
| No.254 | 9 September 2006 | 254 Issues Published in New Zealand from 1994 to 2006 |
Index to Features
Key events over the last 12 years. For the complete list of Jobs Letter headlines, click here.
The Jobs Letter No.1
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LAST Diary
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It strikes me that we have learned a great deal over these years. First that well-working labour markets and stable economic growth matter a lot and yield large employment benefits. Second, that policy and its implementation does matter. Changes to labour market rules, the age and entitlement to national superannuation, and the concerted performance targets of WINZ and its predecessors in getting people into work have all contributed to these gains. Third, we have learned that long-term detachment from the labour market has significant, long-term costs. Studies have shown larger lasting income losses for those out of work the longest. Even now, Pacific and Maori participation rates have not returned to earlier levels as detachment was most severe for these and other lower skilled groups. Fourth, we have learned that getting people off-benefit does not equate with getting them into work and sustaining their attachment and progress in the labour market (e.g. see LEED research reports). We still have some work to determine the appropriate responsibilities of our public institutions in this regard and how best to assist successful work transitions. Fifth, we’ve learned that employment growth, by raising the real and relative incomes of low-income people, has the potential to improve equity in the distribution of income, at least in the lower half of the income distribution (see Treasury working paper on the earnings distribution and Motu analysis of the Maori income distribution). Lastly, I observe that we have gained new understanding of how dynamic the labour market is. The LEED data offer dramatic new insights here. For every new job created in a quarter, perhaps five to ten times as many are starting and a similar number are finishing. High job turnover means that there are many opportunities for job seekers to enter the labour market, but we have also learned that tenure is often very short.
We have learned a great deal over the 12 years. We have learned more about the full social costs of radical economic reform. We have learned more about the strengths and weaknesses of a market economy. We have learned more about our society’s willingness to accept ethnic and sexual diversity. We have learned more about the strengths and weaknesses of central and local government policies for improving social, economic, environmental and cultural well-being. Most of all, we have learned that even in a period of rising economic prosperity, serious problems of poverty (in its widest sense) remain. In particular, New Zealand continues to have shocking issues with child and youth poverty. Social Report 2006 records that 38% of dependent children under 18 years had low living standards in 2004, an increase from 34% in 2000. It also records that New Zealand has the third highest male youth suicide rate and the highest female youth suicide rate in the world. We are one of the few countries where the suicide rate is higher at younger ages than at older ages.
Punitive approaches like benefit cuts and work-for-the-dole are doomed to fail. They don’t lead to real jobs, and they use up case managers time in administration. Only a strong economy and targeted, specialised services deliver sustained employment growth. Services must match people’s skills and circumstances, and acknowledge that some have greater barriers to work than others. The more we reduce unemployment benefit numbers, the more time and resources we can focus on supporting other groups, like people with ill health or a disability or the long-term unemployed. Results like benefit numbers are easy to measure and quick to see. Others, like sustained improvements in education or living standards, take a longer time. We need to measure immediate and long-term progress to get a genuine sense of what’s working.
Work-for-the-dole schemes don’t work, and a strong vibrant economy is a better road to creating jobs than forcing people to work for subsistence wages. Under the current government’s approach, part of the price for higher employment rates appears to be very low wages and poor conditions of employment for many workers. A local government/government partnership (Mayors Taskforce for Jobs) working together to help end youth unemployment can begin to effect real change for the better. Both National and Labour-led Governments are happy to entrench structural discrimination against beneficiaries and their children and to continue with an income support regime which is usually not enough for people to live on, impossibly complex and expensive in its administration, and often unfair in its application. There is a lot more that needs to be done by all of us who care across all sectors to end unemployment and poverty in this country.
I have learned that when we go through significant restructuring we should think long term and not just short term. When we restructured in the 1980s and 1990s we left a group within our community in NZ without engagement, or hope, and we then did not train people for where our economy was heading. We did not train trades people. We relied on the ‘market’ to meet future needs. The partnership between public and private was non-existent. The concept of ‘non market intervention’ was a mantra chanted by the high priests of the market. A modern economy needs an active engagement by both public and private sectors. Our forebears understood this and they set up a good mix of training which was not just at universities. We have to make sure that careers advisors understand where jobs are, and what skills are needed. This will lead to our young people being exposed to many potential opportunities for their lives. We have a lot of lost time to make up if our economy is to have the skilled workforce which will be necessary to meet the demands of new world markets for our goods and services. Let us never repeat the awful mistakes we made during the past two decades with our dreadful ‘hands off’ approach. We are a resilient country that has been rocked by globalisation, oil prices and even the weather in recent times, but we have met these challenges and continue to grow.
No-one talks about these things any more. What has changed? Poverty, inequality, exploitive employment, deteriorating public services and user charges for the poor have become normalised. Successive governments that have claimed to represent working people have been more concerned about threats of capital flight and a crisis of investor confidence. Even compliance with New Zealand’s international obligations on paid parental leave only occurred through pressure from the Alliance Party, which was deliberately killed off at the 2001 election.
We have learned that the ‘divide and conquer’ strategy still works, Fritz Schumacher was right, the monetary status quo where interest-bearing-debt-operating-for-profit-only has sucked us all in and is unsustainable, consumerism is unsustainable, competition needs to give way to co-operation, most institutions in our western society need to be reformed into more sustainable social relationships, we must protect our environment, another world is possible, the trickle down system has not worked, divisional barriers need to be abolished and that we are one species that needs to work together.
It is more what we are about to learn … which is attacking poverty with a work-incentive tied to children is a clumsy and ineffective approach. It punishes those children whose parents lose their jobs in a recession and by being so expensive diminishes the political will to increase disposable income of those who can’t work. In terms of learning, we have learned nothing from the failures of the family income support measures of the 1990s including the introduction of the highly divisive and discriminatory Child Tax Credit in 1996. The In Work Payment of 2006 perpetrates the inequity. We have learned nothing from the benefit cuts of 1991 as they have been mirrored in 2005 with core benefit reductions and changes to hardship provisions. We have learned little from the failure to index family support with indexation applying to cumulative inflation over 5% only from 2007. We have taught women that the only value they have is if they are in the workforce. What we will learn from this is that when women also undervalue their care-giving role, society is immeasurably worse off.
The market does not (nor should it be expected to) provide services and opportunities that are neither commercial nor profitable. Developing and maintaining a fair, just and equitable society requires visionary public and community intervention and investment. Contracts for services in the not-for-profit sector is a poor substitute for developing partnership approaches between the public, private and community sectors to address gaps. A long-term commitment to investing in research and development work in the community sector is a pre-requisite for building more robust and sustainable economies.
We should have learned by now that ‘trickle down’ does not work. Tax cuts for the rich, higher profits, privatisation of state assets and so on did not trickle down benefits to all. If anything they trickled up and then flooded out of the country. We should have learned that there is nothing wrong with strong regulations that can ensure redistribution of income through the tax system and the labour market. We have learned that in the right circumstances, minimum wages can rise sharply without leading to high unemployment. Also we know that if employability relies on having a transferable skill, then we need investment in skills. Knowledge may be an infinite resource but it needs to be nurtured. We have learned that it is very hard to come back later and address the major social deficits that develop when right-wing economic policies reign supreme for over a decade. Hopefully we have learned that a sustainable development framework is a better approach.
[ Achieved ][ Learned ][ Future ][ Top ]
Retaining of power and control generally drives political leaders and their bureaucracies, at both national and local levels, resulting in a reluctance to work in true partnership with citizens. Consequently local initiatives lack of support and encouragement and don’t tap the potential that exists within its citizens, limiting what can be achieved. There’s growing evidence across all sections of society, of increasing anti-social attitudes and values ranging from things like selfishness, greed, lack of accountability, lawlessness, violence and abuse, lack of concern or consideration of others and so on, which also impinges on results. The need is for holistic rather than the pepper-pot approach for attempting to solve the symptoms of social problems or ills when the public demand for action means they can longer be ignored by authorities. Such negative trends feature, in varying degrees, in all developed nations, indicating there’s a common denominator in this socialising failure of young over the last century or so.
I’m not sure that we have learned anything or we have we done anything to change or improve what we know. We have learned that we have a critical shortage of skilled workers and we are now addressing that with a number of initiatives. We know that varsity graduates are leaving the country in order to pay off their huge debts because they are being offered better wages overseas ... and we are not really doing anything about that. We have learned that wages are far better in Australia than here and we are advised by Michael Cullen not to ask for wage increases ... so we are not doing anything about that. In a nutshell we have learned many things but are not doing anything about them.
Sadly, in respect of poverty we have learned nothing. The policies that brought so much hardship to so many in the 1990s have not been abandoned, and in the case of the In Work Payment, they have been made harsher. While CPAG endorses the principle that decent, well-paid work should be available to all who want it, we believe there must be official acknowledgement that the needs of children do not change according to the work status of their parents. And this acknowledgment should be accompanied by policies. Nor have we relearned the value of well-paid, secure work. Communities devastated by the reforms of the 1980s are now struggling as parents work two or more jobs to stay afloat. A liveable minimum wage would seem an obvious lesson that has eluded us.
It is now acknowledged that the Employment Contract Act era of the 1990s encouraged employers to focus on reducing labour costs rather than investing in skill development and technology. The result is that our wages here are low enough to drive skilled workers offshore, particularly to Australia. The neo-liberal economic and welfare policies of the 1980s and 1990s created and worsened the conditions that result in the significant hardship faced by many low-income workers and beneficiaries. More recently though, we have learned that if we involve workers in decision making on matters on the job that effect them, it can have positive results. A good example is the increased worker participation introduced by the 2002 health and safety reforms that are helping to bring down our still too high rates of workplace fatalities. We have also learned that regular, albeit modest, increases in the minimum wage over the last six years has not seen large numbers of people being put out of work, instead it has coincided with the lowest unemployment in 20 years.
What we have learned is that good governance is one of the most vital ingredients to the survival of an organisation and the effectiveness of the programmes it delivers. Robust evaluation is vital so that programmes can prove positive outcomes and improve delivery. Funding streams are too often short term and there is a tendency from funders to throw money at good ideas that are not sustainable. Organisations too often get obsessed with the process rather than outcomes and the end game. There is insufficient emphasis on benchmarking for quality. There is too much competition between organisations and not enough collaboration. There is not enough collaboration between government ministries.
Partnerships between business, economic development agencies, local government and central government are bringing good results both at national, regional and local level. Work & Income Regional Commissioners being given more autonomy and flexibility has enabled innovation and creativity in employment creation areas in partnership with Councils, the community and other key stakeholders. Regional labour market strategic plans also provide for a clear way forward. Key Department of Labour staff working with Ministry of Social Development staff at regional office level is a great step forward in breaking down central government silo thinking. I would like to see Tertiary Education Commission also working closer together with these two key government departments and members of the Mayors Taskforce for Jobs and their Councils. Now we have done the planning, let’s all work together to implement them and achieve full employment.
These 12 years have been hugely valuable as the population, in spite of much of the leadership, has re-established a consensus in favour of public services and other forms of social support and community building: essentially, a re-legitimisation of democratic government. It is now more legitimate to try to control socially and environmentally destructive activities and to plan and introduce desirable social and environmental policy. As well, some of the consumerist frenzy that followed deregulation seems to have eased.
What have we learned? It will be hard to tell until, and if, the economy eases to levels similar to what it was 12 years ago. Only then will we know if robust, effective and sustainable changes have been made to the economic and social fundamentals, or whether our former unemployment, poverty and deprivation will return, perhaps at worse levels. We think we have learned that it is best to help communities find their own sustainable futures through processes that focus on their assets and cross sector commitment to agreed actions and desired outcomes. This is not easy especially in deprived and ‘over serviced’ communities, but it promises to provide more resilient, caring, and self determining futures than those primarily dependent on outside resources and programmes. We have learned how to encourage people to work and we have learned to appreciate the skills of our workforce. Visiting the United States and Europe in late 90s clearly illustrated the likelihood of this to me. New Zealand needs to learn now from the experiences of other countries with a workforce that is accelerating in its ageing and its ethnic diversity.
We’ve learned that New Zealand needs to be vigilant about the promotion and protection of employment rights, whether it be accessing the labour market, moving within it or exiting paid employment. Despite high levels of employment, disabled people for example, find it very difficult to access decent work. Despite the increased female labour force participation, the gender pay gap is still structurally embedded and may even be widening. Despite years of workplace policies, media exposure and societal debate, sexual harassment and bullying are too prevalent. We have learned that we cannot take equal employment opportunities for granted.
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