Unemployment at record low (again)

Written By: - Date published: 1:14 pm, February 7th, 2008 - 17 comments
Categories: economy, workers' rights - Tags: ,

From Stuff:

Growing numbers of women in the workforce pushed New Zealand’s unemployment rate down to a new record of 3.4 per cent in the December quarter.

The rate dropped 0.1 of a percentage point from the September quarter, which itself had been the lowest unemployment rate recorded since the Household Labour Force Survey started in 1986.

Strikes me that as this trend continues the Nats will increasingly struggle to get traction with the argument that the drop in benefit numbers is illusory.

With more people in work, fewer people need the dole.

unemploy small

17 comments on “Unemployment at record low (again)”

  1. AncientGeek 1

    Oh they’ll always come back with that insane argument about everyone moving to the sickness benefit. Even when the number don’t support it.

    Trying to remember how long I’ve heard that as unemployment steadily reduced over the last 8 years.

    Some kind of urban myth for the credulous…

  2. Billy 2

    So all_your_base,

    Care to explain why the good economy is all Labour’s doing, but all social problems are as a result of benefit cuts made in 1990 (and not reversed by Labour in nine years of government).

  3. Steve Pierson 3

    Billy. 8 years. Clearly.

    I thought it was only Mr Key that couldn’t count.

    Governments’ actions have long-term ramifications and often have a long lag time. The social consequences of bad policy often cannot be completely undone. Some of today’s teenagers were damaged by growing up under National in jobless households, with slashed benefits and rising crime. All the jobs, higher wages, and better education in the world will not alter that fact. The damage National did in the 1990s will still have echoes decades from now.

  4. Tane 4

    Oh they’ll always come back with that insane argument about everyone moving to the sickness benefit. Even when the number don’t support it.

    Yeah I’ve got the numbers on that sitting on my computer, just haven’t had the time to graph them and put it together in a post. We’ll get there eventually though… suffice to say people who run that line are just making shit up.

  5. r0b 5

    Speaking of possible future posts, I thought this was an interesting development:

    http://www.stuff.co.nz/4391516a10.html

  6. AncientGeek 6

    Billy: You should rephrase your question.

    Some quotes from the wikipedia articles on
    Major Changes to Social Welfare in New Zealand
    Ruthanasia

    In the early 1990s the fourth National government embarked on a free market programme aimed at reducing state spending and ‘dependence on the state’. Welfare benefits were drastically cut, and ‘user-pays’ charges were introduced for many formerly free public services. These policies were widely known as ‘Ruthanasia’ after Finance Minister Ruth Richardson, although the welfare portfolio was managed by Social Welfare Minister Jenny Shipley.

    The impact of these changes was particularly pronounced as the unemployment rate was high due to the 1987 stockmarket crash and the cost-cutting programmes of the previous fourth Labour government, which had reduced the staff of many state services such as New Zealand Rail. The cutbacks have been partially reversed by the fifth Labour government, but inflation means that in real terms benefits are still lower than before the cuts.

    Ruthanasia was controversial as the National Party had fought the 1990 election on a manifesto promising “The Decent Society” and implicitly repudiating the radicalism of the fourth Labour government. The Prime Minister, Jim Bolger, defended the move in his memoirs on the grounds that he had been badly misled in the runup to the 1990 election as to the actual state of the New Zealand economy.

    Ruthanasia came to an end after the 1993 election, when National’s majority was reduced from 18 (out of 99 seats) to 1. Bolger responded by replacing Richardson with Bill Birch.

    I think you should ask the question – why didn’t national or labour reverse the benefit cuts on 1991?

    The problem was that they’d have had to increase taxes to do it. National wasn’t prepared to do so bearing in mind that Ruthansia’s main effect had been to plunge NZ into a long-term recession. Instead they chose to allow inflation to keep driving the unchanged benefit levels even lower, while also driving down wage rates.

    Effectively they targeted the weakest, poorest members of society and ‘fixed’ a short-term budget problem by screwing them. This is from the party that campaigned that they were bringing “a decent society”. Now Key is hypocritical enough to try to campaign because the results of that screwup by the National party are screwups.

    Labour since 1999 has been steadily bringing the benefit levels up. But the priority has been on reducing the number of people that the nats put on benefits due to their other policies in the 90’s.

  7. AncientGeek 7

    rOb:

    I heard that on the radio. It does make more sense with their voters than getting in bed with the blues. But you really have to look at where their voters came from. Ummm I did a comment on that elsewhere. AncientGeek’s comment on maori roll voters.

    Exactly the same things apply with a brown/green and a brown/blue – there isn’t a lot of support in their electorate as expressed in voting patterns. I could probably go back to the 2002 election and look at how many voted green then – but I know it was similar to the 2005 level – insignificant.

    A working arms length alliance may be politically possible with the greens and not hurt the MP with their voters. I surely don’t think that a blue alliance of any kind will do anything apart from destroy the MP.

    Sounds like people floating ideas. If nothing else, it is useful for later bargaining.

  8. Pablo 8

    I think if the Greens can convince the Maori Party to abstain on confidence & supply, Labour would be over the moon. Obviously the dead rat for Helen there is the F&S legislation, but the recent development with Ngati Porou(?) might be signifying an attempt to rebuild those bridges without actually swallowing. I’d be amazed to see the Maori Party in formal coalition with either party, but to use their leverage in a way similar to how the Greens use theirs at the moment.

  9. dave 9

    All your base,
    care to explain the difference between a reduction in unemployment and a reduction in the unemployment rate?

    If more women enter the workforce because their partners income is too low due to our low wage economy, most dont come off the dole. If the number of extra workers from non economic activity, immigration or study are more than the number of people in full time work off the dole, less those entering the dole, the unemployment rate yas decreased but unemployment numbers havent necessarily..

    And the Government did not say that unemployment has decreased. Because it hasn`t.

  10. AncientGeek 10

    Dave: I just read your comment 3 times. It is still unclear to me what you’re asking and/or what your point is.

    Could you please rewrite it so it is a easier to figure out what you are asking or what your point is?

  11. AncientGeek 12

    dave: Looked at the link.

    I still think you’re confused. The figures reported in the stuff article that all_your_base was talking about are for the Household Labour Force Survey.

    What your link is doing is saying that there is a little or no difference in the number of people who are receiving the unemployment benefit. But that isn’t what the HLFS measures. It looks at participation in the workforce.

    Have you ever looked at the Phillips curve

  12. dave 13

    Ancient Greek. I agree. the HLFS will not tell you whether unemployment has increased or reduced – just the rate of unemployment. Which Is what I have said. Butthe point I was arguing against was this:

    With more people in work, fewer people need the dole. That statement is obviously false if more people are in work and the same amount of people need the dole. As is the case at present.

  13. dave 14

    .. Therefore unemployment is NOT at a record low.

  14. AncientGeek 15

    Dave: You have to remember that the economic reason to have an unemployment benefit at all is to ease economic transitions.

    As an economy adjusts and changes, you’d expect that people for one reason or another get laid off or are unable to enter the workforce because their skills (or lack of) are not in demand. If there was no unemployment benefit then people would get stuck in a poverty trap they got unemployed and their savings ran out. Apart from anything else, they wouldn’t be able to afford to move to where employment was.

    I haven’t looked at the latest HLFS, but I’d recommend a look at Part 3 of the Labour Market Stats 2005. It is a bit old now (but it was the last one I looked at closely), but the trend has continued. I’m sure someone can point to the equivalent in the unemployment benefits paid area.

    In particular table 3.04 on the duration of people being unemployed in the totals section. What that shows is the rapid reduction in long term unemployed and a movement to transitional unemployment.

    Incidentally have a close look around 1993 at national generating long-term unemployed, realising their mistake, and starting to try and correct it. That was a NZ phenomenon – most of the rest of the world was having very good employment around that time. Then have a look after 1999 when a real effort was being made to generate jobs rather than relying on the market to magically do it.

    This table is also interesting. Relative unemployment rates between countries

    I’m sure that people who are into this stuff could do a better find of finding the relevant data than I did in a 10 minute effort.

  15. AncientGeek 16

    Oh I forgot to mention why I pointed to the Philips curve earlier.

    It was there to annoy the ardent leftists. I don’t like having full employment, Last time I saw it was in the early 70’s where it was hard to keep employees for more than a few months. They’d barely become productive and then they’d leave – an impossible situation for employers.

    Also look up natural rate of unemployment, NAIRU, various variants of general equilibrium, etc…. There are endless arguments about it all, but my take on it says that full employment generally shows there is something structurally wrong with an economy. So does having long term unemployed.

    An economy is probably working well where people are on unemployment benefits for less than a few months on average. Shows that the labour market is adjusting to change.

  16. dave 17

    An economy is probably working well where people are on unemployment benefits for less than a few months on average
    Over the long run. Meaning as long as they are not transferred in and out of training and sickness benefits and then stuck on the invalids benefit for months like thousands of 16-17 year olds.

    when a person is on the unemployment benefit for three months, training benefit for 13 weeks, then unemployment benfit for 3 weeks, sickness a benefit for 3 week and back onto the unemployment fbenefit for 2 months ( it happens) the MSD logs it as on the unemployment benefit for two months, when in reality that person is a long termer.

    Also, about a third of those coming off the dole are back on it in six months.

    I do agree with your comments on NAIRU and full employment.

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