need to work fewer hours and more regular hours, but all the signals suggest that the opposite is happening." Ward's suggestion: tack Monday onto the weekend.
Business New Zealand chief Anne Knowles is more cautious about the idea. She says that everyone's work-life balance is different and she is wary of one-size-fits-all policy decisions. She warns that if new work-life policies come with a cost to employers, they could react by stopping employing people. Knowles: "We are actually trying to run a business and employ people. If it all becomes too hard and there are too many extra compliance issues ... it becomes a concern about how much small businesses can absorb."
The terms of reference for the inter-agency group can be found on the Beehive website at www.beehive.govt.nz/ViewDocument.cfm?DocumentID=17591
Sources New Zealand Herald 20 August 2003 "Government sets up integrated approach to work-life balance"; Press release CTU 20 August 2003 "Work-life balance policies long overdue
UNEMPLOYMENT AT 15-YEAR LOW
The latest figures came as a surprise as the consensus prediction from local financial analysts was that the unemployment rate would rise to 5.2% on the back of high interest rates, weak business confidence, the effects of the war in Iraq and the SARS virus, and the early winter power shortages.
We include our regular Statistics That Matter summary in this issue of The Jobs Letter. Some highlights:
The drop in the unemployment rate was largely driven by a fall in unemployment for the 1524 year age group. However, this was not matched by a rise in employment for this group but rather by an increase in the number of people who are not participating in the labour force.
The working-age population grew by 64,800 people, a much greater number than the number of new jobs. More than half of this rise could be accounted for by immigration.
There was a significant increase in the number of people aged 55 59 years getting work. This group gained 14,800 jobs over the last twelve months.
The unemployment rate for Pacific peoples dropped from 8.3% last quarter to 7.1% this quarter. The rates for Maori and European/Pakeha have also dropped, but not significantly.
Sources Press release Statistics NZ, 5 August 2003, "Slower growth in demand for labour"; Statistics Quarterly Employment Survey (May 2003 quarter) 5 August 2003 Commentary ; Statistics NZ "Household Labour Force Survey June 2003 quarter 8 August 2003; Press release, NZ Govt, 8 August 2003, "Employment growth sees fall in unemployment"
MORE JOBS JOLT
In response to a question in Parliament by Green MP Sue Bradford, Minister of Social Development Steve Maharey confirmed that beneficiaries living in the "ancestral papakainga district" will not be subject to the policy. (An ancestral papakainga district is the "place or places where your family comes from".) Bradford says this is an issue that she intends to hold the government to. Bradford: "If they ever try to refuse the dole to someone who has made the decision to go back to their ancestral district, we will remember Mr Maharey's assurances in Parliament..."
A spokesperson for the Minister told the media last week that the remote areas policies did not only apply to pakeha, and that the government has no plans to force people to move. The un-named spokesperson says there has been a misunderstanding of the policy: "We won't be forcing people to move we have been making it very clear we won't".
Newman argues that employment statistics, "and common sense" shows that the groups that have been targeted for the "Jobs Jolt" crackdown should not have been the elderly unemployed ... but the young. Newman: "There are around 35,000 unemployed young people aged between 16 and 25 who are at risk of wasting their lives, but who desperately need the structure, purpose and rewards of a good job. If Labour were truly serious about getting beneficiaries into work to solve the skills shortage problem which is their stated aim they would target these fit young people, rather than the elderly. Not only would young people benefit most from being in a good job, rather than being idle and getting into trouble, but right now, up and down the country, employers would welcome them with open arms just so long as they wanted to work."
Source www.stuff.co.nz Korero 18 August 2003 "Jobs Jolt lets Maori off the hook" by Anna Claridge; Press Release 19 August 2003 Muriel Newman "Race-based welfare not the answer"
Source editorial comment from The Jobs Letter; Press Release 8 August 2003 Progressive Coalition Party " Jobs Party positive about new unemployment low".
O'Sullivan says that Business New Zealand was not a party to the policy process. And while the Manufacturers and Employers Association northern chief Alasdair Thompson said the "Jobs Jolt" was a "step in the right direction", business lobbyists were more concerned that the government's actions were obscuring major policy moves that the lobbyists believe are likely to cut down the prospects for increased employment opportunities. O'Sullivan: "At issue are more changes on the labour law front that the lobbyists fear may form another step on the road back to compulsory unionism. The Government's new package is not expected to be revealed until later this month, but the Wellington policy mill suggests the moves will be unusually invasive on employers' rights..."
Source New Zealand Herald 11 August 2003 "Fran O'Sullivan: Govt facing its own jobs jolt"
MACPAC TO CLOSE NZ MANUFACTURING
But the underlying problem is that all of Macpac competitors now manufacture in Asia. McIntyre says his competitors produce packs, clothing, tents and sleeping bags at a fraction of what Macpac can do. The big difference is in the cost of labour: a junior machinist at Macpac starts on $340 per week, while a Chinese machinist earns approximately $240 per month a generous wage in Chinese terms, which would enable a worker there to begin to buy a house within three or four years.
Donald says the government would do more to help the New Zealand economy if it campaigned for international labour and environmental standards to be enforced in Asian countries rather than trying to force other countries to open their markets to our exports.
Source New Zealand Herald 26-7 July 2003 "Macpac packs in NZ production" NZPA; The Press 26 July 2003 "Macpac staff stand by beloved boss"; Press release Green Party 25 July 2003 "Macpac shutdown a call for Govt to wake up"
BOOST TO WORKPLACE TRAINING
The campaign is part of a joint agreement between the government, Business New Zealand, and the Council of Trade Unions (CTU). Minister of Tertiary Education Steve Maharey says that the key to the project is that it will be driven by the needs of employers and workers. Maharey: "It recognises that skills issues have to be addressed where they occur in the workplace."
CTU president Carol Beaumont agrees: "Workers need to be aware of the opportunities and we all need to work together to remove barriers to participation in training in order to ensure that more and more workers can build on their skill levels..."
Business New Zealand chief executive Simon Carlaw believes that on-the-job training and tertiary learning must have an equal status in the future. Carlaw: "A growing economy requires a tertiary education system that is responsive to far more complex demands and many more participants on a continuing basis than could ever be accommodated by any combination of tertiary institutions. The system must harness the strengths and experience of all the key organisations that focus on skill acquisition, especially industry training organisations, individual businesses, and the polytechnics ..."
Source The Daily News 1 August 2003 "Workplace training gets boost" NZPA; Press release NZCTU 31 July 2003 "Workplace learning good for workers and economy"; Press Release 31 July 2003Business New Zealand "Tripartite initiative on workplace learning" by Simon Carlaw
BONDED "STEP UP" SCHOLARSHIPS
Step Up scholarships will be targeted at people who qualify for a student allowance and who are either just leaving school or are already in a course that is aimed at helping them get accepted into a health science degree programme. For nurses and midwives, this will mean savings of thousands of dollars to each individual. For those going into medicine, dentistry or veterinary professions, it will mean savings of tens of thousands of dollars.
The government sees the Step Up scholarships as a first step to getting more people from low-income families into tertiary education. Minister of Tertiary Education Steve Maharey: "The Step Up scholarships are designed to ensure that people from low-income backgrounds are not deterred by cost from beginning tertiary study and will help to keep skilled graduates in New Zealand contributing to our economy."
Each scholarship will be awarded for the full duration of the degree, so long as the student keeps up their academic achievement. The government expects around 500 Step Up scholarships to be awarded in 2004, costing $15.9 million over the next four academic years. After the first two years of piloting the programme, the government may extend it to people studying in other fields.
The NZ Nurses Organisation says that addressing the burden of student debt for nursing and midwifery students is a step toward addressing the causes of the nursing shortage. President Jane O'Malley: "This sends a signal that there is some recognition of the desperate need to attract young people to nursing, where the average age is currently 42."
Source Press release from Ministers Steve Maharey and Annette King 14 August 2003 "Government launches Step Up scholarships"; Press release NZNO "Step in the right direction on nurses student debt"
ENCOURAGING NEW MIGRANTS TO WELLINGTON
Business leaders told Minister of Immigration Lianne Dalziel that changing the immigrations rules was only part of the solution. The biggest task was to get prospective immigrants to want to come to New Zealand in the first place. The business community believes that requiring immigrants to have a job offers before they arrived would work against businesses because few employers could afford to go overseas to recruit staff. Employers say they are reluctant to hire people they haven't yet met and, even then, they would prefer to hire workers who have some New Zealand work experience.
Paul Winter of the Employers and Manufacturers Association says it would be in everyone's best interest to change the Employment Relations Act so that immigrants could be taken on a trial basis. Winter: "It's a big ask to expect someone to have their whole life tipped upside down and come across the world without knowing what to expect and not have the option to try it for a few months and see if it works."
Source Press release from Ministers Steve Maharey and Annette King 14 August 2003 "Government launches Step Up scholarships"
GOVERNMENT GUARANTEES FOR HOME MORTGAGES
The government says it is delivering the new scheme to try to stop the declining rate of New Zealand families who own their own house. Home ownership has dropped from 74% to 68% over the last ten years. Minister Steve Maharey: "The possibility that more New Zealanders may remain in private rental accommodation throughout their lifetime has implications for social and health outcomes security in old age; retirement income; aggregate household savings; and growth in Accommodation Supplement payments."
The move has taken other banks by surprise. Elaine Gill, chairperson of the TSB Bank (the only wholly New Zealand owned bank until Kiwibank opened its doors) says that they would have welcomed the opportunity to be part of the scheme. Gill says that much of the TSB Bank business is home mortgages and that the loan guarantee scheme (which is similar to the government guarantees provided by the old Trust Bank system) provides Kiwibank with a commercial advantage that other banks did not have.
Source Source Press release Steve Maharey 1 August 2003, "Home ownership mortgage insurance programme announced" The Dominion Post 31 July 2003 "Easier home loans for poor" by Vernon Small; The Dominion Post 2 August "Mortgage scheme opens doors" by Ann-Marie Johnson; A telephone interview with Elaine Gill 20 August 2003 by Dave Owens
US RECESSION OFFICIALLY OVER
The US Gross Domestic Product (GDP) has been growing slowly since the end of 2001 but American businesses have continued to shed jobs on a massive scale. Since the "end of the recession", the US economy has lost 938,000 jobs and 150,000 people have dropped out of the labour force altogether. Businesses have remained reluctant to take on new workers both because of caution on the economic outlook and because they are in cost-conscious mode, trying to meet demand by boosting productivity as opposed to hiring new workers.
The NBER finally declared the recession over only after it downgraded the employment data as a measure economic well-being. NBER member Robert Gordon: " as the gap between the growing GDP and falling employment persisted, there was a gradual shift of opinion on the committee that employment should be demoted in the committee decision."
Source The Independent 23 July 2003 (reprinted from the Wall Street Journal) "Despite job losses, recession is officially declared over" by Jon Hilsenrath; The Australian Financial Review 18 July 2003 "US recession officially over"