Key features of the changes:

Maharey maintains no beneficiary will be worse off financially from the changes. However, he has not ruled out the possibility future beneficiaries might end up with less in their pockets than today's counterparts.

Maharey expects the changes to save government $40-$70 million per year. But he is adamant the move is not just a cost-savings exercise. Maharey: "We're doing it because we want a simpler, more effective benefit system that's geared to people going to work. We're spending our money differently rather than looking for large gains in saving at this time. However, if it's more effective we would hope to see a lot less people on benefits."

One intention of the changes is to see more people on sickness and invalid benefits join the workforce. Those who have some capacity to work will be given a greater financial incentive to work by continuing being paid their disability payments if they join the workforce. Maharey says this recognises that the financial costs of having a disability don't just disappear because a person has a job.

The government has also signalled it will review of the domestic purposes benefit with the intention of making changes before it is finally rolled into the new single benefit in 2007. The review will look at introducing stiffer sanctions for those who don't meet work plan obligations and require more work-focused participation.

The Cabinet papers suggest the move to a single benefit is designed to break down entrenched attitudes and stereotypes about benefits and their purpose. The Cabinet papers: "Too much of the system is still inherited from a past in which jobs were scarce and it was assumed categories of people, and particularly people with health conditions or disabilities, couldn't work and didn't want to work."

Source — Media release Steve Maharey, 22 February 2005, "Simplified benefit system roll-out begins in May"; NZPA, 21 February 2005, "Single benefit to massively reduce administration - Clark", by Sharon Lundy; The Dominion Post, 22 February 2005, "Govt says revamp to put 4000 into work" by Vernon Small; NZ Herald, 23 February 2005, "Cash bait to get beneficiaries into work" by Ruth Berry.

There are also gender rights issues. Women whose husbands die can get a widow's benefit and women over 50 whose relationships break up can get a "woman alone" benefit, neither of which require them to work. But men who are widowed, as well as older single men whose relationships break up, and don't have a job get slightly less money on the dole and are work tested.

Maharey promises that any women on the widow's benefit now would not be affected and their entitlement to will stay with them till they die. There are 8,028 women on the widow's benefit.

Source — Dominion Post 23 February 2005 "Widow's benefit could be axed" by Tracy Watkins.

Despite the need for more skilled workers, Barbara warns that a funding shortfall for off-the-job training of electrical apprenticeships may force some electricians to dismiss their apprentices. Barbara says the Electrotechnology Industry Training Organisation funding started drying up in August last year because government allocations were failing to keep pace with increasing demand. Barbara: "We warned the government of a funding shortfall six months ago. Now, two months into the 2005 year, no further placements can be made. We know training places exist. But the government continues to ignore requests for more subsidies. We find this totally unacceptable — especially when New Zealand is reeling from a skills shortage which can only get worse."

Source — NZ Herald 24 February 2005 "Crossed wires on sparky training" by NZPA; Press release: Electrical Contractors Association of NZ 22 February 2005 "Untrained apprentices could face dismissal"; The Dominion Post, 28 February 2005 "Trade shortage hits `crisis'" by Haydon Dewes; Telephone interview with Jenny Brash by Dave Owens, 2 March 2005.

The Council of Trade Unions says current levels of business profitability and productivity justify paying staff better. President Ross Wilson: "Wages are lagging behind consumer prices which are up 2.7%, house prices rose nearly 14% last year — and the government will shortly put the minimum wage up by 5.6%."

Sunday Star Times business editor Rod Oram says the unions have a valid point. Across the whole economy, and particularly since 2000, business profits have grown much faster than wages. The government collected 18% more money from company tax in the second half of last year than it did in the second half of the previous year. Oram points out that the 2.5% wage rates rise may have been the fastest annual increase in nine years, but even the biggest sectoral gain, in construction, was only 4.2%. Today, just under 50% of people had nil to 2% pay rises. Oram: "In a classic market, prices rise when demand exceeds supply. But wages aren't."

Oram says a key factor in the disconnection in the labour market is the much diminished power of unions. A decade ago, 50% of the private sector was unionised so collective agreements had real clout. Today, with membership down to 12%, union have been "price-takers rather than price-setters". Oram: "And despite employers' hysterical protests to the contrary, the Employment Relations Act and its subsequent amendment bill have not significantly returned power to unions."

Sources — NZ Herald 9 February 2005 "Employers have had it good" by Brian Fallow; Press release, Statistics New Zealand 8 February 2005 "Continued Annual Growth in Wages"; Press release New Zealand Council of Trade Unions 8 February 2005 "Pay Rates Lag Behind Price Rises"; Sunday Star-Times, 13 February 2005, "Unions' pay demands are valid" by Rod Oram.

Source — NZ Herald 28 February 2005 "Unions to push for 5pc pay rise" by Mathew Dearnaley. NZ Herald 28 February 2005 "Call for wage increases `unrealistic' say employer groups" by NZPA; The Dominion Post, 28 February 2005, "Unions: 5 per cent or else" by Pam Graham and Paul Mulrooney; Media release Green Party, 28th February 2005, "Govt should support union's five per cent wage claim".

Minister of Corrections and Labour Paul Swain says the goal is to cut recidivism. Currently, one quarter of inmates re-offend and are back inside prison within a year of release and 40% are re-imprisoned within two years. A work skills training programme could make inmates more employable on their release and perhaps less likely to re-offend. The programme would also help fill skills shortages, notably in construction and road building.

Source — The Dominion Post 21 February 2005 "Inmates may fill labour gaps" by Martin Kay; The Dominion Post, 22 February 2005 "Inmates `should pay for industry training'" by Martin Kay

Miller says those people most affected by such a change had not been consulted. Miller: "Minister Dyson said there had been consultation ads in the newspaper, but the people who are affected can't read the paper. They haven't come to the people most affected and that's not right. We know what will happen … it's going to impact on the lives of our families' in a very significant way. We just want some listening."

• Minister for Disability Issues Ruth Dyson says there has been plenty of opportunity for consultation.

Source — Dominion Post, 15 February 2005 "Fears new legislation could cost disabled people their jobs".

Work Opportunities remains an agency of the Department of Labour, not MSD as reported in the last Jobs Letter. Work Opportunities is to "provide knowledge" about labour markets at the national, regional and local levels. The Department will soon put in place 15 Labour Market Knowledge Managers around the country who will focus on sector and regional labour market strategies and provide support to the new MSD teams.

Source — Email from Naomi Stephen-Smith, Department of Labour, 1 March 2005, "Comment for The Jobs Letter".

The report, The Age Chasm — Successfully Managing Age in Your Organisation, shows growth in labour supply will be firmly concentrated in the group aged 45 and over for the foreseeable future. Age Chasm: "Severe labour shortages are already being felt in the skilled trades and the automotive, education, health and transport and distribution sectors. This trend is expected to become more widespread over the next five years because of Australia's falling fertility rate and immigration levels. We estimate 85% of all workforce growth will be supplied by people aged over 45 by 2012, up from 32% in 1992."