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Aotearoa New Zealand approaches full employment

Written By: - Date published: 8:28 am, August 5th, 2021 - 84 comments
Categories: Economy, employment, Keynes, unemployment, workers' rights - Tags:

Yesterday one of the most outstanding economic statistics ever in my time on this earth for Aotearoa New Zealand was released.

The features were:

In the June 2021 quarter, compared with the March 2021 quarter:

  • unemployment rate fell to 4.0 percent
  • underutilisation rate fell to 10.5 percent
  • employment rate rose to 67.6 percent.

In the year to the June 2021 quarter:

  • wage rates increased 2.1 percent
  • average weekly earnings (for full-time equivalent employees (FTEs), including overtime) increased to $1,360.62
  • average ordinary time hourly earnings rose to $34.76.

You would normally think that this sort of announcement, effectively that we are operating pretty well at full employment and that there has been very solid wage increases over the past three months, would be cause for nation wide celebration.  But the media response has been somewhat muted with concern expressed for employers struggling to find workers.

Two weeks ago the Employers and Manufacturers Association were expressing concern.  From Johnathan Milne at Newsroom:

Unemployment is at present estimated at 4.5 percent and trending down. But the Employers and Manufacturers Association argues it needs to be closer to 5 percent, to make it easier to recruit and retain staff, and constrain wage inflation.

Get that?  The EMA wants there to be more unemployment and the associated misery so that salary and wage increases can be muted.

Whatever happened to the market determining rates and conditions?

Meanwhile in Parliament the Government celebrated as shown in this speech by Chris Hipkins:

National purported to find a conscience, asking us all to think about the 190,000 New Zealanders who are still on the job seeker benefit.  The effect was dulled by Louise Upston asking for current unemployed people to be forced to work.

There is a potential downside to this, interest rates may be increased.  Under the Reserve Bank legislation the Reserve Bank has to take into account the supporting of maximum sustainable employment.  Once this is received the Bank’s other mandate, to achieve and maintain stability in the general level of prices over the medium term, becomes dominant and there will be a temptation to increase interest rates to dampen down inflation.

From Hamish Rutherford at the Herald:

While economists were expecting a fall in unemployment – and were already broadly expecting the Reserve Bank to hike interest rates this month – the stronger than expected labour market figures saw the kiwi dollar jump as economists predicted an aggressive series of increases in the official cash rate (OCR).

“Today’s data shows we’ve flown past full employment, and the economy
is becoming quite overheated,” ANZ chief economist Sharon Zollner said.

“The Reserve Bank needs to hike the OCR promptly to get on top of this.”

Both ANZ and BNZ responded to the news by predicting three 0.25 percentage point increases in August, October and November.

The handling of interest rates will pose a challenge to the Government.  There are a lot of highly leveraged first home buyers out there for who interest rates increases will hurt.

This has the potential of bringing into focus the Reserve Bank’s requirement to maintain price stability.  And it highlights the use of imported labour by employers to dampen down wage increases.

84 comments on “Aotearoa New Zealand approaches full employment ”

  1. Clive Macann 1

    "Louise Upston asking for current unemployed people to be forced to work."

    Or what?

    Sorry, didn't watch the video as it wouldn't play for me.

    • mickysavage 1.1

      From Hansard:

      "So here's a message I got earlier from a constituent: "I need to vent to my local MP. With 117,000 people unemployed, according to Statistics, and 190,000 according to MSD, why are some more not made to work in agriculture and hospitality when employers are crying out for overseas people? No one even mentions the point. Why can't the unemployed fill these jobs?""


      • mac1 1.1.1

        To be fair, the words quoted from Hansard by Louise Upston of themselves don't necessarily mean forced employment to the unemployed.

        What I read there is a question that needs asking and answering- why are unemployed people unable to pick up certain jobs?

        I am old enough to remember in Aotearoa 5000 being the total number of unemployed. Now it's somewhere about 190,000. I would take a lot of persuading that that amount of people have got lazy in fifty years.

        • McFlock

          I dunno. "why are some more not made to work in agriculture and hospitality" seems pretty explicit to me (my italics).

          • mac1

            McFlock, you read what I failed to notice and you are indubitably correct.

            Though I bet some employers would love to have workers ‘made to order’ (in the sense of be produced) to work for them, rather than have to pay them decent wages, provide good accommodation and conditions, treat with fairness and humanity in market where all are fully employed and properly paid for their skills, labour and time.

            • McFlock

              Upston and "the constituent" probably have no idea what they're actually asking for: slavery.

              • mac1

                We did it during the Depression……… no dole without work, so men acted as horses and dragged harrows across farm land, and dug holes for others to fill them.

        • Descendant Of Smith

          You can't compare the job seeker numbers now to the unemployment benefit numbers of the past.

          Widows, sole parents with children and sole parents who had the temerity to have another child while on benefit are all now counted as job seekers. Definitely an apples and oranges situation that makes the waters much more murky. It would be useful if the media could get a breakdown of job seekers at least split into sole parents and non-sole parents which might get a better indication of how many of the traditional job seekers there are.

          National made these changes and Labour maintains them – it makes any historical comparison quite meaningless.

          It also makes the notion of forcing the beneficiary unemployed into low paid seasonal work more farcical by treating them as a homogenous whole – do we mean the ones who are sole parents with 3 month old babies or the ones who are unwell but can't get into a doctor to get a medical as there is a doctor shortage?

          It would be much more sensible to put the sole parents back onto a sole parent benefit so things are more transparent and clear. The media never seemed to question National of their touting of the lowest number of sole parent benefits ever by asking how many had been moved to Job seeker.

  2. Nic the NZer 2

    Full employment in NZ used to mean about 2% unemployment and very little underemployment (fewer casual positions).

    Still looks like a way to go by those standards.

    • weka 2.1

      do you know what definition of employed the government is using?

      • Nic the NZer 2.1.1

        Not precisely but its a few hours paid work a month. Thats why the underemployment rate is a good indicator of actual difficulty finding labour.

        To my mind the aggregates produced by Stats are fine but the media often focuses on very few and tells missleading narratives as a result.

        • weka

          sorry, what? You're no longer unemployed if you have a few hours work a month?

        • Macro

          30 hours per week is considered full time. 1 hour per week is considered being employed, part time or under employed is thus any employment between 1 and 30 hours. These definitions are on the stats dep website (which being on mobile right now I can't link to) .

      • Craig H 2.1.2

        Stats NZ definitions


        People in the working-age population who, during the reference week, did one of the following:

        • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment
        • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative
        • had a job but were not at work due to own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.


        All people in the working-age population who, during the reference week, were without a paid job, available for work, and had either actively sought work in the past four weeks ending with the reference week, or had a new job to start within the next four weeks.

        Other relevant definitions are:

        • Underemployed (people who are employed, work less than 30 hours per week, and would like to work 30 hours per week – full time employment is defined as 30+ hours per week)
        • Potential labour force (people who are not actively seeking but are available and wanting a job and people who are actively seeking but not currently available, but will be available to work in the next four weeks).
        • Underutilisation (unemployed + underemployed + potential labour force)

        These are broadly internationally accepted definitions used elsewhere in the OECD, not the whim of politicians or Stats NZ for anyone wondering, and the Government Statistician (CE of Stats NZ) is the only Public Service head who is not appointed by the Governor-General on the recommendation of the Minister, so there is a serious attempt by Parliament to maintain their independence from ministerial interference.

        • arkie

          Employment NZ has a different take than Stats NZ:

          Part-time and full-time employees

          Whether you’re considered to be part-time or full-time depends on how many hours you have to work. Employment legislation doesn’t define what full-time or part-time work is, but full-time work is often considered to be around 35 to 40 hours a week. For statistical purposes, Statistics New Zealand defines full-time as working 30 hours or more per week.

          https://www.employment.govt.nz/starting-employment/who-is-an-employee/types-of-employee/ (my italics)

          • Craig Hall

            Employment NZ is the front-facing website of the Labour Inspectorate, and it is correct that employment law does not define full time employment, other than to say that employees who work 5 days in a week should not work more than 40 hours unless by agreement, and employees with 40 hours or less work per week should not work on more than 5 days in that week (Section 11B of the Minimum Wage Act – https://www.legislation.govt.nz/act/public/1983/0115/latest/DLM74459.html).

            The Social Security Act 2018 defines full time employment for jobseeking purposes as 30 hours per week, so it's not as if Stats NZ are unique in using it in NZ, nor is it solely used for statistical purposes.

            • arkie

              It does serve a function in statistically obscuring the underemployment and financial insecurity faced by those 0.75 FTE (full time equivalent) employees. It is extremely difficult to find part-time work to 'fill the gaps' without working 6-7days. It is common enough, but then again we don't know because we're not measuring it.

              • Craig H

                That's highly questionable when many larger employers have 37.5 hours as their FTE, not 40, and the 4 day week is starting to gain traction.

                It's also a weak goal – Keynes thought we would be approaching 15-20 hour weeks thanks to automation, and yet somehow people are struggling to maintain an adequate existence without working at least 40 hours. Not exactly Utopia…

                • arkie

                  How does an employee demand higher wages/more income when our society requires income to live and our governments maintain a pool of unemployed people and our benefit system is so woefully inadequate?

        • RobbieWgtn

          The OECD have had common statistics (since the late 1960s I think ?) arguing its important for country comparison. It also suits all Govts to have definitions that serve to minimise the un & under employment numbers.

          • Craig H

            Other numbers are measured as well e.g. potential labour force, they just tend not to be used by governments except when convenient. That's not the statistician's fault, that's deliberate twisting of statistics by politicians. That's why I think the focus should be on underutilisation as much or more than other measures.

    • bwaghorn 2.2

      This under employed thing would be hard to measure I know people are in the position of only wanting 20 2 30 hours a week .

      Would they be in the negative sounding stat.

      • Nic the NZer 2.2.1

        Underemployed category includes people who are employed but also searching for further work hours.

        Its not really harder to measure than the other categories in the survey.

        • arkie

          Except it excludes those in ‘full time employment’ of 30 hrs, they aren’t asked whether they would want or be available for more hours.

          It’s also very difficult to find a 10 hr part time position to bring that up to 40 hrs a week.

  3. weka 3

    why is 4% considered full employment? Because it represents the people moving between jobs?

    I'd like to see some official analysis of the details of people moving into work and what conditions they are working in eg is it permanent? What kind of work conditions? Can they live on their wages? Because we know that successive governments have used unemployment figures in self serving ways. Not suggesting this is what Labour is doing, but it would still be good to see the nuance as well as the blunt figure.

    • weka 3.1

      just seen Nic's comment.

    • Nic the NZer 3.2

      Typically unemployment is thought to contain two categories, wait unemployment where someone is between jobs (of a suitable level) and involuntary unemployment where no job can be found (despite trying) at any level.

      • bwaghorn 3.2.1

        It really does need a cant be bothered % segment, at the risk of sounding all right wing, I genuinely know a young falla who is more than capable of work , he picked up close to 3000 lambs last docking , but between his benefit and bludging on his soft natured mother hed far rather by fucking around on his scooter and trout fishing.

        • Nic the NZer

          I'm enough of a libertarian I don't have a problem with that. On the other hand is he looking for work? Because he is not unemployed without a work search.

          I used to think the state owed such people a wage but am less sure about this now days.

          • bwaghorn

            Is he looking for work!!

            Not to my knowledge, let's face it there isnt many reasons for a psychically capable 20 something not to be in work at the moment.

            He does come with a sad back story but honestly I think he just is happy loafing.

            • Brigid

              If he comes with a sad back story it's likely he's not happy doing anything.

              It seems you've no idea why he isn't gainfully employed, what goes on inside his head but you've determined, in your wisdom, that he is simply loafing.

    • Craig H 3.3

      There is frictional unemployment (people who are temporarily between jobs e.g. due to redundancy) – full employment in the old definition of the term is when the only unemployment is frictional unemployment i.e. people between jobs.

      Lakes District and Ashburton District have frequently reported less than 1% unemployment which would be legitimate full employment by that definition (to put it another way, everyone who wants a job has one or can get one).

      Additional factors which can be considered are skills gaps (the workers available can't do the jobs available) and regional gaps (the workers available don't live in the region and aren't willing to relocate e.g. due to family reasons). More recently, factors like drug testing and criminal records checks have decreased the pool of suitable workers (the workers available can't pass a drug test or criminal record check).

      My personal view is that unemployment of 4% has some room to drop yet if skills gaps can be addressed by training and education and regional gaps can be addressed somehow, but also that underutilisation is at least as important as unemployment in macroeconomic indicators of likely wellbeing and inclusion.

      • RobbieWgtn 3.3.1

        The NAIRU rate used to be 5% so any unemployment rate below this was considered to be inflationary. This is why 4% is considered full employment.

        Ignoring the approx 33% of working age NZdrs who aren't working & haven't registered to claim a benefit so don't appear in the unemployment or underemployment statistics.

        • Craig H

          NAIRU is not full employment by any stretch, it's a measure designed to keep wages down by maintaining a pool of unemployed people.

          If people who are not employed want to work but don't meet the tight definition of unemployed, they are captured in the 'potential labour force' statistic, and in the overall underutilisation statistic.

  4. Enough is Enough 4

    Brilliant news

    Now we can see what happens when we ban foreigners taking our jobs. Unemployment comes down and wages go up.

    This should be the blue print for New Zealand going forward

  5. Ad 5

    I'm looking forward to an economy in which we never need seasonal workers for orchards (and massive investment in automation has happened), or imported labour for infrastructure projects, or imported fishermen, or imported nurses …

    … where it gets so hard to find people to work that we start emptying our jails, even gangs find it hard to recruit to a life of crime…

    … where the government and business have to pay so much per hour that arguments over a minimum or living wage become immaterial …

    … where it's so hard to get good people that companies invest thousands to put their prospects through Drivers License courses, Heavy Truck tickets, heavy electrical tickets, supervisor tickets…

    … and we start to bring down the long-term unemployed numbers, those coming off ACC, the otherwise damaged and bereft and marginalised.

    Maybe start to really lift this country.

    • Stuart Munro 5.1

      There are few or no seasonal employees in Korean orchards – they are quite small, and owner operated. If a bit of extra labour is needed, the neighbours can generally work it out. The resulting produce is very high value, often individually bagged to prevent pest damage late in the season – a significant contrast with the commodity stuff we export, the dregs of which show up in our supermarkets.

    • AB 5.2

      Sounds good – but those conditions would lower profits and reduce the opportunities to get significant passive income from returns on investment. Surely we'd see some form of capital strike before getting even close to those conditions?

      • Ad 5.2.1

        We have already seen what amounts to a capital strike with the big farmers' protest two weeks ago.

        We need to burn the entire poor-paying crap class of business out of this country. The government is doing this by using COVID restrictions to do the heavy lifting for it.

    • weka 5.3

      fantastic Ad 👏

      … where the government no longer feels the need to punish or take a stick to be beneficiaries over working and they remove the abatement process from wages while on a benefit, which frees up a large number of disabled and other people to work part time and flexi time.

      • RedLogix 5.3.1

        they remove the abatement process from wages while on a benefit, which frees up a large number of disabled and other people to work part time and flexi time.

        Yes. You've accurately described there a UBI system – an assured minimum income plus no abatement process as you engage with work.

  6. Sabine 6

    Can someone clarify this for me?

    Increase in temporary work

    In the year to the June 2021 quarter, the number of employees in temporary work (which includes casual, seasonal, fixed-term, and temporary agency employees) grew by 21.5 percent (34,400) to 194,700.

    The change in the number of employees in permanent work over the year was not statistically significant.

    Does this mean that the gains are predominatnly in temp/casual work? And how can this then be called 'full employment'?

    and this


    • The only statistically significant change in employment, by region, was in Auckland, with 28,700 more people employed, to reach 945,700.

    Does this mean that unemployment figures elsewhere then Auckland are different and if so, where can one find these numbers say for the Bay of Plenty.

    I could find this but it is from March 2021 and is thus not updated, and at the time unemployment for the Bay of Plenty was over 5.2% And how about Northland and some of the other 'rural' regions?


    If someone can explain that to me, i would appreciate.

    • Nic the NZer 6.1

      You have interpreted the gains right, and that full employment is open to interpretation.

  7. Jenny how to get there 7



    Written By: MICKYSAVAGE
    Date published:8:28 am, August 5th, 2021 – 24 comments

    Yesterday Statistics New Zealand announced a dramatic drip in the unemployment rate…

    “dramatic drip”, shouldn't that read “dramatic drop”?

    PS. Before he says it, Incognito probably thinks I am a dramatic drip.

  8. Patricia Bremner 8

    I remember full employment in NZ.
    We did have larger "Public Services". We had unions and shortages of materials after the 2nd world war.
    We had picnics went swimming in rivers lakes and beaches, we caught fish found kai moana and shared readily. We appreciated what we had. Life was a great deal simpler. A good cup of tea and a natter. We have so much more in material things but so much less for our mental health. There is a long way to go in giving workers fairness.

    • WeTheBleeple 8.1

      When it comes to mental health – a good cup of tea and a natter goes a long way. While a decaf soy latte is basically a declaration of needing a good cup of tea and a natter.

  9. Sabine 9


    Infometrics economist Brad Olsen said it was likely that inflation would “eat away” any gains to wages over the rest of 2021.

    Inflation pressure was likely to be more broad-based than wage pressure, he said, and could be more concentrated for some groups.

    “It’s giving with one hand and taking with the other. You are getting an increase but you need to adjust your household budget to meet the cost pressures you’ll be seeing.”

    Increases to costs of housing and transport would be hard for some households to adjust their spending to accommodate, he said. But he said these were good problems to have, compared to where some had predicted the economy could be at this point.

    Renney said there were also still concerns in the labour market.

    Female underemployment was running at twice the rate of male, and the Māori and Pacific Island unemployment rate was 7.8 per cent.

    Young people were unemployed at twice the rate of anyone over 30, he said,

    “We have some distance to go before we have truly delivered maximum sustainable employment.

    Not sure we really have something to celebrate here. It seems the numbers vary greatly according to sex, age and ethnicity, and then of course the regional differences.

    • Nic the NZer 9.1

      Now would be a good time to implement a job guarantee scheme. It would have fewer takers at present.

      At the same time less favourable employment than the scheme should basically disappear as a result (e.g no more zero hours style pressures).

  10. Ad 10

    Just in case it needs saying: it was a Labour government that intervened massively into the economy with greater scale than we've seen in a generation that has enabled us to be in the position we are today.

    • vto 10.1

      but the farmers say it was them

      • vto 10.1.1

        me i genuinely think the country would be better off without the 90% of farming which simply goes overseas.. everyone thinks the country would collapse, but nup, it wouldn't… country areas may suffer through a short transition phase… but everyone else would without doubt be better off… financially and ecologically … farming is only 5% of gdp… just like we are better off without foreign tourism (does anyone other than a tourism operator want them back?)… just sayin'… keeping it real eh

  11. vto 11


    i find it astounding

    that so few

    give thought

    to those 4% required

    to be unemployed

    shouldnt they be on the average wage?


    • Stuart Munro 11.1

      Perhaps they should receive a New Years honour – for balancing the part of the books that our ostensibly clever neoliberal economists never even tried to.

      My feeling though, is that their sacrifice was always in vain – it was neither necessary, nor ultimately good economic policy to deprive them of their livelihoods.

    • weka 11.2

      they should indeed be on the average wage.

      • Jimmy 11.2.1

        If they were on the average wage, wouldn't that mean they were earning more than people on the minimum wage, so why would they ever go to work or try to find work?

    • RedLogix 11.3

      If you had a nice comfortable 'average wage' for not working, why would you bother working?

        • RedLogix

          Volunteering is pretty much by definition work that is intrinsically rewarding, to the extent you do not need any other recompense.

          This however doesn't cover off the vast majority of tasks that an economy needs doing.

          • arkie

            I would disagree. Many people volunteer to do thankless tasks that ‘just need doing’. Why would that not extend to tasks an economy needs doing?

            Interesting you’ve framed it as something the ‘economy’ needs doing; not people, not society, not humanity; we labour for the needs of the ‘economy’, a largely artificial, largely abstract, entirely soulless construction.

            • RedLogix

              You can define 'economy' however you like – but if you imagine that your local supermarket will remain stocked on voluntary labour alone, or the power will remain on, the water, plumbing and sewerage will continue to work – or the dentist will happily peer into your mouth for the sheer love of it – then you'll just have to excuse my 'marxist hesitation'.

              • arkie

                Oh ye of little faith

                Our current system hangs the threat of destitution over all of us to 'incentivise' us into labour. Why do you think so lowly of people, in a world of abundance, must still be threatened to behave socially? Maybe what I'm imagining is idealistic, but the argument remains that in our current mode society seems happy to believe in human rights, it's just some of them must be earned through labour.

                • Ad

                  Many in New Zealand have incomes subsidised up the wazoo already. 99% of New Zealand over 65 lives off welfare. That's 12% of New Zealand nearly. That's where most of our remaining volunteers are.

                  There's another 630,000 New Zealanders under 65 receiving some major welfare added to that welfare bill.

                  Either part time or full time there's about 63% of New Zealand paying the taxes to keep those on all that good social welfare in bread and butter.

                  Further subsidy is in state Kiwisaver contributions which are not small.

                  All in favour of volunteering myself (or I would have stopped supporting the Labour Party years ago), but in the meantime I have useful projects to complete.

                  • Sanctuary

                    I am looking forward to hanging up the full time work palaver early for some part time work and volunteering!

      • vto 11.3.2

        But Red, my point is that the system requires those 4% to be unemployed. They aren't allowed to be employed.

        • RedLogix

          UBI. I've advocated for it here since forever.

          • vto

            Yep, I agree with that. But we aint there yet.

            Society needs to find another way of distributing the means of society to ensure everyone is adequately provided for. It is quite apparent that 'work' is no longer able to do this on its own.

            • Descendant Of Smith

              Work (as in private sector, capitalist, profit driven) never could.

              New Zealand had a brief period of full employment (excluding of course many of the unwell and unfit, and widows) due to the welfare system being a job in the public service and a generous pension programme.

              Having taken the job in the public service away – government agencies for instance used to suck up the surplus, inexperienced school leavers the private sector wouldn't employ) normal transmission resumed.

              It is why we need a mixed economy with good capitalist taxation.

              Capitalism to do what it does, socialism to smooth out the market failures and give people the private sector doesn't want dignity. Money needs to circulate not accumulate for everyone to benefit. No problem with unequal distribution as long as it isn't excessively skewed to the top as it is at current.

              Making the working class think they were the middle class has been the biggest con of the last 50 years.

            • Ad

              Every time the state lifts the minimum wage or living wage, they need to put a big jump in what social welfare recipients are paid.

              Child Poverty Action Group need to keep hammering Minister Sepuloni to make her case better to Robertson. Simply no useful excuse from Ardern on the small increases they've made.

              • Descendant Of Smith

                They need to immediately return it to the same rate as NZS as it used to be and compensate people for years of neglect.

                Our forbears knew what they were doing when benefit rates were linked to 60% of the average wage.

                I see Adern looked at a bigger increase but the neo-lib Treasury fascists advised against it.


                "In another report, Treasury advised against a $50 a week increase, saying it should progress, at most, with a $25 a week in this year's Budget.

                In that report, Treasury said there was a risk, without an accompanying increase to in-work support for families with children, a $50 benefit increase could weaken work incentives."

                • Ad

                  None of the Treasury people who wrote that report were on welfare.

                  Few in the entire Labour caucus other than Sapuloni have either. Or indeed worked in a waged job.

                  Cabinet could transfer all the $1.5b they have set aside for the useless Otaki-Levin SH1 bypass and give all the unemployed a much more useful lump of cash for winter instead.

                  • Descendant Of Smith

                    Maybe the tenants of their rental properties need to go on a rent strike.


                    "Currently the housing crisis is completely out of control. 40% or more of one's paycheck is spent entirely on landlords who provide nothing to society, leaving us with very little room to live our lives in a healthy and constructive way."

                    Though more likely they don't care about having those scum tenants cause they can either provide Air bnb to the wealthy or leave them fallow to make capital gains.

      • Brigid 11.3.3

        It's time to quit trotting out this fallacy.

        There's plenty of research following the implementation of various UBI schemes which shows that people who are given 'a nice comfortable 'average wage' for not working' indeed do seek employment.

    • Jimmy 11.4

      No one work if you could earn the average wage on job seeker benefit as you would get more $ than many people working.

  12. barry 12

    Rob Muldoon once half joked he knew all 70 odd registered unemployed by name.

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