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The “free” market can’t even build a bloody hotel?!

3 March 2018 2 comments

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Our crisis in construction reaches tipping point

According to recent reports in the media, New Zealand is no longer able to build and complete major projects;

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Speaking to Radio NZ on 8 February,  Building Recruitment managing director, Kevin Everett, lamented our chronic shortage of skilled building staff;

“There’s astronomical demand, there’s shortages everywhere from skilled to semi-skilled, to labours. We just can’t get reliable people.

The feedback we’re getting for 2018 from our clients is that they’re all expecting a big year this year and that’s putting pressures on everyone because they just can’t get the manpower.

I’ve heard of people going in and getting 40, 50 people in one hit. We’re looking at doing a campaign just now to go across to the UK, so we’re going to go to London, Manchester, and Glasgow and try and bring people in. We’re looking for at least 100 people in all different skill sets, in residential and commercial.”

The $200 million Park Hyatt hotel project was first announced on 4 July 2016 as a j.v. (joint venture) between Hawkins Group and China State Construction Engineering Corporation (CSCEC), the latter being one of the world’s largest construction companies;

In 2012, The Economist named CSCEC as the world’s biggest builder by revenue, then at US72.6 billion, ahead of China Railway Construction, China Railway Engineering and giant French builder Vinci which in 2003 had been the world’s biggest construction company.

Now, CSCEC has revenue of about US$100 billion.

The Economist article said Japanese builders had now disappeared from the world’s top 10 builders, overtaken by Chinese construction companies.

Fu Wah International Group itself is is a Chinese-owned multi-billion corporation. According to Forbes Fu Wah’s chairman, Chan Laiwa, ranked number 36 on the China Rich List and was worth an estimated  US$5.9 billion.  The hotel project is being built by a Chinese construction firm for it’s Chinese owners.

The Park Hyatt will be Fu Wah’s first project in New Zealand. The company has agreed to spend  an additional $2.5 million on  a public promenade, walkway and art display in the vicinity of the hotel.

In the Hawkins Construction 2016 press release Fu Wah New Zealand General Manager, Richard Aitken, said;

“Together with China Construction, they have the resources, experience and skills to deliver an outstanding outcome for Auckland.”

Panuku Development is a Auckland Council CCO responsible for the regeneration of eighteen hectares of Auckland Council-owned land in the Wynyard Quarter. This includes the Park Hyatt hotel construction site, which it apparently retains ownership ofPanuku Development’s  then-Chief Executive, John Dalzell, echoed the sentiment;

“This appointment by Fu Wah International Group is a testament to the quality of work Hawkins has delivered on a number of Wynyard Quarter projects to date.”

In September 2015, as the Park  Hyatt project gained resource consent, then-PM John Key was singing the “benefits” accruing to the region;

“ The new $200 million Park Hyatt in Auckland and the $35 million Sofitel in Wellington will create jobs during construction and when the hotels are up and running.”

Gambling with promises of jobs

The arrangement sounds remarkably similar to a deal in between the National government and SkyCity Casino. In 2012, SkyCity was granted approval for up to 500 new pokie machines in return for a $350 million international convention centre in downtown Auckland.

At the time, Key also touted the promise of 900-plus construction jobs from the the Skycity development. This optimistic promise  was quickly revealed to be another of his shonkey “loose connections with the truth”;

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By June 2016, the reality of the Skycity deal revealed at least a hundred jobs going to offshore to an American contractor in Thailand. National’s response? This was “how the free market operated“.

Increasing tourism and “more jobs” appear to be the two main reasons touted for the Park Hyatt project.

But even the prospect of more jobs has recently been questioned.

Earlier this month (8 February), concerns were voiced that two hundred extra  workers from  China would have to be brought in from China, to “help the 300 local staff already on site“. According to Building Recruitment managing director, Kevin Everett, New Zealand evidently lacks the prerequite skills to complete the Hyatt project;

“There’ll be a number of skills mainly around fine decorating including stone work, tiling, wallpapering, painting, veneer work – there’s quite a lot timber veneer within the hotel, so they’ll bring those skills to us.”

Which is remarkable, as New Zealand once built and completed vast construction projects such as the Clyde Dam with minimal foreign labour;

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Clyde Dam is the largest concrete gravity dam in New Zealand consisting of one million cubic metres of concrete. It's height is 100 metres, width at base is 70 metres, width at crest 10 metres and length at crest 490 metres.

Clyde Dam is the largest concrete gravity dam in New Zealand consisting of one million cubic metres of concrete. It’s height is 100 metres, width at base is 70 metres, width at crest 10 metres and length at crest 490 metres.

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Plans to bring in two hundred Chinese workers appears to be part of China’s long-term strategy to engage and strengthen their state-owned construction companies. As The Economist pointed out in October 2012;

China’s construction firms have become good at finishing big projects on time. But analysts doubt whether they are ready for rich countries. Julian Bu of Jefferies, an investment bank, says their main advantage – low labour costs – is little help in places where they cannot bring lots of Chinese workers over

So much for claims that the project would create more jobs.

Fu Wah even issued a veiled warning that the Hyatt project could face disruptions and delays if  Chinese workers were not allowed into the country immediatly.

At a time when unemployment is still at 122,000 (most likely that figure is an under-estimation as Stats NZ has a narrow definition of unemployment) and under-employment has increased;

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– it is difficult to understand why New Zealand continues to import labour from overseas. Suggestions from some on the Right that these 122,000 constitute a group “unwilling” to work is not credible when taking into account that the under-employed group has risen sharply by a massive 7,000.

The economy – a legacy from nine years of National’s indifference to job-training and thirtyfive years of neo-liberal free market “hands off” ideology – appears paralysed and unable to engage with unemployed and under-employed for re-training. The new Coalition government Minister for Workplace Relations and Immigration, Iain Lees-Galloway, said as much on 8 February;

“We know that construction is a sector where the previous government failed to invest in the skills that New Zealanders need to participate in that sector, and there are significant shortages in the construction sector as we’re seeing a lot of infrastructure and a lot of construction being undertaken at the moment.”

It seems cheaper simply to import labour when needed, and return them to their home countries when that need has ended. That let’s businesses off the hook having to invest heavily in training local workers. It also increases labour exploitation by unscrupulous bosses.

The Property Council’s acting CEO, Matt Paterson, frankly admitted that foreign companies and labour could be used as a weapon to lowering prices (including wages), when he disclosed in July 2016;

“One of the issues holding back the development and construction market in New Zealand is high prices, so any additional competition we get is good. We do need to make sure competition is also bringing us quality and they’re not taking short cuts with materials or labour. Construction costs have been high in New Zealand for a long time. We need to develop a stronger, more competitive, capable construction sector. In the short term, there’s work that needs to be done and overseas firms can play a part in that. But we need to build stronger New Zealand industry.”

In the case of Fu Wah and the Hyatt hotel project, at least one construction company disclosed to Radio NZ that they had attempted to tender for the contract;

However an Auckland company, which did not want to be named for fear of losing out on future work, told RNZ they had voiced their interest at the start of the project in 2016.

A staff member said soon after Hawkins and China Construction were appointed as the main contractors, his company was contacted about what the programme of work would be and asked whether they would be able to do it.

“We went back and said ‘yes, everything’s fine, things are going to be a little bit tight here, things will be fine here’, but nothing major that would lead us to believe we’d been crossed off as a potential subcontractor.”

He said while it was emphasised that they should lock in subcontractors early because of a busy schedule to meet the deadline, it was never an issue of lack of skills.

“At that point in time we more or less had a year or two to lock in labour resource, to build up the labour teams that we have if necessary. But we heard nothing for a couple of years, in fact we never even heard back in the end on whether we could tender for the main package.”

When asked whether they had the staff to do the work now, he said they did.

There appear to be several aspects to this story – all inter-related;

Globalisation

The US’s economic model over the past 40 years has been predicated on a kind of globalisation that encourages low wages and outsourcing. The idea was that cheaper stuff would offset the loss of jobs and lower wages. But in an economy made up of 70 per cent consumer spending in which wages haven’t risen for most of the population since the 1990s, that maths stops working. “Globalisation can’t be just about outsourcing and low wages,” says [former General Electric CEO] [Jeff] Immelt (there’s an increasing body of research showing that low wages are a cause, rather than just a symptom, of the problems of globalisation).

In 2014, our own right-wing think-tank, the NZ Initiative (formerly Business Roundtable) said;

As technology improves, many of the unskilled jobs in advanced economies such as New Zealand will simply be replaced.

Even more pertinent, those unskilled jobs that can’t be replaced by technology are likely to be outsourced to those who can provide the cheapest labour, namely, developing countries.

Globalisation has already seen this effect occurring to a large extent.

Leaving labour to Market Supply & Demand

The free market sees unionised protection for workers as anathema to the concept of Supply and Demand for skilled, semi-skilled, and low-skilled workers.

During last year’s election, the supposedly “free market”  party, ACT, promised to increase teacher’s salaries – but with strings attached;

David Seymour is proposing to boost funding for schools – but only if they agree to take teachers out of collective pay agreements.

He said teachers had lost ground against the average wage over the past 30 years.

And Mr Seymour said the reason was a 1970s style pay system.

“The unions insist on paying the best teacher and the worst teacher in New Zealand exactly the same and often protecting under-performing teachers.

“What we’re saying is that we’ll raise teacher pay on average by $20k, but we won’t have that model anymore.”

The ACT Party education policy encourages “…schools to opt out of union contracts”. (Which seems to forget that teachers unions are already voluntary. People have a choice and can already opt-out of membership. Though the ACT Party espouses “personal freedom”, the word “choice” is strangely missing from their Principles statement.)

So what’s gone wrong?!

So if New Zealand has a free-market economy that according to one group is the third most open in the global economy – what’s gone wrong? Why do we have 126,000 unemployed and a further 108,700 under-employed when we have a skills shortage in the construction trade? (Note: Stats NZ’s definition of what constitutes an unemployed person is narrow and actual  numbers are most likely even higher than “official data” states.)

The Christchurch earthquakes of 4 September  2010 and 22 February  2011 damaged and destroyed large parts of the city.  In late 2011, the National-led government at the time was keenly aware that the cost of rebuilding was estimated to cost around NZ$13.5  billion. By 2014, Treasury increased that estimate to a jaw-dropping NZ$15.4 billion.

The need for skilled labour should have been obvious to all.

Obvious to everyone except the government at the time: the Key-led National government.

National’s “response” – an exercise in incompetence

National’s response to on-going problems in the construction industry can best be summed up in a March 2012 comment made by then Earthquake Recovery Minister, Gerry Brownlee;

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Leaving citizens to the “tender mercies” of the free market seems National’s de fault setting.

Which had its inevitable conclusions as the Christchurch re-build is yet to be completed; the entire country is suffering a housing crisis; affordability worsens; and homelessness increases. Even retiring “baby-boomers” have not escaped our deepening housing crisis;

“We risk discovering that New Zealand is going to have a population of homeless pensioners,” Salvation Army spokeswoman Sue Hay told Radio New Zealand.

Compounding housing unaffordability and homelessness was a critical shortfall in skill tradespeople.

At a time when over a hundred thousand New Zealanders were out of work and under-employment was rising, National was practically sitting on it’s hands.

Post 2008 Global Financial Crisis, enrollments for ITO trainees fell dramatically;

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In 2013 – two years after the second Christchurch earthquake, Waikato Plumbing Services office administrator,Gayelene Woodcock, warned presciently of a looming critical shortage of skilled tradespeople;

“During the early 1990s the same thing happened. When there was a decline after the 1987 crash it didn’t actually affect the whole industry until the early 1990s.

The lack of apprentices taken on there showed through about four or five years later when there was an extreme shortage of tradesmen.”

Labour’s Grant Robertson could also see the rushing train bearing down on us;

“We have a shortage now in skilled tradesmen. It’s welcome that the Government worked out they need to do something but the impact of that skilled shortage is being seen at the moment. It’s being seen in Christchurch and it’s likely to be seen around the country.”

Report Card: F for Failed

We now have a shortage of tradespeople so critical that the viability of some  building projects’ is threatened.

Whatever tepid measures National implemented failed to address the growing problem. After the 2011 Christchurch earthquake, National had clear warning of the problems confronting the construction industry.

It chose to tinker with half-hearted solutions, but  these proved ineffectual seven year later as one media report after another highlighted the crisis.

One immediate solution has been to remove barriers such as tuition costs. The  Productivity Commission’s report appeared to reluctantly confirm this barrier;

There is some evidence that differences in subsidy, fee and student support arrangements can influence the study decisions of students (and employers). For example, members of the ITO sector expressed concern about these influences on decisions on undertaking industry training while in full-time employment through an ITP, PTE or ITO…

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The University of Waikato submitted that fees combined with geographic distance may still represent a substantial barrier to obtaining a university education. In particular, it notes:

While parents with professional incomes and substantial net assets may not be concerned about their
children acquiring large amounts of debt to fund tertiary study, the poorest families with minimal net
assets will quite rationally be averse to their children acquiring large amounts of debt. (University of
Waikato, sub.93, p.6)

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The evidence suggests that higher fees reduce demand, that students in non-university tertiary education and lower-income students are more price-sensitive, and that some minority groups may be more price-sensitive (Leslie & Brinkman, 1987; Heller,1997). Where the actual cost students will pay is not transparent,
because various grants or discounts apply that mean actual cost is lower than the advertised price, students from lower-income families are more likely to be discouraged. The availability of loans and allowances will offset this, although students from lower-income households may also be more debt-averse.

In plain english, low-income families were “debt averse” – a scenario which contradicts many right-wing reactionary prejudice which parrots the myth that poor families are in debt because they make “poor choices”. In this case, a student debt is a poor choice that such families will unsurprisingly seek to avoid.

The new Labour-led Coalition government – not fettered by the dead-weight of user-pays ideology to which National is chained to – has understand this simply reality and taken blindingly obvious steps to remove this barrier;

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It took National nine years to allow the current mess we now have in the construction industry. A mess whereby over a hundred thousand New Zealanders are unemployed whilst the building industry is seeking to import cheap, skilled labour from offshore.

It has taken the Coalition just over three months to begin to tackle National’s toxic legacy of mis-management.

Postscript1

In March 2017, Fu Wah  applied to build 330 apartments on the Auckland waterfront, adjacent to the Hyatt Park hotel.

At this stage it is unclear who will  provide the labour for this project. Familiar claims have been made that the proposed NZ$500 million apartment project would “create more jobs”.

Past evidence suggests those claims should be regarded with caution.

Postscript2

Globalisation continues to wreak havoc with our local industries As Fletcher Building announced on 25 February has it has pulled out of the Ormiston Town Centre building project. This is the latest in building projects that Fletchers has either withdrawn from, or will not be tendering for, as local companies find it  impossible to compete with low-priced offshore competitors.

Postscript3

Fletcher’s chairperson, Ralph Norris announced his resignation from the debt-ridden company on 14 February.

Norris was also chairperson of the Business Roundtable until September 2001. The Business Rountable (later re-branded as the so-called “NZ Initiative”) was a pro-free market lobby pressure group  that was instrumental in the neo-liberal “reforms” of the late 1980s and 1990s. Part of those neo-liberal reforms was globalisation: allowing offshore companies to bid for contracts in New Zealand alongside local industries.

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References

Radio  NZ:  200 Chinese tradies to complete Akl hotel

Hawkins:  Hawkins and China Construction JV signs up for Park Hyatt Auckland

NZ Herald:  World’s biggest builder arrives in NZ for $375m in contracts

Forbes:  Profile – Chan Laiwa & family

TVNZ News:  $200M luxury hotel under way in Auckland’s waterfront

Panuku Development Auckland: Home Page

NZ Institute of International Affairs: Speech to the NZIIA – 3 May 2015

Radio NZ:  300 apartments for Auckland waterfront

Financial Times: Why US big business listens to Bernie Sanders

Treasury: 2014 Budget –  Rebuilding Christchurch

Fairfax media: Christchurch rent crisis ‘best left to market’

Radio NZ:  Housing report paints ‘sobering picture’ of crisis

Fairfax media:  More NZ retirees will become homeless without action on housing – Salvation Army

Productivity Commission: Student characteristics and choices (pgs 41, 60, 73, 74)

TVNZ:  Shortage of skilled tradespeople exacerbating Auckland’s housing problem

BCITO:  Prime Minister encourages construction apprentices

Radio NZ:  Fletcher out of running on another big-ticket build

Noted:  Unfair overseas competition hurting NZ forestry, says industry leader

Fairfax media:  ‘Incompetence’ behind Fletcher Building’s woes, admits chairman Sir Ralph Norris

NZ Herald: Ralph Norris retires

Additional

NZ Herald:  Brian Gaynor – How to fix Fletcher Building

Fairfax media: Dearth of tradesmen foreseen

Other Blogs

The Standard:  Fonterra and Fletcher Building

Previous related blogposts

Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

Lies, Damned lies and Statistical Lies

Lies, Damned lies and Statistical Lies – ** UPDATE **

MSM catches up on Unemployment stats rort

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This blogpost was first published on The Daily Blog on 26 February 2018.

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Have the media finally learned to ask the right questions?

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planet key

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When right-wing, normally pro-National,  columnists like the NZ Herald’s John Armstrong question the veracity of this government’s assertions, then it is another indication that things are not going well for John Key’s six-year old administration.

Specifically, Armstrong’s questioning  Steven Joyce’s claim on 12 March that thousands of new jobs have been created in Northland;

When you add that to the 7,500 extra new jobs created in Northland in the last year, it is clear that the region is turning the corner and beginning to grow well.”

Armstrong replied two days later, lambasting the National Minister;

Deserving of special scrutiny is the repeated claim by Steven Joyce that 7500 new jobs were created in Northland last year. It certainly sounds impressive. The Economic Development Minister’s assertion is based on Statistics New Zealand’s household labour force survey. That indeed showed an increase of 7500 more people in employment in Northland at the end of last year as against the previous December.

The survey, however, stipulates that anyone who does paid work for as little as one hour a week is classed as being in employment. When people talk about “new” jobs, they usually mean full-time or part-time with a reasonable number of hours. We simply do not know what types of jobs were actually created.

Note Armstrong’s comment; “The survey, however, stipulates that anyone who does paid work for as little as one hour a week is classed as being in employment”.

He is indeed correct. Statistics NZ considers a person to be employed if they;

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment 
  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative 

Note that a worker does not even have to be paid for Statistics NZ to consider you officially “employed”.

Which Armstrong duly noted;

The risk of making bald assertions without qualification is underlined by the survey’s other finding that despite the apparent strong lift in employment, the number of unemployed in Northland fell by only about 100 during the same 12 months.

It is refreshing that some in the media are finally starting to pick up the mendacities of this government. Key and his cronies are simply not be be trusted and every utterance they make should be fact-checked.

If an openly pro-National columnist understands that the governments claims are bogus, it should not be beyond the abilities of other journalists to undertake basic research as well. There is simply no excuse; the information is readily available through search engines.

Even Cameron Slater has picked up on National’s blatant  propagandising and seems less than impressed.

As I blogged in early February;

If the last six years have shown us one thing, it is that the next scandal and revelations of dodgy ministerial practices and inept Prime Ministerial behaviour is not too far away.

The media are alerted. The public now have some awareness of dirty politics behind the scenes. And journalists are starting to exercise a form of collective memory.

It is said that the public no longer care about politics, and that Key has “de-politicised” it. But, like the continuing bad stories that finally destroyed Jenny Shipley’s government, continuing negatives stories can have a corrosive effect on this government.

The more times Key is caught out lying or being tricky with the truth or breaking promises – the more that the public will slowly but surely distrust his “brand”.

The loss of Northland will not only be damaging to the National government, it will be the clearest indication yet that the value of “Brand Key” has been  irrevocably tarnished and diminished.

This will be Key’s final term in office.

Hat-tip: Maria Sherwood – ‎John Key has Let Down New Zealand

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References

National Party: Strong economic performance in Northland

NZ Herald: John Armstrong – Questionable tactics in race for Northland votes

Statistics NZ: […] Definitions

Whaleoil: Wheels come off Steve Joyce’s Northland campaign

Previous related blogposts

Un-employment; under-employment; and the plain unvarnished truth

Un-employment; under-employment; and the plain unvarnished truth*** UP DATE ***

Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

Witnessing the slow decay of a government past it’s Use-By date

When the teflon is stripped away


 

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3000 more jobs - fantasy by J Key

 

This blogpost was first published on The Daily Blog on 16 March 2015.

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Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

12 February 2014 8 comments

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Unemployed under-employment

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A new Roy Morgan poll has un-employment in New Zealand steady at 8.5%, with a further 11.3% under-employed. Collectively,  19.8% of the workforce (519,000, up 69,000)  were either unemployed or under-employed. For the December Quarter 2013, according to Roy Morgan:

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New Zealand real unemployment steady at 8.5%

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By contrast, the last Household Labour Force Survey (September 2013 quarter) reported 6.2% unemployed, and the 2013 Census survey gave a figure of 7.1%.

Gary Morgan, of Roy Morgan said,

The latest Roy Morgan New Zealand December Quarter 2013 employment figures show New Zealand unemployment at 8.5% (unchanged from September Quarter 2013). However, New Zealand under-employment – those working part-time but looking for more work – has jumped to a record high 11.3% (up 2.7%). It should be noted that this is the fourth year in a row that under-employment has increased in the December Quarter. However, this year’s increase is substantially larger than in previous years and must represent a major concern for Prime Minister John Key seeking re-election.

“This means a total of 19.8% (up 2.7%) New Zealanders are either unemployed or under-employed – almost identical to the figure earlier last year in the March Quarter 2013 of 19.9%. Total New Zealand unemployment and under-employment is also significantly higher than when Prime Minister John Key won the 2011 Election (19.0%). Key clearly needs to reduce unemployment and under-employment during 2014 to have a strong chance of winning re-election to a third term in November.”

Bearing in mind that Statistics NZ defines being employed as anyone working one hour or more, per week, whether paid or unpaid, and it becomes apparent as to why unemployment/employment statistics in this country are skewed towards the low end. Statistics NZ is simply not presenting us with a real picture of  unemployment.

This, of course, suits governments of either hue, whether National or Labour-led.

Roy Morgan further  explained how their polling was conducted;

The Roy Morgan New Zealand Unemployment estimate is obtained by surveying a New Zealand-wide cross section by telephone. An unemployed person is classified as part of the labour force if they are looking for work, no matter when.

The results are not seasonally adjusted and provide an accurate measure of monthly unemployment estimates in New Zealand. The Statistics New Zealand Unemployment estimates are obtained by mostly telephone interviews.

Households selected for the Statistics New Zealand Labour Survey are interviewed each quarter for up to two years (eight interviews), with one-eighth of the sample being replaced each quarter. The first interview is conducted face-to-face. Subsequent interviews are then conducted by telephone.

Statistics New Zealand classifies an unemployed person as part of the labour force only if, when surveyed, they had actively sought work in the past four weeks ending with the reference week and were available for work or had a new job to start within the next four weeks.

Statistics New Zealand Unemployment estimates are also seasonally adjusted. For these reasons the Statistics New Zealand Unemployment estimates are different from the Roy Morgan Unemployment estimate.

There is a similar divergence caused in Australia’s ABS Unemployment estimates and the Roy Morgan Australian Unemployment estimates. Roy Morgan Executive Chairman Gary Morgan’s concerns regarding the ABS Unemployment estimate are clearly outlined in his letter to the Australian Financial Review, which was not published.

No doubt National/ACT supporters will find little joy in these figures and will casually dismiss them as unreliable or some other reason.

But one suspects they will sing a different tune when a Labour-led government is installed later this year, and Roy Morgan polling continues to show higher-than-official  unemployment statistics.

At that point the Right will suddenly “discover” Roy Morgan.

Note: The Household Labour Force Survey for the  December 2013 quarter was released on 5 February 2014.

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References

NZ Parliament: Unemployment and employment statistics: the Household Labour Force Survey in context

Roy Morgan:  New Zealand real unemployment steady at 8.5% and a further 11.3% (up 2.7%) of workforce are under-employed

Roy Morgan:  Roy Morgan measures real unemployment in Australia not the “perception” of unemployment

Statistics NZ: 2013 Census QuickStats about national highlights

Statistics NZ: Household Labour Force Survey: September 2013 quarter

Statistics NZ: Definitions – About the Household Labour Force Survey

Radio NZ: Unemployment rate falls as more give up job hunt

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18 percent of 18-24 year olds unemployed

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 5 February 2014.

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Un-employment; under-employment; and the plain unvarnished truth… *** UP DATE ***

11 February 2014 2 comments

Continued from: Un-employment; under-employment; and the plain unvarnished truth

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Unemployed under-employment

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Additional to my original blogpost on The Daily Blog on 6 February.

In up-coming unemployment stats, I’ll be focusing on the Jobless and under-employed numbers, as well as the narrower “unemployed” stats from the Household Labour Force Survey (HLFS). It is evident from the numbers of under-employed and the extremely narrow defining on what constitutes an unemployed person, that we are not getting the full picture from the HLFS.

Coupled to that, the Census last year revealed unemployment to be at an astonishing 7.1% whilst Roy Morgan poll (5 December 2013) had the figure at 8.5%.

By comparison, the HLFS (at roughly the same time) had unemployment at 6.2%.

So unemployment stats ranged from 6.2% (HLFS) to 8.5% (Roy Morgan).

Coupled to that is the narrow definition of the HLFS used by Statistics NZ (see below), and we begin to see why the “official unemployment rate” appears more ‘benign’.

From the January 2014 Parliamentary report, Unemployment and employment statistics: the Household Labour Force Survey in context;

The Reserve Bank has expressed concern at its variance with other indicators. [2]   A commentator in the Westpac Bulletin, puzzled by the continued weakness of the HLFS in 2012 compared to the Quarterly Employment Survey (QES) and other labour market indicators, described it as ‘confusion reigns’ and suggested that survey ‘volatility’ played a role. [3]   The ANZ commentator is cautious: ‘The HLFS has been very volatile in recent years, and we and the Reserve Bank will treat the result with a degree of scepticism, preferring to take note of a wide range of labour market indicators.’ [4]  

These broader labour market indicators include external ones such as business and consumer surveys and job advertisements. These are in addition to those derived from official statistics such as changes in the employment and labour force participation rates, full- and part-time work, and hours worked, together with fine-grained analysis of changes by region, industry and age.

Various reasons for the volatility of the unemployment rate and its variance with other labour market indicators have been discussed – the impact of the recession, the dynamic nature of the labour market, the survey nature of the HLFS, and differences in coverage of the statistics. It has been suggested that the HLFS is more volatile at a turning point – either going into or out of recession…

The latest Household Labour Force Survey (HLFS) stats;

Officially unemployed stats;

The unemployment rate decreased over the quarter, down 0.2 percentage points to 6.0 percent. This decrease reflected 2,000 fewer people being unemployed [147,000]. The fall in unemployment was from fewer men unemployed.

Official unemployment: down

The  under-employment stats;

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Official under-employment: up

The HLFS Jobless  stats;

In the year to December 2013, the number of people in the jobless category fell 27,400 to 257,100. Alongside the 15,000 fall in the number of people unemployed, there was also a 10,200 fall in the number of people without a job who were available for work but not actively seeking.

Official Jobless: down

Source

Observation #1: Under-employment is increasing, which brings into question how effective the “drop” in unemployment and Jobless actually is. As being “employed” is defined as working for one hour (or more) per week; with or without pay: the whole statistical reporting of true unemployment in New Zealand is now called into question. Especially with regards to the next point.

Observation  #2: “A 10,200 fall in the number of people without a job who were available for work but not actively seeking” signifies that the drop in Unemployment/Jobless can also be attributed to people giving up, as this Radio NZ report stated in February last year (2013).

Observation #3: As stated in the “Definitions” below, a person who is job seeking only through newspapers is not considered in the “Unemployed” category, but under the wider “Jobless” definition. Considering that a number of  households  cannot afford the internet, and do not qualify for WINZ registration, this makes a sizeable “chunk” of unemployed effectively invisible.

Observation #4: The above Observation suits successive governments, which are desperate to report lower unemployed so as to gain support from voters.

 

Definitions

Jobless: people who are either officially unemployed, available but not seeking work, or actively seeking but not available for work. The ‘available but not seeking work’ category is made up of the ‘seeking through newspaper only’, ‘discouraged’, and ‘other’ categories.

Under-employment: employed people who work part time (ie usually work less than 30 hours in all jobs) and are willing and available to work more hours than they usually do.

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment 

  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative 

  • had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

Source

Up-coming unemployment stats will focus  on  Jobless and under-employed numbers, as well as the more restrictive “unemployed” stats from the HLFS. Hopefully this will create a more comprehensive ‘snapshot’ of what is happening in the jobs ‘market’.

Further Information

“4 out of 5 New Zealand homes had access to the Internet, up 5 percent since 2009.”

– Statistics NZ

The corollary to that is that one in five households – a staggering 20%! – do not have internet access.

Which means that job seekers on little or no income (especially if they do not qualify for WINZ support) may rely solely on newspapers to look for jobs.

But as I’ve reported above, using a newspaper to be job-seeking does not quality you as “unemployed”.

20%.

That’s quite a number.

No wonder of official unemployment stats are dodgy as hell.

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References

NZ Parliament: Unemployment and employment statistics: the Household Labour Force Survey in context

Roy Morgan:  New Zealand real unemployment steady at 8.5% and a further 11.3% (up 2.7%) of workforce are under-employed

Roy Morgan:  Roy Morgan measures real unemployment in Australia not the “perception” of unemployment

Statistics NZ: 2013 Census QuickStats about national highlights

Statistics NZ: Household Labour Force Survey: September 2013 quarter

Statistics NZ: Household Labour Force Survey: December 2013 quarter

Statistics NZ: Definitions – About the Household Labour Force Survey

Statistics NZ: Household Use of Information and Communication Technology: 2012

Radio NZ: Unemployment rate falls as more give up job hunt

Previous related blogpost

The REAL level of unemployment

Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

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18 percent of 18-24 year olds unemployed

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 9 February 2014.

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Un-employment; under-employment; and the plain unvarnished truth…

11 February 2014 3 comments

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Continued from:    Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

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Unemployment logo

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This is the plain, unvarnished truth that most New Zealanders don’t know; don’t understand, and quite frankly, many do not want to know or understand. For many – especially National/Act supporters living in their own fantasyland – this is the reality that would shatter their comfortable upper-middle-class world-view.

First, read Mike Treen’s excellent analysis on The Daily Blog, on 30 January;

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EXCLUSIVE - Billions of dollars stolen from the unemployed

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(Note the pathetic and largely ineffectual attempts by right wing blogger; self-proclaimed “social welfare expert”; and ex-Act candidate, Lindsay Mitchell, and one or two other National Party supporters to undermine Mike’s analysis. They are unable to address or answer even the most simple points Mike and others have raised.)

Then, read Matt McCarten’s piece in the NZ Herald, a few days later;

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Matt McCarten - Rose-tinted view cruel fairy tales

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And now, here’s the ‘kicker‘;

According to Statistics New Zealand, which carries out both the five yearly Census as well as the Household Labour Force Survey (HLFS), the definition of an employed person is so loose and wide-ranging as to make the term meaningless;

Definitions

About the Household Labour Force Survey

The Household Labour Force Survey (HLFS) provides a regular, timely, and comprehensive portrayal of New Zealand’s labour force. Each quarter, Statistics NZ produces a range of statistics relating to employment, unemployment, and people not in the labour force.

The survey started in October 1985 and the first results published were for the March 1986 quarter.

More definitions

The labour force category to which a person is assigned depends on their actual activity during a survey reference week.

This section includes definitions used in the HLFS release. These conform closely to the international standard definitions specified by the International Labour Organization.

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment 

  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative 

  • had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

So, if youworked for one hour” – even without pay! ” – you are automatically classed as employed by this country’s statisticians.

No wonder that the Roy Morgan poll consistently reports that New Zealand has a higher unemployment rate than is generally reported by Statistic NZ’s HLFS or Census.

Quite simply,

  • It appears that our stats are horribly wrong and are under-stating the severity of unemployment in New Zealand by several degrees of magnitude,
  • Lower unemployment figures suit the agendas of successive governments (National, as well as Labour-led),
  • Community organisations are over-worked struggling to put  band-aids on the growing problem of hidden unemployment,
  • New Zealand as a whole suffers through loss of productivity; increasing costs due to poverty; and other socio-economic problems.

When a government agency purports to measure employment and unemployment, and defines being employed as “working for one hour or more”, either paid or unpaid, those are not statistics – they are a sick joke. In effect, we are fooling ourselves as a nation that we have “low unemployment”.

These are not facts – they are propaganda; half-truths; mis-information; lies-dressed-up-as-comforting-facts. The reality – unpalatable as it may be for many – is that our unemployment is much, much worse than we have been led to believe.

If New Zealanders want to keep up this pretense, they will eventually have to “pay the Piper”, as societal problems worsen. And then, the rioting begins.

Note: For future reference, any subsequent use of Statistics NZ data referring to unemployment, in any upcoming blogposts,  will carry the caveat;

Definition of Employed (by Statistics NZ) includes any person who is;

  • anyone working for only one hour (or more)
  • anyone not paid for their labour

Accordingly, Statistics NZ information may not present a fully accurate picture of this country’s unemployment/employment rates.”

*** Up-date ***

The HLFS results for the December 2013 Quarter reported a “drop” in unemployment from 6.2% to 6.0%.

Interestingly, as Radio NZ reported, “the fall in unemployment did not match the pick up in jobs, due to more people searching for work“.

This ties in with the fact that “employment” is defined as anyone working for one hour (or more).

If more people are looking for work, this suggests any number of factors,

  • The HLFS survey is failing to pick up accurate numbers of unemployment,
  • Statistics NZ’s definition for unemployed is too narrow,
  • The number of under-employed is (as Roy Morgan reveals) so high as to mask real unemployment.

Also interesting to note that the drop in the HLFS survey results mirror the fall in Roy Morgans polling, further lending credibility to the latter.

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References

NZ Parliament: Unemployment and employment statistics: the Household Labour Force Survey in context

Statistics NZ: Hours Worked in Employment

Scoop News:  New Zealand Real Unemployment at 9.1%

Statistics NZ: Household Labour Force Survey: June 2012 quarter

The Daily Blog: EXCLUSIVE: Billions of dollars stolen from the unemployed

NZ Herald: Matt McCarten: Rose-tinted view cruel fairy tales

Roy Morgan: New Zealand real unemployment down 0.3% to 8.5% and a further 8.6% (down 1%) of workforce are under-employed

Statistics NZ: Household Labour Force Survey: September 2013 quarter

Scoop News: Inequality keeps rising, says UC social research expert

Statistics NZ:  Labour market statistics for the December 2013 quarter

Radio NZ: Unemployment falls to 6 percent

Previous related blogposts

The REAL level of unemployment

Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

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unemployed welfare beneficiaries paula bennett

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 6 February 2014.

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