As the welfare debate again rises from the grave over the next few weeks, it'll pay to remember that life is messy and keep asking 'where are the jobs?'.

I suspect we can start this post by agreeing that having 325,000 people on benefits is not a great thing and we'd like to see more people in work. And I suspect the agreement ends about there, such is the red rag welfare tends to become in political debates. It divides and infuriates people faster than

Where you stand on welfare reforms largely comes down to whether your gut reaction to beneficiaries is to blame them as individuals, or to blame other factors at play, such as economic conditions, economic policies, family breakdown and the like. Everyone has a fistful of anecdotes to back up their position because, well, there's an element of truth on either side.

The tough task of government is to find out what's most often true for most of the people and figure out what can be done to get more people into work.

To that end, the government has this year formed the Welfare Working Group and told it to take a hard look at long-term welfare dependency. Of course this focus and the language used - including the government's edict that the group wasn't allowed to even discuss benefit levels - immediately raised the hackles of some and the hints and sceptical murmurs around the Welfare Working Group (WWG) have been flowing ever since.

There's talk of beneficiary bashing, insurance-based systems and time limits, which has hardly been discouraged by the Group's description of the current welfare system as "unsustainable" and its tendency to spin the most alarmist statistics available, even if some of them are downright misleading.

But we don't know anything for certain yet; not until the group releases its second report, which is its "options paper", in a fortnight's time. We might suspect that a centre-right government wants costs cut and won't be afraid of using some stick to achieve that, and knowing this government we can assume that this group, like every other taskforce and review before it, is a kite-flying exercise used to see exactly how much it thinks it can get away with. But we don't know.

Having said that, following the interview with WWG Chair Paula Rebstock on Q+A this morning, it looks increasingly as if the focus will be on more "quid pro quo" between the state and beneficiaries.

In other words, beneficiary groups may be placated with more money to assist those looking for work, but may also be enraged by more compulsion or even time limits being introduced. On one hand, 'we're here to help you and train you'... but on the other, you'd better take it or else we'll kick you to the curb'.

Rebstock seemed to especially stress that young people would not be able to leave school and go straight onto a benefit, without some requirement to continue their education or training. "That would be an unacceptable thing" overseas, she said admiringly.

Of course the concept's nothing new. Requiring teens to be in education, training or work was Labour party policy under Mike Moore at the 1993 elections, and National party policy in 2008. Good luck enforcing it. As governments tend to find out, real life is much, much messier than nice, clean slogans.

For example, the Group's inclination seems to be for some form of work-testing for those on Sickness and Invalid's benefits. But 40 percent of those on the Sickness Benefit are mentally ill, so is fair to tell them to pull themselves together, get out the door to work regardless of how severe their OCD or bi-polar conditions are?

On the Invalid's Benefit you'll find the "terminally ill" and the "totally blind". Are we going to force them into work, 'or else'? Those on the DPB are by far the largest group of beneficiaries. Do we just saying child-raising no longer matters, it's work or nothing even if your kid is only five? Or four? Or two?

But the perhaps the biggest reality check the Group and the government face is this: the jobs just ain't there.

Rebstock thinks otherwise. In the interview she said the economy has created over 500,000 jobs since 1986 and questioning the number of jobs is "a cop out".

Which is unmitigated nonsense. The New Zealand economy creates and destorys hundreds of thousands of jobs ever year, so I assume her 500,000 figure is net gain. But with no mention of immigration, birth-rates and the like, or what kind of jobs they are, the figure is meaningless.

What I can tell you is this, from Statistics New Zealand: In 2006, at the peak of our recent economic growth, we had a net gain of roughly 30,000 jobs. In much tougher times, 2008, the net gain was barely 9,000 jobs.

If you can figure out how 325,000 goes into 9,000 you're better at maths than I am.

So let me say it again... the jobs ain't there.

The really interesting question becomes how we create them, and leads us slap, bang into ideology.

You see, the WWG likes to say that in 1960 only two percent of the working-age population were on benefits. In 2008, that had reached 10 percent. Cue crisis.

But step back and ask yourself what's changed since 1960. You can't ignore the recession and the jobs lost. But the market will rebound and find places for many of the skilled New Zealanders who have struggled over the past few years.

No, I'm talking about bigger social changes that account for big chunks of those on benefits who weren't there a generation or two ago.

For example, no-fault divorce naturally means there are more women on the DPB, and that may be a better thing than someone saying in a bad or abusive marriage because of stigma or lack of money. Second, we've closed down the mental hospitals. Folk we would have been unquestionably been caring for in hospitals will now be some of those on the Invalid's Benefit.

But biggest upheaval of all is that we've slashed the public sector. In 1960, a lot of the bums, the misfits, the uneducated, the unwell and the unmotivated would have been working down the Railways... or building roads... or pushing paper in an office somewhere. Or on the very honestly-named "make work schemes".

This was so commonplace we made a TV series about it and had a laugh. It got people out of bed in the morning, created a work habit, gave people less time to become a social nuisance.

In the 1980s and '90s we decided that was inefficient and the market was better placed to employ these folks. (And of course the bonus for business was that the sudden over-supply of labour drove down wages, which helped create the wage gap with Australia... but that's re-hashing my previous post).

Problem is, it doesn't. (Altogether now...) The jobs ain't there.

So as out of vogue as it may be, perhaps it's time for a re-think. Perhaps the WWG could crunch some numbers comparing the cost of inefficient public services yet small beneficiary numbers on one hand with that of trim public services yet swollen benefit numbers on the other.

As we speak, Matt McCarten is running a by-election campaign on just this ideain Mana. He reckons that a few quick polytech courses followed by some government-created jobs repairing state houses, caring for the elderly and helping in school classrooms could deal to Mana's 3000 unemployed tout suite.

I laughed when he first told me; it sounded like the political equivalent of wearing corduroy and paisley. But you know what? I haven't heard any better, more grounded ideas recently.

So the onus for that is now on the WWG. Is it just manufacturing a crisis and spinning some propoganda for a government with pre-determined ideas, or has it got something practical to say? We'll know by the end of the month.

Comments (13)

by Alec Morgan on November 14, 2010
Alec Morgan

I have experienced usually laid back people go mouth foaming crazy while bene bashing. 75% of kiwis exist on 48k or less per annum, ‘middle class’ folk receive WFF payments which look suspiciously like welfare to me, so who is kidding who? Corporate welfare? $1.6 bill to South Canterbury Finance, too big too fail. Don’t get me started. AlternativeWWG http://www.alternativewelfareworkinggroup.org.nz is doing some useful spadework. What is a more modern consideration of work unpaid and paid? A universal basic income is worth further investigation, every citizen would receive say $10,000 per year abated re income. That would help retire the carrot and stick finger pointing model that Rebstock espouses. Being suspicious of the WWG agenda, I would like to see Paula fronting the media more often. Her charmless disdain for the beneficiary citizens of our increasingly unequal small country might motivate a few more people to pay attention.

by stuart munro on November 14, 2010
stuart munro

One of the tragedies of the ideological position the WWG seems to be taking on welfare is that it never really looks outside its policy box. There is something debilitating about the way we handle unemployment in NZ, and I doubt that applying more stick will do anything constructive - besides driving some folk off benefits and lifting the suicide rate.

Unemployment is an economic opportunity for a competent government. Drop unemployment from 6 to 5% and you'll get about 3% GDP growth - rather more than you'd derive from mining the Coromandal or building a national cycleway.

One thing to consider is that one way or another, NZ supports these people anyway. A bit of careful thought should be able to find a way to improve the outcomes for both sides.

One of the things Korea did 60 years ago, when it woke up to its economic situation, was to pay a proportion of its workers in raw materials like cloth and wool. The object was to foster the skills to create small industries. But they also paid strict attention to trade balances  (and still do). They halved sugar imports, and pretty much excluded all finished goods.

We will know our government is actually doing its job when they stop talking about dependency and start working out how to do something analagous.

by Andin on November 15, 2010
Andin

Yes it certainly is a fine fix we find ourselves in.

One thing is certain, there are very few amongst our current crop of politicians and business leaders who are "equipped" - is that the right word - to deal with this and other looming problems.

But hey what would I know, an atheist immoralist with a colourful history (nothing nasty you understand) just - well... varied. I have lived me a life. And somehow it has excluded me from seeking high office. For which, if there is a god, I can only thank s/he/it.

And my moniker - self anointed - is to make it clear, if to be in public office you must have a "clean slate". So tiresome. And be culturally sensitive, god fearing and highly moral - or at least give the appearance of such until some one checks the paperwork, or juggling all those balls goes horribly wrong.

I want none of it, and it wont have anything to do with me. So I'll just sit waaaaay over here and throw as many barbed, and I hope witty comments, as I can and encourage others to do the same.

Shit I went on about myself a bit there sorry.

Yep as you say

Jobs, they ain't there, unless its minimum wage and your've kept up the forelock tugging practice.

So Don Brash/ Paula Redstock

"Eat my shorts"

P.S. I hope this is taken in the humour in which it is given. I just find those with nothing to worry about, holding forth with much gravitas and fine clothing, on those who have nothing but worry, wildly obscene and worthy of much poking.

My apologises again Mr Watkin for taking up your valuable band width. Fine writing once again.

All the best.

by Tim Watkin on November 15, 2010
Tim Watkin

Alec, it's a good point how selective some people are when they're talking about welfare... Howe about being too little to fail? Seriously, if the 'broken windows' approach to crime has some merit – and while it's not the panacea some reckon it is, I think it has some – then why not a similar approach to welfare?

by Tim Watkin on November 15, 2010
Tim Watkin

Andin, you're welcome to share my bandwith, especially when you pay me compliments!

The question of who's equipped to deal with this is a good one. Part of the Alternative WWG being set up, I think, was the sense that the official group hasn't been seeking out and listening to beneficiaries.

It's interesting, would the Capital Markets Taskforce have been mocked for not talking to listed companies? I suspect so. Why doesn't the same logic apply here?

When you start looking into this issue, you do get a sense of two NZs here talking at cross purposes... there are so many prejudices in our heads on this (and I include myself in that).

by nommopilot on November 15, 2010
nommopilot

I read the paper by Dr Dalziel on the AWWG site and really appreciated the historical context of these issues that it revealed.  It would be nice if the official WG that is being given taxpayer funds showed some evidence of a similar sociological and historical understanding of the issues at play rather than a merely ideological one.

Thanks for the link, Alec and the thoughtful post, Tim.

(that paper is at:

http://www.alternativewelfareworkinggroup.org.nz/dox/Welfare%20Reform%20... )

by Brendon Mills on November 15, 2010
Brendon Mills

Ah yes, nothing like welfare reform to stir up the (redneck) masses. The talkback lines run hot and the internet messageboards run thick with responses (of course no-one seems to see the irony of using their employers internet and time to go on about 'bludgers'...).

M(r)s Rebstock, flush with her family benefit, award wages, free tertiary education and subsidised 3% Housing Corp mortgage, with her ACT symphasiser friends, wishes to more or less water down the last remnants of our social safety net, which far from encouraging dependency, is simply a social contract that in return for taxes paid on one's wages, the state more or less takes care of you in hard times, I really dont see how difficult it is to grasp. Sure there may be some undesirable unintended consequences of having a welfare system, but really, I would rather have them, than our bridges, streets, parks and alleyways teeming with men, women and children, who are simply unlucky enough to have things turn to custard for them, because it has to be remembered: It can happen to anyone. You dont belive me? Go to the USA, where it is the welfare reformers wet dream, time limits, privatisation,  work testing, drug and booze testing, everything, and go for a walk along the street - you will see homelessness in all its glory, of all ages, even people who work are still having to live on the streets or in their cars because wages are too low to afford rent (something that is slowly but surely happening here). Do we really want this here? Is this acceptable to the likes of John Tamihere (who seems to think it was acceptable for one of his medical centres to turn away a woman who was suffering from menigicoccal disease because she didnt have the $13, consultation fee), Lindsay Mitchell (who seems to have made it her personal crusade to throw women and their babies on the street), Deborah Coddington, Christine Rankin, Muriel Newman, and so forth? They really need to come out and say if they are willing to accept the homelessness, misery and squalor that will come from the destruction of the welfare system. They owe us that, if nothing else.

by Alec Morgan on November 16, 2010
Alec Morgan

To add to what Brendon says, a friend just got back from a conference in San Fran having toured around California and Nevada. He was quite unsettled and disturbed by the in your face homelessness, poverty. and ‘no go’ areas. For a tiny population NZ has more than enough inequality. Do we really want to go all the way on welfare?

by Tim Watkin on November 16, 2010
Tim Watkin

Alec, the US is one of the most unequal of developed countries, and homelessness is especially bad at 3-4 million, but there are some specifics about San Francisco.

Most of all, SF and the towns of the Bay area, Berkeley in particular, have had generous welfare provisions, shelters etc and so are some of the better places to be down on your luck, and of course the weather's better, so a lot of people head west when things turn sour.

And whilst this has happened since we lived there and so it's only anecdotal, the recession has been bitter in California.

by Anna Cox, Poverty Action Waikato on November 17, 2010
Anna Cox, Poverty Action Waikato

We do need to find a way of getting the work that is needed done. There are no jobs but there is a lot of work to do. In our conversations with people working in social service agencies in the Waikato we hear of the tremendous work that they believe is needed for the flourishing of both people and planet. There are houses that need building, rebuilding and insulation (we hear of rat infested, shacks). There are children and young people that need care, parents and caregivers that need support. There are local health and services that need rebuilding. There is transport to regionally provided services that needs co-ordination.  All these needs and more  currently generate pressure on the resources that are needed by each service, exacerbates the competition among them for the resources tied to the vagaries of the investment market and the State’s capacity to provide.

Another idea for a way to get the work that’s needed done might be (for those who can) to work less in a ‘job’ and use the extra time to work for the development of self and community (see Clive Hamilton’s Growth Fettish). Clive Hamilton suggests hopping of the consumerist treadmill and doing the work (not necessarily found in jobs) that produces self and reproduces community. Such a move might free up some of the paid work/jobs for others to do. There is also the idea of reduced automation put forward by Schumacher (see http://www.smallisbeautiful.org/buddhist_economics/english.html). Schumacher describes the possibility of restoring the humanity of work through less automation. He suggests that the essence of civilization is not in the multiplication of wants but in the purification of human character and that this that character is formed through work. He describes how craftsmanship can develop a person’s ability and creativity and that there is a difference between a tool and a machine – a tool allows the human part of work to happen.  How much of our work happens without us? These ideas may be worth talking about at least.

 

by Rab McDowell on November 18, 2010
Rab McDowell

The punch line to Tim’s piece is, as you would expect, at the end. “(Altogether now...) The jobs ain't there.” Tim made similar comments when a guest on Jim Mora’s panel on National Radio.
He makes this claim despite the Sept 2010 quarter showing unemployment decreasing to a rate of 6.4%, the 11th lowest in the OECD (which averages 8.5%), hours worked increasing by 0.8% and employment increasing strongly in agriculture, forestry, fishing, education, training and other services.
Tim says that, given “the jobs ain't there”, the best idea he has heard is Matt McCarten’s call for government-created jobs repairing state houses, caring for the elderly and helping in school classrooms.
There are some problems with Matt’s solution. The first is that those in work have to be taxed more to fund these make work jobs. We put taxes on tobacco to discourage smoking by making it less affordable. Many of us want to do the same with alcohol. The country, with its ETS, is doing the same with coal consumption. We all know that taxing something to make it more expensive will reduce demand for it. Labour is no different. So what Matt wants to do is increase taxes on real work, thus reducing its affordability, so that he can fund make work jobs.
As an employer I am fully aware that the gross cost of wages, including ACC etc, is the price to my business, whereas to my employees, what counts is what they get in the hand. The wider apart those two get the bigger the problem in justifying the economics of employing someone.
The more you tax real production to fund the make work jobs the less able employers will be to provide real jobs to those people when the make work scheme finishes.  
NZ’s employment figures are better than most. The shame for NZ is its youth unemployment rate which is over 16%. This country did away with youth rates for employment. It was done for the very best of reasons. The effect of this change was to price youths out of the market, making them unemployable at adult rates and unemployed at a rate two and a half times the average for all workers.

Perhaps Tim is right. The jobs aint there. If so then the solution is to make employment more affordable, not less so.

by Tim Watkin on November 19, 2010
Tim Watkin

Anna, saying tha jobs aren't there but the work is takes an interesting perspective. Problem is that the sort of work you then talk about is largely skilled work and having some folk do jobs not as 'work' to free up jobs for others has all sorts of fish hooks.

Robert, I understand what you're saying about taxes as incentives and disincentives. There's a clear link between raising tax on tobacco and fewer people smoking, but I'm not sure the link is as strong in cutting company or income tax and seeing job growth. Seems to me there are many other variables at play and a strong incentive for employers to pocket tax cuts.

We also have historically low tax rates, so surely if tax cuts worked as an incentive to hire more people, then its efficacy would be at its peak.

Yes, there's a cost to creating those jobs, but the savings made on fewer benefits would help defray that cost. And if a small tax increase created, off the top of my head, tens of thousands of jobs, well, you could hardly accuse that tax increase of disincentivising job growth, could you?

Also, using the WWG's own logic and evidence, more people in work would cut health costs.

I guess the question is whether by making employment more affordable, as you say, the market would provide. What I'm saying is that it's not creating enough jobs at the moment (9000ish p.a.) and perhaps there are options around the margins.

by DeepRed on November 22, 2010
DeepRed
And two words come to mind: false economy. What gets saved in lesser taxes ends up being negated by gated communities and bodyguards. The weak poor may starve, but the strong poor will probably survive by any means necessary. And Wisconsin Works, the poster boy of 'welfare reformists', has experience massive cost overruns from the very start.

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