Unemployment tsunami hits Chch

Written By: - Date published: 12:12 pm, March 5th, 2011 - 28 comments
Categories: economy, national/act government, uncategorized, workers' rights - Tags:

3065 people have already claimed the special benefit for people left unemployed due to the Christchurch earthquake. Once that payment expires in a few weeks they’ll be on the dole, if they’re eligible. The quake killed and did physical damage in seconds but, without action, it will keep strangling the economy and taking jobs for months.

It’s worrying that so many jobs have been lost so quickly. The government’s wage support scheme effectively pays quake-effected worker’ wages up to the minimum wage, leaving the employer to top up the rest. It appears a lot of employers are finding the subsidy isn’t enough and they’re better off shutting down or laying off staff than trying to pay the unsubsidised portion of their wage bill.

Each job that goes sucks a little more life out of the local and national economy, triggering further job losses for people who don’t get a special earthquake benefit. Job losses will see more families default on their mortgages, or go bankrupt, and many will upsticks permanently for another part of the country or Aussie.

There’s a lot on the government’s plate but stemming this tsunami of job losses through more assistance and working with the banks to offer mortgage relief, which some banks are already doing, needs to be a priority or the life will drain out of the city, making rebuilding even harder.

This collapse of the private sector just confirms the leading role the government will have to take in the rebuild.

28 comments on “Unemployment tsunami hits Chch ”

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  1. Colonial Viper 1
    5 March 2011 at 12:14 pm

    Direct government employment please in Christchurch. Get people busy, get their minds off the destruction, give them an income.

    Otherwise not only will there be a tsunami of economic damage from this unemployment, but also of family, social and psychological damage.

    • tsmithfield 1.1
      5 March 2011 at 12:49 pm

      Can’t say I disagree with you on this one CV. There is plenty of cleaning up to do, so there is no reason why the government couldn’t employ temporary workers to fast track the process.

      • Colonial Viper 1.1.1
        5 March 2011 at 1:48 pm

        Yes, sometimes certain actions just make sense, and cut through differences in political ideology.

      • Lanthanide 1.1.2
        5 March 2011 at 1:50 pm

        In a few weeks, there won’t be any ‘easy’ work left. The student volunteer army, the farmy army and others have already done the menial silt-digging work. After that it comes down to work that requires skilled tradespeople to do.

        We already had a big thread arguing about this after the last quake, with people saying the government should give people shovels so they can lay drains. I think we made it quite clear that despite what it sounds like, drainlaying is actually highly technical work that has to be done properly or it ends up making everything worse in the long run.

        • todd 1.1.2.1
          5 March 2011 at 1:59 pm

          That’s when the lack of training incentives really starts to bite.

          • Colonial Viper 1.1.2.1.1
            6 March 2011 at 11:24 am

            And our low wage rates which mean that a whole lot of our tradespeople and machinery operators are currently working in Australia, not here.

    • Just Me 1.2
      6 March 2011 at 11:19 am

      For that matter the change the rules around relocating those currently receiving the Unemployment Benefit and relocate all of them without dependents to Christchurch to assist in the clean up.

      • Colonial Viper 1.2.1
        6 March 2011 at 11:26 am

        I’m suggesting we get those people off the UB and give them direct Govt employment in Christchurch.

        Including helping to relocate them there, if needed.

      • eZb 1.2.2
        7 March 2011 at 11:17 am

        Nah, round up all the people who have never experienced hardship and have no real life experience, (easily tested for by asking: “Are the unemployed only good as cannon fodder, sewer line unblockers and for rolling concrete slabs over?”) and send them to ChCh in cattle trains and make them dig holes, and then refill them, without any amenites, food or equipment. Once they collapse, whip them. Now that’s what I call helping the country.

  2. Jenny 2
    5 March 2011 at 12:33 pm

    Mortgage Relief Legislation?

    Moratorium on Mortgages?

    measures taken at times of widespread financial distress arising from economic or natural causes.

    Answers.com

  3. bbfloyd 3
    5 March 2011 at 1:05 pm

    i had assumed, asit would seem an obvious move, that the government had already instituted large scale “p.e.p” type schemes for christchurch. firstly, to soak up some of the unemployment created by the quake(shades of the 30’s?), and secondly, to speed up the process of rebuilding necessary basic infrastructure.

    now, i don’t feel so secure with that assumption.

    has ther been anything come out of the dept of labour regarding this? or anything resembling it?

    • Marty G 3.1
      5 March 2011 at 3:15 pm

      Department of Labour is Kate Wilkinson’s charge. When was the last time we heard anything from her?

      • Colonial Viper 3.1.1
        5 March 2011 at 3:35 pm

        I saw her on TV saying that those BMW’s were 3 years old and anyway maybe it was time that they should be replaced. Does that count? 🙂

  4. Jenny 4
    5 March 2011 at 1:38 pm

    “working with the banks to offer mortgage relief, which some banks are already doing, needs to be a priority”

    MartyG

    This approach of appealing to the banks to grant mortgage relief is not enough. As you say Marty, some banks are doing this already.

    As well as being time consuming and no doubt a bureaucratically complicated process, when people’s energies could be better concentrated elsewhere, the big danger of this approach is that it risks seeing those with less influence and/or time and energy to be wasted, being shoved to the back of the queue, (as always).

    To meet the need and cut through all the paper work and red tape, what is needed is some visionary leadership in the house of representatives to forcefully demand that the government immediately enact the necessary circuit breaking legislation.

    The Christchurch Emergency Mortgage freeze enabling Act – should state, “That for the duration of this emergency that a Moratorium on Mortgages shall apply. Specifically; all mortgage payments in the Greater Christchurch Area; public, private and commercial, will be waived with no accrued penalties or interest to be payable to the banks.”

    Further: “That the need for this emergency enactment shall be reviewed at a period of no less than every three months from it’s implementation.”

    To have any chance of influencing the government, As well as the opposition parties, the coalition parties should also be challenged to support the “Moratorium”.

    It is by raising such demands that an opposition party is judged. And by opposing them or sitting on the fence, are all other parties judged as well.

    So let’s see some forceful visionary leadership from the opposition benches that is prepared to promote policies which by alleviating some of the financial pressures of those affected will be of direct and immediate benefit to those suffering in the aftermath of the Christchurch earthquake.

    captcha – “decision”

    • Oscar 4.1
      5 March 2011 at 1:49 pm

      Only problem is that both sides of the house are too scared to do anything in fear of alienating their potential support base.

      National is populated by ivory tower type peoples who are extremely uncomfortable with “real people”

      Labour is populated by highly educated people that only mix in Labour circles and wouldn’t know reality if it came up and smacked them in the face.

      Greens have traction, but when they don’t make a fuss with Labour stealing their policies, it’s a bit gutless.

      George Forbes would be better at the management of Christchurch even if he is a corpse. No worse than who’s in charge now.

  5. Lanthanide 5
    5 March 2011 at 1:47 pm

    “Once that payment expires in a few weeks they’ll be on the dole, if they’re eligible.”

    The government are highly likely to extend the programme, although the $ amounts might change or there might be stricter provisions. They extended their (less generous) scheme after last years quake, and this one is much worse. It’s also election year.

    “It appears a lot of employers are finding the subsidy isn’t enough and they’re better off shutting down or laying off staff than trying to pay the unsubsidised portion of their wage bill.”

    Evidence please. I haven’t seen or heard anything about companies shutting down because the subsidy isn’t sufficient.

    • Marty G 5.1
      5 March 2011 at 3:13 pm

      It’s self-evident. Businesses wouldn’t need to be laying off staff due to the quake if the wage subsidy was enough to tide them over until they can re-open. The two supermarkets that closed are case in point (and possibly also evidence of a cynical confidence that workers will be easy to come by when they reopen). The exception is businesses that think they are permanently destroyed.

      • infused 5.1.1
        5 March 2011 at 6:59 pm

        Doubt it. Most small businesses have cash flow for around 1-2 months. It just makes sense to close. I’d say it has jack to do with the subsidy.

        • neoleftie 5.1.1.1
          5 March 2011 at 7:57 pm

          i think from a SME point of view cash flow and cash reserves are slim to nothing for lots f chch businesses, retails down massively nationwide.
          The flow on effect over the next 6-9 months is so massive its beyond the pale really. The Tories are in such a bind – raise taxes to pay for the billions they need goes against thier narrow ideology and support base, if they retrench the public sector in a massive way both the economy and there chance at second term are doomed.
          Without the 5-6 billion in tax cuts under the Tories, which did provide little stimulous for the economy, the state might just have had the resources internal from the tax take to make bold steps in providing fast solutions to the chch challenge.
          This the worst that could have happened to Chch and then economy and from my perspective the very very best situation for the tories to find themselves in.
          Imagine if the Tories ‘go round’ coinsided with a growing economy with positive macro indicators…At least now if they touch anything they stuff everything and lose.

        • Marty G 5.1.1.2
          5 March 2011 at 11:03 pm

          A hell of a lot of businesses are already on the edge. The calculation would be whether to keep going and slowly die from paying out the unsubsidised wages or close down now

      • Lanthanide 5.1.2
        5 March 2011 at 8:50 pm

        I think the supermarkets are probably the worst example you could’ve picked. It’s probably going to take at least a year before those buildings are repaired sufficiently, or suitable alternative premises found in the same local area. If you think the government should be paying the employee subsidy for that long, or at a higher rate than they currently are, then I don’t really know what to think.

        Staff costs are a very small part of the overhead for a supermarket. Most of their costs are in the building, stock, heating/electricity running costs and back-end costs like accounting, cash handling and franchisee costs.

  6. Afewknowthetruth 6
    5 March 2011 at 10:09 pm

    With petrol now at $2.11 and another big rise very likely within days if Saudi Arabia (the world’s top oil supplier) ‘blows’ it is well past time for a major paradigm shift. However, we all know how amenable most people are to a paradigm shift. … they’d rather hang on to redundant paradigms and ‘keep doing it till they can’t’.

    Business as usual is over, but only 1% of the populace can see it at this stage. These are most interesting times.

    ‘Saudis mobilise thousands of troops to quell growing revolt

    By Robert Fisk, Middle East Correspondent
    Saturday, 5 March 2011
    Saudi security forces in armoured vehicles responding to the threat of a Shia uprising this week
    Saudi Arabia was yesterday drafting up to 10,000 security personnel into its north-eastern Shia Muslim provinces, clogging the highways into Dammam and other cities with busloads of troops in fear of next week’s “day of rage” by what is now called the “Hunayn Revolution”.’

  7. Irascible 7
    6 March 2011 at 2:19 am

    Using the earthquake as excuse the NATS will use the same play book as the Tories in the UK.
    http://www.guardian.co.uk/commentisfree/2011/feb/27/coalition-coup-sleeping-public?INTCMP=SRCH

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