While we cannot eliminate the impending unemployment; we have to flatten the curve.

The Treasury has mentioned that 13% of the labour force may become unemployed; its more pessimistic scenarios have even higher forecasts. Some private sector commentators predict the rate at the peak of the Great Depression, although there is a scholarly debate as to just how high it was.

Typically, these figures refer to those who are unemployed at any point in time – or do they? In some ways the more important figure is the proportion who will be unemployed over, say, the next three years.

This is nicely illustrated by what happened under the Rogernomics-Ruthanasia stagnation in the late 1980s and early 1990s. The unemployment rate peaked at just over 11% of the labour force, but the indications are that about half the labour force was unemployed at some time over a four-year period. ‘Unemployed’ is defined here to mean that people without jobs were concerned enough to ask for the Department of Labour’s assistance.

Most were unemployed for about six months and then, perhaps with the help of the DOL, they got another job. In the interim, they may have suffered considerable trauma from losing their previous job and during the transition, while it seems that most took pay cuts in their new jobs. (That might be a signal of lower productivity; the productivity record during the Rogernomics-Ruthanasia stagnation is disappointing.) But the fact is that most of the unemployed were in that transition state for a short period.

There were two main factors causing this unemployment. The supply-side one was the contraction of the manufacturing industry and the corporatisation of state owned enterprises, mainly under Rogernomics. The demand-side one was the mismanagement of fiscal policy, especially under Ruthanasia. (We are experiencing both supply-side and demand-side shocks today, although for different reasons.)

To extend the ‘unemployment pool’ metaphor, you can look at a lake as a large pond of unemployed workers. Or you might see it as a place where the river temporarily pools, but its water of workers is flowing in at one end and out at the other. The first image is of a stagnant body of water, the second is of water in transition, although there may be some water which is stagnant. (The DOL paid particular attention to that group in the early 1990s.)

What is happening is that the supply-side disruption compounded by the weakening demand-side has created a flash flood upstream, the water is pouring into the lake and the lake level is rising. The issue is the amount getting out at the other end.

Where it is going? In the early 1990s too many went into jobs they were not qualified to do, a sort of downstream flooding of the swamps. Notably, some seem to have gone back into the building trades they had left years earlier. They were not prepared for the massive change in building technologies while they were out, so they contributed to the leaky buildings debacle.

Or some switched into investment advising. Given the ignorance of those who approached me with financial propositions, I was not surprised at so many people getting burned by the finance company collapse in the 2005 to 2010 era.

I am not sure we are better prepared this time around. Alas, there is no longer a Department of Labour (if there was, I doubt it would be led by as outstanding a public servant as Jas McKenzie). Its active labour market responsibilities were transferred to Work and Income New Zealand which seems to be focussed on the stagnant part of the pool. (When some friends used their services – some years back – I was appalled by their manner of operation; the aim was to get them off WINZ’s book, not to find them a sustainable job.)

The rump of the Department was merged by the previous government into the Ministry of Business, Innovation and Employment. It seems to have been broken up and so there is no longer a significant centre of expertise on labour markets within the public service. If you are a neoliberal, of course you think that labour markets are just like any others and so there is no need for specialist competence in them. (I note that even some neoliberals are showing a nervousness about the current disruption.)

Presumably, we should be better at integrating redundancy provisions and the unemployment benefit to make the time in the lake less stressful and at developing an active labour strategy to locate them in valued work. But that has been a counsel for many years. Instead we have had mañana.

It is probably too late to do much. The lake is going to fill with a narrow and congested exit. The government has indicated it will try to create channels in some key industries, such as construction, to speed the outflow. There may be more opportunities for tertiary sector retraining, but they have to be for what the economy needs rather than what the institutions can supply (which can be quite different).

The lake level is going to rise. Whether it rises to the forecast heights, depends on the government’s response and the initiative and energy of those losing their jobs. I have some confidence in the latter.