No.230 17 March 2005 Essential Information on an Essential Issue

of key events over the last few weeks.










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2 May 2005

An ambitious $1 million private effort is under way to tackle skill shortages in the information and communications technology industry (ICT). It hopes to result in a technology curriculum for years 11-13 schoolchildren, and in the creation of a new national ICT training organisation. The initiative is the brainchild of E-Regions, a non-profit trust founded by influential industry activists.

Permanent long-term migration to NZ increased the population by 1,400 people in March and by 10,000 for the year to March. This was down by 28,000 on the previous year.

Migration outflow of NZers to Australia was 17,200 for the year. This was slightly higher than the annual average of 14,000 NZers who have gone to live in Australia since 1993.

3 May 2005

South Canterbury school principals report that a concerning number of secondary students are struggling at school because they have paid jobs which are distracting them.

Treasury officials have questioned PM Helen Clark's plans to get mothers back into paid work, saying NZ households are already among the hardest working in the world. Treasury says getting more mothers into work would result in less time for child rearing, housework, and leisure or unpaid activities that are "... nonetheless valuable and contribute to the overall welfare of the country."

The Treasury comments have been welcomed by women's groups, child welfare organisations and home-based mothers angered by Clark's comments earlier this year.

5 May 2005

Statistics NZ reports that the cost of labour increased 0.5% in the March quarter and by 2.5% for the year to March. 59% of workers received an increase. The average increase was 4.4%.

The World Economic Forum will launch a study later this month that attempts to measure and rank the "gender gap" between 58 national economies. The intention is to gauge the benefits countries receive or penalties they endure due to involvement or lack of involvement of women in their economies.

6 May 2005

The International Monetary Fund is forecasting the NZ economy to grow by 2.8% in the coming year, a slowdown from last year, but still faster than the OECD average.

7 May 2005

The increase in the number of mothers returning to work — especially those of under one-year-olds — is contributing to a widespread shortage of nannies. NZ Nanny Support Service says there is a big demand for care for babies. Manager Stacey Dunne says there is a whole culture change occurring. Nannies have traditionally been employed by the wealthy but with government subsidies, demand has taken a huge leap. Dunne says she has only been able to fill a third of her enquiries for nannies this year. Nannies earn $15 - $18/hr and experienced, qualified nannies can command as much as $25/hr.

8 May 2005

Te Wananga O Aotearoa is on the brink of insolvency. Cabinet approves a $20 million loan to the institution so it can meet its financial commitments over the next fortnight, including wages to staff and payments to creditors.

Hewlett-Packard has beaten EDS and IBM to get the job of trialing client management software Curam for Work and Income. The software trial itself runs to seven figures but, if successful, would cost the government "at the low end of $80-180 million" to install and support, according to a Hewlett Package spokesperson. Curam is expected to take on many of the functions done by Swiftt and Trace, the custom-built case management applications used by Work and Income. The trial will run from July to November.

10 May 2005

About one-in-four NZ homes are not insulated and one-in-three have inadequate or no heating. The Health Research Council has found that people in insulated homes suffer less from respiratory problems and have fewer sick days off work.

11 May 2005

A report from the investigation of employment conditions of foreign fishing crews working on NZ boats in NZ waters is still unreleased by Minister of Labour Paul Swain. The Nelson Mail says Swain received the "potentially damaging" report in December. The investigation was initiated last year when NZ fishing companies, who said they could not find NZers to crew factory trawlers, gained approval to employ foreign workers.

The National Australia Bank will cut 10% of its workforce or 4,200 jobs, worldwide. 2,500 Australian jobs will be part of the cuts.

12 May 2005

The NZ unemployment rate rises to 3.9%.

The Australian economy defied economists' predictions and added jobs in April. The Australian unemployment rate remains at 5.1%.

13 May 2005

NZ newspaper job ads increased 3.9% in April after being down almost than much the month before. Jobs ads are 1.3% lower now than they were at this time last year.

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  • unemployment.gif - 8195 Bytes The unemployment rate rose from 3.6% to 3.9% last quarter, the first rise since December 2003.

    The number of jobs added to the economy, just 1,000, was significantly lower than the nearly 12,000 increase in the working-age population. Annually, employment growth was still a strong 3.4%, or 67,000 jobs, but the growth has slowed.

    Statistics New Zealand says that despite the increase in unemployment and the "flat employment result", the labour market remains historically strong. The unemployment rate of 3.9% is still the third lowest rate the Household Labour Force Survey has ever recorded, the rate of labour force participation is still high, and there are more people than ever — 2,055,000 — in the New Zealand workforce.

    For the week preceding the statistics release, economic forecasters had been predicting unemployment to drop to 3.5%.

    We include our regular Statistics That Matter summary in this issue of The Jobs Letter. Some highlights:

    — the rise in unemployment was primarily a result of a rise in the unemployment rate for Pakeha/European men;

    — the number of women in paid work rose, and the female labour force participation is now at an all time high;

    — full-time employment increased 0.8% but part-time employment decreased by 3.2%.

    Is this the landing of a heated economy long-predicted by economists? It is too soon to tell, but it is the first turn around in the jobs figures since June 1998.

    Also see our updated feature: Who Got the Jobs.

    Source — Statistics NZ, 12 May 2005, "House Labour Force Survey March 2005 quarter"; New Zealand Herald, 12 May 2005, Unemployment rise contradicts economists" by Simon Louisson.


  • High school students are taking on too much part-time work, according to some school principals. A survey of Year 13 students at Shirley Boys High in Christchurch last year revealed that 85% worked for an average of about 12 hours a week and some students work up to 25 hours per week. Principal John Laurenson says a small amount of part-time work can be good for students' personal development, but he is concerned about the impact of increasing hours students are spending at work. He says too much work encroaches on study time and limits the opportunities students have to participate in sporting and cultural activities. Laurenson: "It's eating into their time at night to study and then they don't have the energy when they do come to study."

    Wellington East Girl's College principal Janice Campbell says some working students at her school are saving for university, but others just want cash for fashion and entertainment. Campbell agrees that part-time work could teach important skills but she notes that her school's top pupils focus on their studies and extra-curricular school activities. She says the students who get the best results don't have part-time jobs.

    The top three reasons students give for getting a job are to save for (or to run) a car, to have a social life and to save for tertiary education in hopes of avoiding having to take out a student loan.

    Source — The Press, 9 May 2005, "Part-time jobs cut study hours" by Amanda Warren; don 9 May 2005, "School warning on part-time job drain".


  • Meanwhile, the number of tertiary students receiving student allowances has been dropping over the last five years. 40,434 students received an allowance in the first quarter of this year compared to 52,465 in 2001 — a drop of 23%. Over the same period, student numbers increased by 28%.

    The reduction has continued despite the government's assurance that the changes to the eligibility criteria for the student allowance, made in last year's Budget, would boost the number of students receiving allowances. But since the 2004 Budget, there have been 3,000 fewer students claiming an allowance.

  • Co-president of the NZ University Students' Association Andrew Kirton says the government had failed its promise to students. The government predicted 36,000 more students would receive an allowance in 2005 when it made eligibility changes last year. NZUSA co-president Camilla Belich points out that if students earned more than $108 per week after tax by working, they lose their allowance. Belich: "This is far too low and needs to be raised to reflect the actual cost of living."

    And both the National Party and the Green Party have pointed out that Minister of Education Trevor Mallard knew in mid-February of the decline in this year's student allowance numbers and yet three weeks later he announced how the Ministry would be budgeting $223 million for more student allowances over the next four years, an amount it looks unlikely to spend.

  • Mallard says there are a variety of reasons for the drop-off in student allowance numbers. These include the strong employment market that has encouraged more students to go straight from school to work instead of enrolling in tertiary education. There has also been a shift from full-time to part-time study accompanied by part-time work, putting these student incomes over the eligibility threshold. Mallard also speculates that parents may be earning more and so fewer students are eligible for allowances because these are based on their parents' incomes. Mallard: "Part of the problem with this issue is that it is just all good news."
    Source — Association of University Staff Tertiary Update, 5 May 2005, "Student allowance figures plummet"; Media release NZ University Student Association, 4 May 2005, "Students invoice Mallard over bungled allowances"; Media release Nandor Tanczos, 4 May 2005, "Students still waiting for $223 million the govt promised"; media release Trevor Mallard, 5 may 2005, "Strong economy leads to fewer tertiary enrolments"; New Zealand Herald, 3 May 2005, "24pc fewer students on Govt allowances".


  • msdandcofc2.gif - 7700 Bytes The government has signed its latest "jobs partnership" with the intention of getting more sole parent beneficiaries into the workforce. Minister of Social Development and Employment Steve Maharey is working with the Auckland Chamber of Commerce to identify skills and labour gaps. Work and Income will respond to these by selecting candidates — primarily from a pool of people on the domestic purpose benefit — who "have career aspirations that meet the needs of employers". The Chamber will then provide, or nominate, training and support for those people moving into work.

    The reason the government has joined with the Chamber of Commerce in this latest jobs partnership is because it wants to shift the perception employers tend to have when they consider hiring people who are on the domestic puprposes benefit. Maharey: "A particular problem is that employers are often reluctant to hire sole parents with young children. To help address this the Chamber will promote the benefits of flexible workplace practices among its members."

    This "jobs partnership" is the ninth the government has initiated, but the first that is directed at a particular group of beneficiaries rather than with a specific industry. The Ministry has jobs partnerships with the hospitality, meat, retail, transport, plumbing, rail track maintenance, road and bus industries. They are all intended to provide unemployed people with entry-level skills training.

    Source — Media release, Steve Maharey, 6 May 2005, "DPB focus of new industry jobs partnership".


  • costello1.jpg - 5646 Bytes Australian Treasurer Peter Costello's Budget has made changes to tax rates that will reduce the amount of income tax the government will receive by $21.7 billion over the next four years. Australians with incomes of $55,000 or less will have their taxes reduced by $6 per week. And the 400,000 families with children, who earn less than $37,500, will also get a $12 per week increase in their family tax benefit. Costello says the changes will see more than 80% of Australians being taxed at 30% or less.

    The tax changes are more generous for those earning $95,000 or more. This group will have $41 a week more in their pay packets this year, rising to between $57 and $86 next year.

    Welfare. Costello had promised a "welfare revolution" and the most significant changes in his Budget are tough new welfare rules. From next year, new applicants for a disability benefit who are judged to be capable of working at least 15 hours per week will be required to get a job or they will be pushed onto the dole, which pays $40 per week less. Similarly, new sole parent applicants will only be eligible to remain on that benefit for much shorter time frames before they are forced either into work or, like the disabled, onto the dole. People who fail to turn up for job interviews — or look for enough jobs each fortnight — face a faster suspension of their dole payments under a new penalty regime.

    On the "carrot" side, there will be more places for out-of-school-hours childcare. And benefit abatement rates have been eased to allow people going into low-paid work to retain more of the benefit.

    Jobs. The Budget contains $2 billion over four years to boost "rehabilitation, retraining and job-search support". Included in these are pain management courses and personal support programmes to get people "job-ready quickly". There will be 68,000 places in employment programmes for people with disabilities as well as taxi fares to get beneficiaries to their job interviews or work. Wage subsidies for 7,000 people will be paid to companies for up to six months to hire older and long-term jobless people.

    Skills. More money is to be spent to attract skilled immigrants. Trade skills shortages are to be addressed by the new Australian Technical Colleges (see Jobs Letter No 220), which will begin training people in localities experiencing severe trade skill shortages. Youth allowances will be extended to new apprentices and school-based apprentices. And apprentices will get an $800 allowance to spend on a tool kit.

  • Australian Labor Party education spokesperson Jenny Macklin says the government needs to deal with the skills crisis today, and not wait until 2010 when the Australian Technical Colleges will produce their first tradesperson. She says it is wrong to respond to the skills shortage by relying on the "quick fix" of imported skills. Macklin: "The government had turned away 270,000 Australians from TAFEs [polytechnics] since 1998 but imported 178,000 skilled migrants since 1997."

    Australian Council of Trade Unions argues that the Budget provided no money to deal with the skills crisis now. President Sharan Burrow: "The Budget contained not one extra dollar for TAFEs. Skills are absolutely ignored. We get a tool kit when we've got a skills crisis."

  • The Australian Council of Social Services says new spending for childcare and wage subsidies for the long-term unemployed are welcome, but overall, investment in the Budget is "modest". President Andrew McCallum characterises the Budget as a game of "snakes and ladders" for the jobless. McCallum: "Some people get extra services which give them a push up the ladder into work, while many sole parents, their children and people with disabilities get payment cuts and harsher penalties which will slide them deeper into poverty."

  • The Budget ignores Australia's key problems, according to the Centre of Full Employment and Equity. Director Bill Mitchell says the Budget didn't provide the major public spending that is needed to address the skill shortages and infrastructure bottlenecks that will curtail future prosperity.

    Mitchell points out that in order to move more people from welfare to work there has to be enough jobs to go around and people with the skills to take them. He says the Budget is silent on how people will find work and provides no job creation initiatives. Mitchell: "We needed jobs from this Budget. Instead there are more training courses and programmes while Job Network providers get more power to punish those who fail their penurious activity tests. We needed a Budget that invested in job creation, public health and education. We got a Budget that continued to feed a Future Fund when those who are unemployed, sick and poor today need access to services and paid work."

    Source — The Age, 10 May 2005, "Budget cuts for them masses" by Xavier La Canna; Sydney Morning Herald, 11 may 2005, "The money in your pocket" table; The Age, 11 May 2005, "Tinkering leaves a few carrots, plenty of stick" by Farah Farouque; The Age, May 11, 2005, Welfare set for $3.6bn overhaul; The Age, May 11, 2005, "Boost for training to avert crisis"; The Age, May 11, 2005, "Recipients can keep more of dole while working" by Misha Schubert; Media release ACOSS, 11 May 2005, "Snakes and ladders for jobless in Federal Budget". Media release Centre of Full Employment and Equity, 10 May 2005, "An unfair budget and not a jobs in sight!"


  • Minister of Finance Michael Cullen looks unlikely to be drawn in by the tone of the tax cutting Australian Budget. Cullen has tempered any enthusiasm for tax cuts, saying the New Zealand economy appears to have peaked at the end of last year. Cullen: "We are entering a period of economic slowdown that looks set to continue for 2005 and into 2006. The over-riding theme of this year's Budget, as with the past five Budgets, is the need to play the long game, to ensure that our economic fundamentals remain strong. This week's Budget would continue `a conservative fiscal approach'."
    Source — New Zealand Herald, 12 May 2005, "Economy on downturn, says Cullen," NZPA


  • The Defence Forces have had to limit recruitment despite having fewer staff than necessary to do the work the government expects of it. A report conducted by the Defence Force, the Ministry of Defence, Treasury and the State Services Commission found the New Zealand Defence Forces is about 2,500 staff short. Overall, personnel numbers have reduced from about 21,000 in 1991 to about 13,000 last year. This has occurred at a time when overseas deployments have soared. Through the 1990s, 2 — 6% of Defence Force staff were on operational deployment at any one time. Now 14 — 25% of staff are on operational deployments, primarily due to the government's increased commitments to global peace-support operations. The Army attrition rate is 18% per year.

    Minister of Defence Mark Burton says the government will spend $4.6 billion over the next 10 years to rectify the problems outlined in the report. The money will be primarily aimed at improving staff retention and recruitment. The Defence Force hopes the funding will help it to boost staff numbers by 1,500 — 2,000.

    Source — New Zealand Herald, 3 May 2005, "Army staff victims of cash crisis" by Ruth Berry.


  • The availability of better paying jobs in other industries is pulling workers away from the caregiving sector, according to a working party on support services for the elderly and disabled. The working party, that included Ministry of Health officials and industry representatives, found poorly-paid caregivers are leaving their jobs in large numbers. Staff turnover rates were 39% for home carers and 29% for residential caregivers. The average time staff spent working in the sector was just two years. The working party concluded there is almost no training provided in the sector.

    The working party's report indicates the situation is likely to worsen now that nurses working for district health boards have negotiated a 20% pay rise. That settlement was likely to draw both nurses and caregivers from the sector, to better paid health board jobs.

    Source — NZPA, 10 MAY 2005, "Caregivers giving up, paid $9.50 an hour"


  • Happiness: money can't buy it, at least not in developed countries. A new book claims that people who live in developed economies are financially about twice as well off as they were 50 years ago, but they are no more content. And although people in richer countries are on average happier than those in the poorest ones, a "diminishing return on happiness" sets in steeply once incomes reach around $20,000 a year.

    In Happiness: Lessons from a New Science, British economist Richard Layard points out that part of the reason for this is that people judge wealth relatively rather than absolutely. Layard says even if you were happy getting a pay rise, finding out a colleague got a bigger one can more than wipe out your "happiness increment". Once people have enough money to live, Layard says competition for money and status is a zero-sum game. And the more opportunities people have for comparison, through things like rankings and advertising, the greater people's dissatisfaction is.

    Layard maintains that traditional economics fails to take account of the remarkably commonsensical things that happiness really depends on: loving relationships, fulfilling work, reasonable health, ties of community and friendship, personal freedom and values. All of these have a greater impact on people's happiness than their income.

    Security and family-friendly policies are more important than absolute income and Layard maintains there is no overwhelming need for people to work harder to keep up materially. Targets, incentives and performance-related pay aren't the best way of running companies or revolutionising public services. His research found a fulfilling job allowing pride in the work, challenge and autonomy, is its own reward and the best workplace motivator.

    happiness.jpg - 21191 Bytes

    Lessons from a New Science

    February 2005, published by Allen Lane,
    can be purchased through Amazon.com here

    Source — Guardian Weekly, 29 April — 5 May 2005 "Money can't buy happiness" by Simon Caulkin