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Unemployment back to English’s ‘realistic’ level

Written By: - Date published: 5:11 am, August 7th, 2009 - 33 comments
Categories: bill english, employment, unemployment, workers' rights - Tags:

Who said this?

“if we continue with National’s policies over the next three years we will be able to create another 115,000 jobs and bring unemployment under 6%. These are realistic targets…Labour’s claim that it can bring the unemployment rate down to 3% is also a hoax”

unemployment 2009 q2It was Bill English in 1999. Of course, after Labour won, unemployment fell and fell, getting down 3.5% and staying under 4% for four years. All that’s undone now. English has his ‘realistic target’. Unemployment has shot back up to 6%, the highest rate in nine years.

6% is far higher than expected. The consensus expectation was 5.6%. Social Development Minister Paula Bennett’s only response is to say the numbers were “no surprise”. A simplistic response from a simpleton minister.

40,000 jobs have disappeared in the time since she became minister (2%) and nearly all of them have been full-time jobs. An even higher percentage of work hours have been lost, down 3.5%. That doesn’t mean part-time jobs aren’t disappearing – more likely, losses of existing part-time jobs are being offset by full-time jobs becoming part-time. Hours are being cut back and people are having to settle for part-time work if they can get any. The number of ‘underemployed’, people who have jobs but can’t get as many hours as they want has shot up 40% to 114,000 in just nine months. What this means is that a higher portion of workers are now only able to get part-time work, even though many want full-time.

The pain is being felt hardest by a few groups.

Pasifika unemployment has nearly doubled in a year to 12.8% while Maori unemployment is up 55% to 12.6%. Both groups are seeing plunging labour-force participation as people give up looking for work, which masks the level of job loss somewhat. When you look at the number of Pasifika who are in work, it is down 14% in just 6 months.

Youth unemployment is the other major area of worry, up 50% in a year to 22.9%. The number of employed 15-19 year olds is down 18% in six months.

The worst of it is that the pain is far from over. Unemployment will hit at least 8% next year. It will continue to be the poor and vulnerable who feel the brunt of it. Key’s government will continue to do bugger all to help.

33 comments on “Unemployment back to English’s ‘realistic’ level ”

  1. IrishBill 1

    And let’s not forget 6% was the unofficial optimum rate of unemployment under national in the 90’s for control of “wage inflation”. Don Brash will be a very happy man.

  2. Deciduous 2

    Eeeeerm, its the global recession stoopid. And lets not get into cataegorisation arguments about whats unemployed vs sickness bene’s etc aye.

  3. BLiP 3

    Social Development Minister Paula Bennett’s only response is to say the numbers were “no surprise’. A simplistic response from a simpleton minister.

    Not quite.

    Its actually a carefully thought, out Crosby/Textor- supplied line given to a Minister too stupid to know what she was saying.

    The unemployment rate is a requisite for what is intended for Aotearoa by National Inc. Don’t think for a minute that the level of unemployment is not deliberate.

  4. Deciduous 4

    blip>Don’t think for a minute that the level of unemployment is not deliberate.

    WTF?

    Tinfoil hats are must have clothing at blips house. It protects him from having his brain consumed by the vast right wing conspiracy, although it would make a fairly small meal of limited nutritional value.

    • BLiP 4.1

      Ad hominem – very helpful, thanks.

      • Deciduous 4.1.1

        If you make such ludicrous statements you warrant ad hominem.

        But I suppose such classic reasoned arguments such as “Its actually a carefully thought, out Crosby/Textor- supplied line given to a Minister too stupid to know what she was saying.” are way outside the realms of ad hominem eh bro.

    • roger nome 4.2

      “Tinfoil hats are must have clothing at blips house.”

      There are policies that can affect employment levels substantially – i.e. work subsidisation schemes. Lot’s of work has been done on the Swedish case. Their active labour market policies have ensured a very high employment rate.

  5. BLiP 5

    How else would John Key be able to realise his aspiration for Aotearoa

  6. jason 6

    Rediculous says “WTF?”
    Who’s wearing the tin foil hat then?

  7. Relic 7

    A ‘reserve army’ of unemployed and underemployed has long been the desired default setting of capitalists everywhere because it puts downward pressure on wages and encourages workers to compete against each other. Social democratic governments see the damaging effects of this and try and mitigate as the Australians are doing. Our current 90s Nat leftovers as they are virtually to a man, see it as their chance to put the boot in and settle some old scores. Even the US govt for chrisakes is to the left of our hollow men. One different factor I guess this time is the larger middle class unemployed sector, which may come back to bite Nact.

  8. RedLogix 8

    Not to worry, there probably won’t be rioting in the streets until it hits 20-25%.

    Yeah look I agree totally that has been the global failure and collapes of neoliberal economics (ameliorated somewhat by a massive socialist bailout of the banks), which has been the cause of these rising unemployment figures…. it is this govts total lack of a credible, effective response that worries me.

    And again I urge anyone who has not yet done so, to have a look at Steven Keen‘s reasoning around the massive de-leveraging the Western world faces over the coming decades.

    • rave 8.1

      Red don’t spread the myth that the bank bailouts are “socialist” please. Nothing of the sort. The banksters control the state and pay themselves out of our future wages and taxes, or empty cupboards when inflation breaks out. Socialism is not equated with state spending. The state is just an instrument the bosses use to fool workers into thinking they belong to a nation of equals.
      If it was socialism, they the banksters wouldnt be paying themselves bonuses again out of workers pockets, or running countries like NZ by attacking wages and welfare.
      A socialist solution to the financial crisis would be let the banks go bust, socialise one big state bank (kick out JP Morgan and Co) and put industry under the control of the workers who can plan what needs to be produced not what makes money for the bosses.

      • travellerev 8.1.1

        Just fore the fun of it, did you know that J.P Morgan did not have a foothold into the country until August 2008?

        Yep, well into the John Key campaign J. P. Morgan al of a sudden takes an interest in little oll New Zealand.

        And big bad Goldman Sachs didn’t buy into looting new Zealand until euhh only two weeks ago.

        NZ is for sale.

  9. The Voice of Reason 9

    It’s not the global recession, Dec. It’s the lack of a positive response to what’s happening that is the specific problem here in NZ. The NACT govt is philosophically happy with high unemployment as having lots of alternative workers available encourages those in employment to stay on last years wage rates, tug the forelock to the boss and not challenge the status quo.

    In other words, this is a government that is aspirational for your employer, but doesn’t give a flying one for you.

  10. coolas 10

    How can manufacturers/exporters retain a steady workforce when exchange rate fluctuations give no certainty. It’s crazy. We can compete at 50-60 cents to the $US but over that margins are too tight and the workforce suffers. Rather than loose the business altogether we’re forced to scale back by forced redundancies.

    The biggest impediment to growth and full employment is the uncertainty caused by exchange rate which is traded like chips in a casino.

    Fat chance Key will address this because that’s how he made his money – gambling in the money markets.

    • Peter Johns - bigoted troll in jerkoff mode 10.1

      Maybe the fact the the USA is printing money and we are not has something to do with the exchange rate. You can’t blame Key for that.

      Get over the fact that Key was a money trader, just like we get over the fact Goff was a uni lecturer.

  11. Actually no Dad,

    it should be very much in the forefront of our thoughts as he is still very much in touch with his previous mates and still very much a gambler

  12. vto 12

    Has it ever occurred to those of you who pillory anything capitalist re unemployment that an unemployed community with no money provides less scope for doing business and making money than an employed community with money, and as such capitalists and businessfolk desire the latter over the former by a factor of about a mullion?

    duh

    • snoozer 12.1

      That’s not how it works, vto. A level of unemployment is desireable to capitalists in a capitalist system because it undermines the price of labour – ie our wages – allowing a greater share of output to be retained by the owners of capital.

      Of course they don’t want everyone unemployed but you’re arguing against a strawman there.

      • vto 12.1.1

        I think you can’t see the wood for the trees.

        “A level of unemployment is desireable because etc…” may have some small credibility attached to it. But solely for the same reason that if any other input to a business is necessary but unavailable (demand and supply) then the price gets all out of kilter very quickly and raises an uncertainty in the entire business model (as zero unemployment would). That is very undesireable.

        But you miss the bigger picture of my point – which is the main picture. Business prefers a healthy and prosperous community, for obvious reasons spelt out earlier. It quite simply does not prefer a community with high unemployment and no ability to buy or sell or take an active part in the economy. It means less business.

        The current economic environment is a perfect example. Unemployment is rising, people are not spending. And business is very very unhappy. Business is doing poorly and going broke. Following your reasoning business should be happy, but its far from it. The evidence (and logic) does not support your theory.

        • snoozer 12.1.1.1

          vto – this is not some far out stuff, it’s a basic maxim of rightwing economics, just google ‘natural level of unemployment’ – http://en.wikipedia.org/wiki/NAIRU

          • vto 12.1.1.1.1

            I think I acknowledged your point to a small extent above snoozer. It is however just a small component of the bigger picture of what business desires in any given community (which is the opposite of what many posters on here think and opine).

    • The Voice of Reason 12.2

      Duh, youself VTO. Capitalism requires spare capacity to function properly, both in widgets made and in makers of widgets. A pool of unemployed is a fundamental requirement of capitalist society. A pool big enough to scare down wages, but not so big as to cause rioting. I can’t think of a capitalist society that had 100% employment, even in the good times. Can you?

  13. Vto,

    You tell that to the millions and millions of Americans who lost their jobs due to outsourcing and the financial collapse.
    While I can see value in localised trade, international capitalism is a parasitical bloodsucking sport of the global financial elite. And yes that includes our bankster prime minister.

    • vto 13.1

      Travellerev, the pain experienced by recent unemployed is not what I was talking about. Neither was global financial elite. I was talking about what makes business happy, and that is an employed and prosperous community, not an unemployed and poor one. Nobody has come up with a counter to my proposition outlined above, but happy to listen to it if it exists.

      • The Voice of Reason 13.1.1

        Business is the global financial elite, VTO. More and more companies owned by fewer and fewer conglomerates. More power in less hands. I happily accept that for a shopkeeper in a small town, having everyone in that small economic pool in a well paid job would be ideal. But that’s a fantasy, because just as soon as the smile spreads on the shopkeeper’s face, Walmart moves in and closes him down.

        Reread the posts in reply to yours, they do give clear counters to your proposition. Even though it’s hard to counter something that doesn’t actually exist!

      • Akldnut 13.1.2

        vto what makes business happy, and that is an employed and prosperous community

        That is only partially correct as the opportunity to make money is higher in a prosperous community. The thing that makes business MOST happy is making as much money as possible with as little output as possible – irrespective of how many are employed

      • travellerev 13.1.3

        Vto,

        We’ve crossed swords before. Just tell me what is “business”.
        You are an intelligent guy so don’t go cheap on this.

  14. roger nome 14

    VTO:

    That was true under Keynsianism, but unfortunately it’s not true any more. Globalisation has caused a disconect between productivity and wage levels (i.e. you no longer necessarily rely on domestic demand for profits, therefore that incentive to keep wage levels reasonable is gone).

    http://news.bbc.co.uk/2/hi/business/5303590.stm

    Here’s an example, which illustrates my point:

    The Employer’s Federation supported centralised collective bargaining (which ensured a large part of the pie for workers) from 1936 through to the 1980s – but abondoned it in favour of a deregulated labour market in the 1990s – which saw the median hourly wage rate stagnate for almost a decade. A high unemployment rate was arguably part of that strategy, as Don Brash kept lending rates unnecesarily high, making it harder for new businesses to start up and take on new workers – this ensured plenty of labour supply, and thus low wage levels.

  15. roger nome 15

    Here’s a good doco for anyone interested in looking at the recent history of unemployment in NZ:

    http://www.jobsletter.org.nz/jbl16910.htm

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