The Maori Party wants the dole abolished to be replaced by work schemes. It’s a bad idea but it’s not too far from being a good one.
Make work schemes are bad in several ways. They distort the market for low-skill work. The State with an army of cheap, semi-involuntary labour ends up undercutting the normal labour market, pulling down wages for workers or forcing them out of a job (and into the work schemes). When unemployed people are stuck in work schemes they don’t get the opportunity to look for proper work. It’s likely that workers in work schemes will be poorly used, we remember the stories from the Great Depression of one work gang digging a hole, which another filled in.
The Maori Party is right about the demoralising effect long-term dependence on benefits can have but it is wrong to think forcing people against their will to do useless work is the answer. Instead, the Government should look to get them into proper jobs. The Government should create more ordinary jobs by expanding its infrastructure construction, which is exactly what Labour is proposing to do.
Let’s remember, too, that there are very few long-term unemployment beneficiaries in New Zealand. Only 5,300 people (0.2% of workers) on the UB now have been on a benefit for longer than a year. That’s down from 45,000 in 2003 and over 100,000 in the 1990s. Most people are on the UB for very short periods. We don’t want to be unnecessarily diverting those people out of the normal job market into make-work schemes. Yes, we should continue the good work that is being done to eliminate long-term unemployment but we don’t need to throw the baby out with the bathwater.
Rather than make-work schemes, the Government should also help unemployed people find work in the private sector – WINZ should go into competition (and, ideally, replace) the labour hire companies by putting unemployed workers and businesses in need of short-term labour together. WINZ could offer decent work rights to these workers, as well as better rates to the workers and the businesses than the labour hire companies do at present by operating on more reasonable margins.
I do worry that there is starting to be a trend of the Maori Party blurting out poorly considered ideas. If they want to make serious gains for their people, they have to get more serious.