The “Great Recession” saw a greater spike in unemployment in New Zealand compared to its drop in GDP than everywhere but economic basketcase Spain.
An ILO study shows that whilst GDP slumped, unemployment did less so in all but 2 countries across the world: NZ and Spain. The Government, far from being relentlessly focussed on jobs, or even catching Australia, has ensured with its policies that workers were laid off in swathes.
New Zealand’s “flexible” employment laws make it too easy to sack employees. Rather than treating them as people, businesses are encouraged to think of labour as just another resource, to be thrown on the scrap-heap when no longer required. Overseas businesses are made to look after their employees in good times and bad – if you employ someone you have a duty of care and security in return for their efforts. It may sound quaint, but humans are to be valued.
Sure people are still sacked or made redundant, but not just on a whim. Redundancy legislation means it costs to get rid of people, so you don’t sack them for six months and get them back on again when the business picks up, leaving individuals to suffer the pain. It makes it slightly harder to employ people, as a few additional costs are considered, but it gives the far greater stability that people (real people, not numbers on a balance-sheet) need. Ultimately businesses will still employ people on the basis that they have work that needs doing, so it has only a slight depressing effect on re-employment after recession, and provides higher quality jobs and employment. It also makes more sense for businesses as a whole too – employed people are much better customers than unemployed ones. But, like higher wages, it’s a prisoner’s dilemma for businesses – they do best if they can pay low wages and sack people on a whim and everyone else pays high wages and keeps their staff employed; the best for the country is if everyone stays working in well-paid jobs, and the worst is if everyone pays badly and sacks on a whim.
In Aotearoa we have to deal with many people being rapidly laid off, and the disruption that causes. Younger generations are shut out of work for longer and careers are interrupted. If people have skills they will often head overseas, to be lost to the NZ economy forever.
The Business Roundtable, seeing that light regulation hasn’t worked, calls for even more of the same. Roger Kerr says we should cut welfare to provide ‘incentives’ to people to work, re-introduce youth rates and cut the minimum wage. Because the low-wage economy and competing with China and Mexico is really going to get us to the top of the OECD ladder and a better life for kiwis. He may hope it provide a better life for him, but then it turns out inequality harms the rich too.
The CTU are much more sensible – endorsing a government stimulus to help the economy through difficult times, more workplace security, better on-job training, and indeed, setting out a more cogent economic plan.