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| No.205 | 21 April 2004 | Essential Information on an Essential Issue |
 of key events over the last few weeks. FLOOD RELIEF HAMPERED BY TRADESPEOPLE SHORTAGE FLOOD RELIEF MONEY UNSPENT THE FLEXIBILE WORKFORCE ARGUMENT YOUTH MINIMUM WAGE ANALYSIS
STATS NZ REPORT ON OLDER WORKERS
FIRMS NEGLECTING BEST STAFF: WOMEN BUYING AN UNPAID JOB WELLINGTON CITY MISSION: 100 YEARS OLD JOBS PARTNERSHIP WITH RETAIL INDUSTRY NZ RATED 12TH BEST OUTSOURCING DESTINATION KERRY PLEDGES TO TAX OUTSOURCING IS THE OUTSOURCING BOGEY A “BEAT UP”? WHAT IS A SOCIAL ENTREPRENEUR?
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Index to Features
15 March 2004Gerda Yska, 1951 _ 2004. Business advisor and enterprise enthusiast. 17 March 2004The Family Tax Credit will not rise with inflation when benefit adjustments are made on 1 April. The Child Poverty Action Group says it is illogical and unfair that low-income families who rely on Family Support payments to feed and clothe their children have not received an increase since 1996. 20 March 2004The number of clock and watch repairers in NZ is down to just 150 and five apprentices, and the numbers are likely to decline further though there is a ongoing demand for their services. Watchmaker training all but disappeared with the abolition of the apprenticeship scheme in the 1980s and the Horological Institute says the industry is too small to set up an industry training organisation. Global oil company Shell is to cut its production costs in Nigeria. Media reports claim the company's cost-cutting strategy includes axing 1,000 Nigerian jobs. Canadian aerospace and transport company Bombardier says it will axe over 1,300 jobs as it closes its three British train-making plants. A UK survey finds that half the people over age 50 expect to be working past the retirement age of 65. The Reed Consulting and Age Concern London survey also finds that one-third of these people expect to be working until they are aged 70, and nearly one-quarter intend to keep working as long "as possible". At present, just 9% of British people work past age 65. 23 March 2004Minister of Finance Michael Cullen says this year's Budget will be "somewhat more stimulatory than its predecessors". Marshal Software, a NZ specialist Internet security company, is closed down with the loss of 25 jobs. NetIQ, the US company that bought Marshall Software 16 months ago had said it would expand and invest in the NZ company but changed its mind. 24 March 2004The proposal to allow the Reserve Bank to intervene in the foreign exchange of the NZ$ would bring NZ into line with other countries, according to BERL. The economic forecaster says virtually all central banks buy and sell their own currency when they believe it is over or under valued. Michael Cullen says that any currency intervention impacts by the Reserve Bank are unlikely to be large; maybe a few cents at the peaks and troughs of cycles, or helping the cycle to turn a little earlier than otherwise would happen. A new law requires employers who have staff who are also in the Territorial defence forces to hold their job open if they are called up for active duty. 25 March 2004Michael Cullen says that NZ and Australia could become a single market within five years. In January Cullen and Australian treasurer Peter Costello confirmed plans to move towards integrated competition laws, a single accountancy standard and common rules for banks. US Secretary of State Colin Powell urges India to open its markets to US goods in a bid to make up for the loss of US jobs to India. Powell asks India to reduce agricultural and industrial tariffs and quotas, liberalise government procurement rules and stiffen intellectual property protection. 29 March 2004The Maritime Union of NZ says that NZ shipping is being destroyed by "so-called competition". Secretary Terry Ryan says that Burmese sailors aboard a Korean owned vessel loading fruit at Port Nelson were being paid $US350/mo, less than half of the ILO minimum wage for shipboard workers. Ryan: "The case highlights how floating sweatshops in NZ ports and coastal waters are ripping off workers and putting NZ seafarers on the scrap heap". 30 March 2004The number of Indian and Chinese migrants granted residency in NZ has dropped dramatically since changes were made to immigration rules last July. 31 March 2004Around 30 of every 100 medical graduates leave NZ by their third year after graduation, according to the NZ Medical Association. Chairperson Tricia Briscoe says the exodus is due to high student debt and the global shortage of doctors which is seeing many countries offering junior doctors better working conditions and pay. 10% of NZ medical graduates have left the country each year since 1995. Increased demand for coal as a fuel for electricity generation could see between 50 and 100 jobs created if mining is stepped up in the Huntly area. With the scrapping of plans to dam the Waitaki River for power generation, the electricity industry is looking for further local sources of coal. Coal is currently imported from Indonesia to complement domestic supplies. Building consents for new residences have reached the highest annual number in 34 years. The Australian newspaper says that a confidential report to government, prepared by the Australian National University, found that participation in social or community activities by people on welfare has no discernible effect on their ability to get work. EMI, the world's third largest music company, says it will cut 1,500 jobs as it reduces its recorded music workforce and artist stable by one-fifth. 1 April 2004Changes to the Holidays Act come into effect which include increased payment for people working on public holidays and greater sick and bereavement leave entitlements. The adult minimum wage increases from $8.50 to $9/hr and the youth minimum wage rises from $6.80 to $7.20/hr. A Ministry of Health report confirms that a trans-Tasman regulatory system for natural health products will cost NZ jobs and increase the price of these products for NZ consumers. NZ Health Trust spokesperson Amy Adams says many of the industry's small players will be forced to close down or move to Australia if the treaty goes ahead. 2 April 2004A programme to provide ICT training to long-term unemployed and disadvantaged people while they work in community organisations is launched in Otara by Manukau Mayor Sir Barry Curtis. The "Cyber Communities" programme is one of the Jobs Jolt initiatives. Acting Minister of Social Development Ruth Dyson says there are fewer than 78,000 people on the unemployment benefit, nearly half the number there were when the government took office in 1999. The number of people on main benefits (unemployment, invalid, sickness and domestic purposes) has dropped by 14% over the period, from 381,000 to 326,000. The Capital and Coast District Health Board and the Council of Trade Unions sign an agreement that the $303 million development of two hospital projects will help tackle the trade skills shortage in Wellington. The agreement commits both parties to maximise trade training on the sites. 4 April 2004The Gisborne Commercial Fishermen's Association says the introduction of a quota for "by-catch" fish caught while fishing for southern blue tuna would spell the end for up to 100 small businesses. Under proposed rules, only tuna fishermen with catch histories in 1990-92 of by-catch species will be allowed by-catch quota. Association secretary Colin Kerr: "Could you just tell your fisheries ministry to act fairly towards the tuna fishermen and maybe save 100 businesses from going into liquidation?" Loan sharks, who charge up to 60% interest, are on the increase in parts of the Wellington region. Loan sharks are preying on people who borrow because they have come up short of money, often for unexpected expenses, and then find themselves with compounding interest bills that can cost them such possessions as their car or furniture. Budget advisors say that some cash-loan companies have put up signs saying: "Beneficiaries welcome _ bad credit not a problem". The US economy added 308,000 jobs in March, the biggest monthly gain in four years. 5 April 2004The New Zealand Herald says "sources" claim that the Otautahi Maori Women's Welfare League used Community Employment Group grant money to pay for a $10,000 male strip performance. The money in question was granted money for a two-day hui and awards dinner in 2001. 6 April 2004Later this month mayors and agencies from around the country will be in New Plymouth to talk about how their successful youth-focused programmes can be built on. New Plymouth Mayor Peter Tennent says that the Mayors Taskforce for Jobs is serious when it talks about getting all youth into training or employment. Tennent: "It isn't an impossible goal, it's something that can be achieved and that many cities and towns are well down the track towards addressing". 9 April 2004The government plans to offer "new start grants" for farmers forced to leave their properties due to the February floods. The grants are to ensure that farmers are left with up to $65,000 in equity if their mortgager writes off the remaining debt following the sale of the property. The government has also assigned $11.25 million for rates relief. 11 April 2004The Rangitikei Distict is to get a new sheepmeat processing plant that will employ 220 workers. Anzco Foods is building the plant at Greatford, north of Bulls. The government launches a postgraduate studies diploma to train nurses for work in rural medical clinics. An ad in NZ newspapers for security staff to work in Iraq has drawn more than 600 replies. But the Ministry of Foreign Affairs has put an "extreme risk" travel advisory on Iraq and cautions NZ'ers not to go to Iraq and, if they are already there, to leave. The Australian unemployment rate drops from 5.9% to 5.6%, the lowest level in 14 years. 12 April 2004Some people living on flood-devastated farms in the Manawatu are facing up to a year without permanent housing. Manawatu Mayor Ian McKelvie estimates 180 homes are unoccupied because of flood damage. The BNZ forecasts economic growth to be lower over the next five years than it was over the last five years, with employment growing at an average annual rate of 2% rather than 2.5%. The bank predicts unemployment to temporarily rise to 5% as the economy moves into the slower growth cycle. China plans to slow down the closure of inefficient state-owned enterprises and make it more difficult for companies to sack workers. The moves are part of an effort to hold down rising unemployment.
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FLOOD RELIEF HAMPERED BY TRADESPEOPLE SHORTAGEApprentice Training New Zealand manager Bruce Howat says there are up to 500 people still unable to return to their homes. Howat: "A disaster highlights the dramatic cost to New Zealand society when we don't train people to support and run our infrastructure." Some farmers believe the situation is being made worse by some trades people's reluctance to repair flooded houses because of the dirty nature of the work. Longburn farmer Morton Barnes says it's not a nice job in muddy places and a lot of the tradespeople seem to be just carrying on with their normal work, not wanting to know anything about flood damage work. Source - Dominion Post 22 March 2004 "Tradesmen `don't want to do the dirty work'" by Matt O'Sullivan.
FLOOD RELIEF MONEY UNSPENTRegional recovery manager of Horizons Regional Council (Manawatu-Wanganui) Mark Harrison says the hold-up is that each individual council is setting their own criteria for spending the money. Some councils are still undecided on who should be handling the money and some councils have only just sent out application forms. Some are willing to give money to individuals while others want to give it to social service organisations for ongoing support. Harrison says that councils have also been waiting on details of the government assistance programme. Other considerations are the issues of the insured versus the non-insured. Source - The Dominion Post 2 April 2004 "Flood relief millions unspent" by Julie Jacobson; The Dominion Post 2 April 2004" Dole out money, mayors urged"; by Julie Jacobson;
THE FLEXIBLE WORKFORCE ARGUMENTLooking at the ratio of unemployment for younger to older workers, the picture is even less favourable. Youth unemployment in the US is three times higher than prime age unemployment — only Norway and Italy show a higher ratio. The UK also performs poorly. The report: "Greater flexibility in the US and the UK appears to be associated with higher, not lower relative unemployment rates for younger worker."
Source: Authors' analysis of OECD, Employment Outlook , June 2001, Table C. Ratio of unemployment rates for age 15-24,A similar picture emerges from a study of low-skilled workers. In both the UK and the US, the gap between unemployment rates for the least educated and most educated workers is large in comparison to most other OECD countries. Schmitt and Wadsworth: "The international data for 1990-2000 gives little support to the view that greater flexibility in the US and the UK benefited less skilled or otherwise disadvantaged workers in those economies. Despite low aggregate unemployment rates in the US and the UK at the end of the 1990s, youth and less-educated unemployment rates in the two countries were only in the middle of the range for the OECD, while relative unemployment rates (measured by the ratio of youth to prime age unemployment) were often worse, sometimes far worse, than average for the OECD." It is true that unemployment rates of marginal workers in the UK are lower now than they were 10 or 15 years ago, but the evidence is that this has been achieved not by pricing workers back into jobs but by removing them from the labour force altogether. — Is the OECD Jobs Strategy Behind US and British Employment and Unemployment Success in the 1990s?, April 2002, published by Center for Economic Policy Analysis. Download (PDF, 58 pg, 163 kb) from http://econpapers.hhs.se/paper/epacepawp/2002-06.htm
YOUTH MINIMUM WAGE ANALYSISPrior to 2001, the youth minimum wage (then applying to 16-19 year-olds) was set at 60% of the adult minimum wage. The reform lowered the eligible age for the adult rate down from 20 years to 18 years, immediately giving in a 69% increase in the minimum wage for those who were aged 18-19. And, it raised the youth minimum wage (now applying to those aged 16-17) in two annual steps from 60% to 80% of the adult minimum. This was a 41% increase in the minimum wage for 16-17 year-olds. The report found significant increases in labour earnings and the total income of teenagers relative to young adults. However, there was some evidence of a decline in educational enrolment and an increase in unemployment and inactivity. — Youth Minimum Wage Reform and the Labour Market, New Zealand Treasury Working Paper 04/03 March 2004,Download (PDF, 37 pg, 429 kb) from http://www.treasury.govt.nz/workingpapers/2004/twp04-03.pdf
STATS NZ REPORT ON OLDER WORKERS
— Older New Zealanders - 65 and beyond, April 2004, by Statistics New Zealand, can be downloaded chapter by chapter from http://www.stats.govt.nz/analytical-reports/older-nzers/default.htm
FIRMS NEGLECTING BEST STAFF: WOMENIn the early years of employment, men and women both leave jobs to change careers. But later on, women tend to leave jobs because they were not getting the same opportunities at work that the men were getting. Kingsmill maintains that in overlooking the talent women offer, companies are not managing their human resources as well as they could. Kingsmill: "What we found in 2001 was that although company bosses generally agreed that people were their greatest asset, this was not often recognised as a guiding principle of business strategy." Source - NZ Herald 4 April 2004 "Firms neglect best staff: women" by Denise Kingsmill.
BUYING AN UNPAID JOBThe Centra's human resources manager Marama Wallace says Sakamoto had been offered a three-month "work experience" placement through the East Wind agency but the hotel had been unaware that she had paid fees. The hotel has since hired Sakamoto. East Wind manager Katsumi Okoshi maintains that the firm was doing nothing wrong. He says that between 60 and 70 Japanese students applied to East Wind every week looking for work placements and a weekly fee of up to $60 was required of them. Okoshi: "What we are doing is legal. They are volunteers." Source - NZ Herald 31 March 2004 "Unpaid job costs visitor $2400" NZPA, NZ Herald 3-4 April 2004 "Job for whistleblower" NZPA.
WELLINGTON CITY MISSION: 100 YEARS OLDThe Mission for Work is co-ordinated by Mary Moon who says they are sent beneficiaries who have been out of work for more than two years, "the toughies". The Mission to gives them practical experience at its furniture restoration unit. Moon says this gives the staff a chance to get to know them and it gives the beneficiaries a chance to get into the work routine. Many are not accustomed to taking orders or keeping to a strict timetable. Moon says the biggest thing the Mission changes is their lifestyle. Many who attend the programme go on sickness and invalid benefits which Moon says they probably should have been on in the first place. But half of the unemployed people who go through the programme get a job. Moon: "It's a big buzz to see someone swan out of here with a job." The Wellington City Mission was set up a century ago by the Anglican church when it employed William Walton to improve life in the typhoid ridden slums of Te Aro. To keep youngsters off the filthy streets, Walton set up a Sunday school and kindergarten, formed a boy's club and organised cricket teams and held regular gatherings. Today, the Wellington City Mission has 140 staff. Source - Dominion Post 24 March 2004 "A hundred years of giving people a hand up" by Leanne Bell.
JOBS PARTNERSHIP WITH RETAIL INDUSTRYWork and Income in Wellington and Auckland have been running a retail programme placing 100 job seekers in retail employment over the last two to three years. The new Job Partnership will expand this over the next three years into "retail hot spots" around New Zealand. The first stage will involve 60 participants in the Christchurch, Central and Bay of Plenty regions. The Retail Association and the Retail Industry Training Organisation will identify intermediaries that can assess Work and Income job seekers for qualities needed in retail. They will also assist in the arrangement of a structured straining programme, including pre-placement, and on the job training. To address the problems of retention in the industry, the intermediary will also give follow-up support to job seeks after they get a job and help them to develop and implement a six-month career plan. Source - Speech NZ Government Rick Barker 24 March 2004 Barker Speech: Jobs Jolt employment programme www.scoop.co.nz/mason/stories/PA0403/S00511.htm
NZ RATED 12th best outsourcing destinATIONSource - Press release A T Kearney 5 April 2004 "NZ Listed at No 12 in Offshore Ratings Report" http://www.scoop.co.nz/mason/stories/BU0404/S00065.htm ;
KERRY PLEDGES TO TAX OUTSOURCINGSource — Reuters 4 April 2004 "Kerry goes for Bush on jobs" www.stuff.co.nz/stuff/0,2106,2865546a12,00.html
IS THE OUTSOURCING BOGEY A "BEAT UP"?But Drezner argues that the numbers being thrown around are vague, overhyped estimates. What hard data exists suggest that gross job losses due to offshore outsourcing have been minimal when compared to the size of the US economy. Drezner says that during the 1990s, offshore outsourcing was not uncommon, but no one much cared because the number of jobs leaving US shores was far lower than the number of jobs created in the US economy. Drezner predicts that most jobs will remain unaffected by outsourcing because close to 90% of jobs in the US require geographic proximity. Drezner: "As for the jobs that can be sent offshore, even if the most dire-sounding forecasts come true, the impact on the economy will be negligible. The prediction of 3.3 million lost jobs is spread across 15 years. That would mean 220,000 jobs displaced per year by offshore outsourcing, but total employment in the US is roughly 130 million and about 22 million new jobs are expected to be added between now and 2010. Annually, outsourcing will affect less than 0.2% of employed Americans." Source - Foreign Affairs May-June 2004 "The Outsourcing Bogeyman" by Daniel W Drezner. www.foreignaffairs.org
WHAT IS A SOCIAL ENTREPRENEUR?New Zealand Herald business columnist Colin James has a go at defining it. He says a social entrepreneur, like a genuine business entrepreneur, builds something new, creates something out of ideas and energy that would not otherwise happen. Business entrepreneurs create economic wealth; social entrepreneurs create social connections or improvements — social wealth, or social capital. James: "Social entrepreneurs are not numerous. They are unpredictable, idiosyncratic, as herdable as cats and can't read rulebooks. They are polar opposites from the risk-averse public servants who dole them cash. They are attractive to cash-constrained modern governments because they extend governments' reach, are more effective than lumbering, rule-bound state agencies and can be value for money." Source - NZ Herald 6 April 2004 "Social entrepreneurs a politically hazardous breed" by Colin James.
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