No.194 9 October 2003 Essential Information on an Essential Issue

of key events over the last few weeks.









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23 September 2003

The real hourly earnings of New Zealand workers dropped 6.5% between 1980 and 2001, according to the Canadian Centre for the Study of Living Standards. The Centre has found NZ workers fared worst among workers in all of the 16 OECD countries it surveyed.

24 September 2003

In view of rising house prices and falling home ownership, Minister of Housing Steve Maharey is making a bid for more home ownership initiatives in the next Budget.

The Green Party calls for a capital gains tax on rental properties. Co-leader Rod Donald says that investors are partly to blame for the current rise in house prices.

United Future MP Gordon Copeland calls on the government to end tax breaks for property investors.

Minister of Finance Michael Cullen tells a World Bank/IMF meeting in Dubai that the call for an increase of $16 billion in aid was a mere 4%-5% of the total spent on agricultural subsidies by the world’s richest countries. Cullen: “Demolition of these rotten structures will increase the incomes of poorer nations and free up resources in the richer ones to increase aid.”

1,500 new jobs are being created in Melbourne as General Electric redevelops its headquarters and creates an Asia-Pacific employee training centre.

25 September 2003

Treasury reports a Budget surplus of $5.6 billion.

Statistics NZ reports a national current account deficit of $5.9 billion.

The waiting list for families to go into state houses tops 12,000.

The NZ Commerce Commission will not oppose the sale of the National Bank by ANZ Bank.

26 September 2003

Finsec, the bank workers’ union, believes hundreds of jobs will be lost if the ANZ bank buys the National Bank. Secretary Andrew Cassidy says that previous bank mergers have resulted in between a fifth and a quarter of the staff working for both banks losing their jobs. The ANZ has about 3,700 staff and the National Bank has about 4,600 staff.

In Australia, dole payments may be suspended if a beneficiary misses an interview. New rules could see the dole cut off if a person cannot be contacted within four days of failing to attend a Job Network meeting or a scheduled job interview.

28 September 2003

IT company EDS is shedding 50 jobs in NZ. EDS has a contractual obligation with the government to generate 360 new jobs by March 2006 as part of its Best Shores scheme.

Nelson area construction contractors, desperate for skilled labour, are poaching staff from other firms. Master Builders president Mark Vining says he has heard of tradespeople being enticed away from firms with promises of higher pay and other benefits.

Business leaders dismiss the government’s economic development programme as a waste of time and money. A Business Herald survey of 50 business leaders did not generate one positive comment and they rated Jim Anderton’s programme a 3.2 out of 10.

Jeans maker Levi Strauss is closing its five remaining North American factories with the loss of nearly 2,000 jobs. Manufacturing will be shifted to a “third-party global sourcing network company.”

Unite, the largest North American clothing workers union, blames the Levis closures on the US government’s trade policies which allows firms to “scour the globe for the cheapest, most vulnerable labour”.

29 September 2003

The Lincoln University Students Association says the government surplus means that there is no excuse for not implementing a universal student allowance scheme.

30 September 2003

The government decides it will end the tariff freeze on clothing, footwear and textiles in 2006.

Waikanae-based footwear manufacturer Kushla Buswell says the lowering of tariffs will give her competitors a 9% advantage. Buswell: “It will make it even more enticing for local retailers to buy foreign-made products.”

1 October 2003

Desperate employers in the Manawatu are sending a talent scout to South Africa in the hope of recruiting skilled workers. The scout is specifically looking for hydraulic and refrigeration engineers, nurses and carpenters.

More NZ’ers are working in higher-paid jobs. The average NZ wage rose by 6.9% over the last year, according to Statistics NZ.

2 October 2003

The dearth of midwives has left the Palmerston North and Feilding hospitals eight midwives short. Two English midwives are expected to start next month and MidCentral staff are in Britain trying to recruit more.

Forestry company Carter Holt Harvey warns that the high exchange rate is costing jobs. Chief financial officer Jonathan Mason urges the Reserve Bank to lower interest rates, saying the government and Reserve Bank has to understand that when exporters go out of business the jobs won’t necessarily come back when the exchange rates goes down again.

3 October 2003

The US announces a rise in jobs in the economy for the first time in eight months.

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  • Employment and Labour Ministers from OECD countries gathered in Paris last week to boost international efforts to create more and better jobs. The Ministers are being challenged to revitalize their labour markets, especially as many OECD countries struggle to emerge from the most severe economic slowdown in a decade. The Ministers are also grappling with how to improve employment opportunities for people on the fringes of labour markets, and also how to address the challenges posed by ageing populations.

    The “Towards More and Better Jobs” meeting was held at the OECD headquarters in Paris on 29-30 September 2003 and two-thirds of the member countries sent their Employment or Labour Ministers. Our own Minister of Social Development and Employment Steve Maharey was unable to attend, and New Zealand was represented by government officials Paul Barker of the Labour Market Policy Group (LMPG) of the Department of Labour, and by Neil Martin of the Ministry of Social Development.

    — The website and background papers for the OECD “Towards More and Better Jobs” conference (Paris, 29-30 September 2003) can be found at www1.oecd.org/subject/elm/index.htm
    A special issue of the OECD Observer (September 2003) on the “Employment Challenge” has also been produced to coincide with the meeting of Employment and Labour Ministers. It can be found at www.oecdobserver.org/2003employmentspotlight

  • The OECD Employment Outlook 2003 report, also published this week, warns that governments must do more to improve the job opportunities for women, older workers, people with disabilities and the low-skilled. It says that economic growth could be choked by the cost of ageing populations unless more and better jobs are found for under-represented groups in the workforce. And getting such groups into paid work makes good political sense because this will also generate more tax revenue and ease up on the cost of benefit claims.

    The OECD estimates that, unless action is taken, the annual growth of the workforce in its member countries will slow from an average 1.3% over the past thirty years to 0.3% over the next thirty. In some countries such as Italy and Japan, the labour force will actually decline. And on current trends, the ratio of over 65 yr-olds to the total workforce will rise from 27% in 2000 to 47% in 2030, straining current pension schemes and threatening living standards.

  • The OECD recipe for action is based on its traditional policies of supporting economic growth and demand for labour. But it also recommends governments need to keep more older workers in the job market by removing incentives to early retirement. It says that disability benefit schemes should also be reformed in order to prevent long-term dependency and encourage work among the disabled.

    The OECD singles out women — mothers and lone mothers in particular — as groups that governments should target to join, or return to, the workforce. It says governments need to pay attention to subsidising childcare and promoting flexibility in working hours. Governments should also look at offering companies tax credits that are conditional on employment or exempting employers from social security contributions if they recruit low-skilled workers.

    OECD Employment Outlook 2003
    — Towards More and Better Jobs

    (OECD 2003) ISBN 92-64-10061-X

    extracts can be viewed, and full report ordered from here

    Sources – OECD website www.oecd.org; OECD Press release17 September 2003 “ Workforce Must Expand and Invest in Skills or Future Economic Growth Threatened, Warns OECD”; Reuters 17 September 2003 “OECD urges labour reforms to fund pension costs” by Paul Carrel

  • So just what are the OECD nation Ministers doing about jobs? What policies are making a difference? On the eve of the Paris meeting, the journal OECD Observer decided to ask a variety of Employment Ministers what measures are they taking to create work opportunities. The forum included François Fillon, French Minister for Social Affairs, Employment and Solidarity (and chairman of the conference); Jane Stewart, Canadian Minister of Human Resources Development; Tarja Filatov, Finnish Labour Minister; Chikara Sakaguchi, Japanese Health, Labour and Welfare Minister; Carlos Abascal-Carranza, Mexican Secretary of Labour and Social Welfare; Des Browne, the UK Minister of State for Work; and our own Minister Steve Maharey.We feature their responses in this edition of The Jobs Letter.
    Source — OECD Observer No. 239, September 2003


  • The government has decided to end the tariff freeze on clothing, textiles and footwear imposed in its first year of office. The move (which won’t come into force until after the next election) will mean cheaper imports for shoppers ... but both unions and employers say it will cost jobs.

    From July 2006, the highest tariffs — of up to 19% on clothing, textiles, footwear and carpets — will be gradually cut to 10% by July 2009. Rates on other goods will drop by 5% by July 2008. The move is still well short of the APEC target of zero tariffs by 2010. However, Minister of Commerce Lianne Dalziel says that New Zealand could jump to zero tariffs after 2009, but that would depend on what other countries were doing.

  • Bruce Goldsworthy of the Employers and Manufacturers’ Association warns that the decision will lead to further job losses and deteriorating national accounts. Goldsworthy: “Our textile clothing and footwear manufacturers and their 18,000 employees fail to understand why New Zealand must continue to lead the world in freeing up trade.” Goldsworthy argues that any tariff reductions should be closely aligned to those in Australia where apparel tariffs of 25% will drop to only 17.5% by July 2005.

    Robert Reid, from the Clothing Workers Union says New Zealand is mad to lead the way on tariff reduction and should wait until its major trading partners make some concession. He says a World Trade Organisation agreement allows a 37% tariff on textiles, clothing and footwear for New Zealand, and the collapse of the recent WTO talks means there is even less reason for the government to act.

    Source – New Zealand Herald 1 October 2003 “Govt change opens door to cheap imports” by Ellen Read and NZPA


  • New Zealand is financially punishing its poorest children simply because of the origin of their parents’ income, according to Susan St John, Senior Lecturer of Economics at the University of Auckland and a major advocate for the Child Poverty Action Group (CPAG). Writing in The Independent, St John points out that in 1996, when the NZ government introduced the child tax credit of $15 per week, it made families who were in receipt of income support ineligible for it. This abandoned an important principle that all children should be treated the equally.

    St John estimates the families of 300,000 children have missed out on the child tax credit because they were unlucky enough to have a parent on a sickness, invalid or unemployment benefit, ACC, student allowance, or NZ superannuation. She says the discrimination is exacerbated by the complexity of the system as many parents, who fall in and out of the benefit system over the year, do not claim their entitlements. She estimates that over the past seven years, these poorest families have sacrificed around $2 billion in lost payments due to this policy. St John: “While not politically fashionable to make the link, it is hard not to conclude that their sacrifice contributes significantly to the current Budget surpluses flowing into the New Zealand Super Fund.”

  • St John also points out that for those who do qualify for the credit, it has steadily been losing its value. The child tax credit has stayed at $15 per week from 1996 to 2002. And, as wages have increased to cover the cost of living, more and more families have lost their eligibility for the child tax credit as their income has crept up above the $20,000 per year household income threshold.

    St John contrasts the NZ situation with Australia and Britain, where family support levels are significantly higher and apply universally to all children. The level of support and income eligibility thresholds are also regularly adjusted for inflation. Currently, Australian families can earn $A31,755 before their family tax benefit begins to reduce. And there is a second family tax benefit that provides additional assistance for single income families.

    St John: “Why is New Zealand such a laggard? Nothing has been done since the 1996 Budget, apart from a tiny crumb of a marginal change in the threshold for abatement of family support in the 2003 Budget. This gave, at most, $1 a week for some children in particular income ranges. In the light of increasing concern about levels of child poverty in New Zealand and its alarming consequences, this lack of action is unfathomable. Families have been told to wait for the 2004 Budget, when they will get a boost to their family payments if the surpluses are large enough.”

    “Oz wins hands down on income support for families” by Susan St John (The Independent 24 September 2003) can be read at the Child Poverty Action Group website at www.cpag.org.nz

    Source – The Independent 24 September 2003 “Oz wins hands down on income support for families” by Susan St John


  • Vernon Small, political columnist for The Dominion Post says that calls for better government support for children may indeed be heeded in the next Budget. Minister of Finance Michael Cullen said in his last Budget speech that if last year’s $4 billion government surplus was maintained, and if other conditions were met, he would deliver a $500 million package of assistance to families which would also include incentives to assist people moving from welfare to work. Since that time, the government’s fiscal position has improved with the government tax take up 9.9% on this time last year, and the government’s fiscal position is at a record $5.6 billion surplus. It looks like Cullen’s conditions for a family assistance package will be met.
    Source – The Dominion Post 26 July 2003 “Surplus offers hope for the poor” by Vernon Small


  • New Zealand houses are selling quicker and prices are rising faster than they have for 20 years. Nationally, the price of the average house have risen by 14% this year, fuelled by low interest rates and the demands being made by recent population growth. The New Zealand Herald says that Auckland builders are booked up for at least the next six months. Throughout the country, local authorities issued consents for 2,704 dwellings last month, the highest August tally for 25 years.

  • This housing boom has pumped up the construction industry, creating many jobs and exposing skills shortages ... and it may also be underpinning the re-birth of the New Zealand apprenticeship system. But the boom is putting real pressure on low-income families. First time house buyers in Auckland now need an annual income of at least $100,000 to afford to buy a traditional three bedroom bungalow. Aucklanders who earn less than this and don’t already own a house must consider buying well outside of the city, or continue to rent. This has increased the demand for rentals and pushed rents beyond the reach of many middle-income, much less low-income families.

    Investors are pushing up prices for lower-end houses, once regarded as the first step to home ownership, to new heights. Wellington area real estate agent Blair Double says the biggest increase in prices for residential property during the past year was in traditionally cheaper suburbs. Blair: “There is a lot of competition for first home buyers because they are competing against investors. It is getting a lot harder to buy your first home.”

  • Housing activist Alan Johnson is adamant that the current housing policy is not working for the poorest New Zealanders. In a report commissioned by the Child Poverty Action Group, Johnson points out that the relief provided by the reintroduction in 2000 of income related rents for state houses, benefited the 53,000 state tenants but ignored the 150,000 low-income households who weren’t in a state house.

    Johnson: “The poorest New Zealand households are now not state tenants but private sector tenants depending on inadequate subsidies for their housing. It’s ironic that a government which campaigned on the need to reintroduce income-related rents for state tenants has remained so indifferent to the continuing relative poverty of the three times as many families who continue to rent from private sector landlords.”

    Alan Johnson recommends that Michael Cullen makes provision in the next Budget for at least $500 million annually for the next decade for a New Zealand Housing Strategy. Johnson argues that in setting its budgetary framework, the government need to give the adequate housing of children the same priority that it presently gives to the future retirement incomes of the baby boom generation.

    Room for Improvement
    — Current New Zealand housing policies and their implications for children

    by Alan Johnson,
    (CPAG, September 2003)

    can be downloaded
    (PDF 82 pg, 924 kb)
    from www.cpag.org.nz

  • Minister of Housing Steve Maharey says he recognises that first home buyers are being squeezed out of the market by soaring house prices. He has confirmed that he has put a Budget bid in for more money for home ownership initiatives and signalled that measures, including first home grants and expanding the existing mortgage assistance scheme, were all up for debate. A draft housing strategy due for release soon is expected to spark further debate over the government’s role in home ownership.
    Source – Weekend Herald 20-21 September 2003 “Cost of crowded houses” by Geoff Cumming; Weekend Herald 27-28 September 2003 “Housing bonanza biggest in 20 years” by Eugene Bingham; The Daily News 25 September 2003 “Property rush prompts calls for govt aid” by Tracy Watkins


  • Many countries may soon experience serious teacher shortages because not enough young people in the world’s richer countries want to be educators. An annual OECD report, Education at a Glance, warns that teacher shortages may become a policy challenge to governments as student enrolment levels rise while older teachers retire and not enough younger people join the profession.

    In 15 out of 19 OECD countries surveyed, the average age of teachers is increasing and the majority of primary school teachers are over 40 years. In Italy and Germany, almost half of secondary teachers are over 50 ... and in Sweden, Iceland, the Netherlands, Norway and New Zealand, more than a third of the teachers are older than 50 years.

    A survey of upper secondary schools in 14 OECD countries showed an average of 12% of teaching posts to be vacant at the start of the 2001/2002 school year, and an average of 14% of full-time teachers and 31% of part-time teachers in these schools failed to fully comply with official training and qualification requirements. Science, technology and computer sciences, mathematics and foreign languages were cited as the areas where hiring difficulties were most acute.

    Source –OECD website “OECD Report Warns of Growing Risk of Teacher Shortages in OECD Countries”; New Zealand Herald 22 September 2003 “World teacher crisis looms, says OECD” by Reuters;


  • Can we get more men into primary school teaching? More than 80% of primary school teachers in New Zealand are women. The 4,433 men in the profession make up just 18% of all primary teachers — a drop from 22% ten years ago. Marlborough Boys’ College principal John Rodger says that while there is little evidence linking teacher gender with student achievement, some parents have expressed concerned at the impact on boys learning when they had come from a predominately female teacher environment.

  • A report, commissioned by the NZEI has found that there are three reasons why men are not joining the profession: 1) men see primary teaching as a low-status job because it has a high proportion of women; 2) primary teaching is perceived as being poorly paid; and 3) men are concerned that as part of the job there will be physical contact with children and that will put them at risk of being accused of sexual abuse. The report refers to this as the “Peter Ellis syndrome” ... the NZEI itself instituted a “no contact” policy for its members, after the Peter Ellis Christchurch Civic Creche sexual abuse case.

    One recommendation from the New Zealand Educational Institute (NZEI) is to offer scholarships to men in order to help correct this gender imbalance. But Minister of Education Trevor Mallard is not keen on the idea. Mallard: “My key priority is to have qualified teachers. I am yet to find a parent who would prefer their child be taught by an inferior male teacher rather than a better woman teacher.”

  • The low proportion of men primary teachers is not unique to New Zealand. In 1999 men made up only 23% of the primary teaching workforce in the OECD countries that were surveyed. In Canada the figure was 32%, Britain 24%, New Zealand 18%, Ireland 15% and the United States 13%.
    Source – Press release New Zealand Educational Institute 22 September 2003; The Marlborough Express 23 September 2003 “Male teachers ‘forced’ to be too PC”; New Zealand Herald 26 September 2003 Editorial “Male staff essential in our schools”


  • The government hopes to reduce unemployment benefit dependency through a new series of seminars being offered throughout the country at Winz offices. WRK4U (work-for-you) is a voluntary service which is offered to anyone applying for an unemployment benefit. It provides unemployed people with information about their full and correct entitlements and about their obligations while on a benefit and then focuses on what steps the unemployed person can take in order to find work.

    WRK4U has been piloted since March in three Auckland Winz offices and Associate Minister of Employment Rick Barker says the interim results from the pilots are encouraging. Barker: “The Auckland pilot suggests that the number of people requiring the unemployment benefit from the three sample communities dropped 19% below what was predicted. Early indications suggest that WRK4U is helping clients take on jobs sooner, but it will be some weeks yet before we can ratify that. This is an extremely promising trend ...”

    Source – Press release NZ Government 18 September 2003 “Govt fast-tracking people into jobs through WRK4U”

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