Coalition Government's employment strategy

  • Peter McCardle

Gisborne District Council
Gisborne District Council, Fitzherbert Street

Thank you for the invitation to speak this morning. It provides me with an excellent opportunity to share with you details of
the Coalition Government's employment strategy and the far-reaching changes that will be happening over the next twelve to
eighteen months in the area of employment.

My meeting with you today is also significant in that last week saw the Government signal its commitment to the Employment
Strategy in its announcement of nearly $22 million worth of spending in 1997/98 to significantly progress the Strategy this

It is therefore a pleasure to be able to speak with you today, to outline for you the details of the Government's Employment
Strategy, and to discuss with you the progress that will be made in the coming twelve months, and how Gisborne City can
maximise its involvement in the aspects of the new approach that will begin to emerge shortly.

Since taking up the role as Employment Minister late last year, I have found that media interest, and for that matter public
interest, has largely, and I guess inevitably, focused on the proposal to replace the Unemployment benefit with a Community
Wage and Training Allowance.

However, the disproportionate attention given to that one aspect of the new strategy means that the wider context of the new
approach to employment, and the understanding of the central objectives behind the new strategy have not enjoyed the same
widespread attention.

It seems logical to begin by first highlighting the issue of unemployment itself. You here in Gisborne know better than many
the cost of high unemployment to the wider community. However, in order to understand the rationale behind the
Government's radical new approach to employment policy, it is useful to first have clear in our minds the size of the
unemployment problem we are dealing with.

[Overhead 1] The last decade and a half has seen an explosion in unemployment that you here today will be very aware of.
The Household Labour Force Survey puts New Zealand's official unemployment rate at 6.4%. While that places us
favourably amongst OECD countries, and reflects the fact that our total labour force is the biggest it has ever been, we still
have well over 150,000 registered job seekers in this country.

And with the changes that came into force on April 1 designed to encourage new groups of beneficiaries to actively seek
work, the register is projected to rise.

I should say at this point, as the Government has quite clearly stated in its Coalition Agreement, it is economic policy that
largely determines the total number of people out of work at any one time. There is undisputed agreement that it is the
economic environment that enables businesses to expand and prosper, providing the conditions for sustainable job growth.

On the other hand, what employment policy can and must do is address the length of time that individuals remain out of work,
as well as influence how job seekers are viewed and treated while they are between jobs.

[Overhead 2] This leads me to the most pressing issue with unemployment. that is, the length of time our job seekers are out
of work.

Despite the plethora of employment programmes and interventions that have been developed and introduced in the last dozen
or so years, there has been an undeniable explosion in the number of long-term job seekers. In 1984 approximately 12,000
job seekers of the 74,000 on the register were out of work for longer than 6 months. Six years later, that proportion had
jumped by 600%, and today we have nearly 70,000 long-term job seekers in this country.

[Overhead 3] Taking a closer look at the composition of that long-term register, we can see that there is a real challenge
ahead of us if we are to make significant inroads into pulling back the length of time our job seekers are out of work.

At this stage, there are well over 6000 job seekers who have been registered unemployed for over four years. And in fact I
have not been satisfied that the procedures the Employment Service currently uses to measure the duration of job seekers'
registration are providing the accurate measure of registered long-term unemployment that we need, particularly given that
the success of the Government's employment strategy is to be, in large part, measured on its delivery of reduced long-term
unemployment. That is why there is work currently underway at the Employment Service to deliver a more robust and
accurate system for recording long-term unemployment. In the near future a new set of principles is expected to be
implemented for the existing register, as well as for new job seeker enrolments that will show that, as a starting point in
attacking long-term unemployment, the challenge is much greater than is currently acknowledged.

[Overhead 4] Our strategy quite simply has two objectives. The first is to reduce the duration of unemployment. All the
money we have spent on over one hundred and fifty different employment programmes and schemes over the last decade has
not produced the result that New Zealand Employment Policy should have sought - specifically, a reduction in the number or
percentage of job seekers long-term unemployed.

A key difference between the current and future approach can be described as the difference between "activities" and "the
final outcome"; the difference between activity goals such as placing 10,000 job seekers into training, or onto Taskforce
Green versus the outcome of having no job seeker being unemployed over four years.

The activities we as a Government purchase to assist our job seekers must no longer be the end in themselves. Rather, the
activities must be a means to the end; with the end result being the reduction in the number of long-term job seekers.

The second objective of the Government's new approach focuses on the way we treat job seekers while they are between
jobs and receiving income support.

I believe that the least productive of the taxpayers' investments in helping job seekers has to be the payment of around $1.3
billion to fit and able job seekers to do nothing but stay at home and lose their self-esteem, their dignity and their connection
with the workforce.

As one who has worked for many years with unemployed job seekers, I have found that one can almost literally graph the
decline in their efforts to seek work, to the point where after 20 or 30 rejections they simply stop looking.

Today we have a large number of job seekers who have given up their search for work. Not only does long-term
unemployment involve a loss of skills, dignity and motivation, but it involves the loss of the work ethic. It is my personal
view that the work ethic is a fundamental part of human nature and human character.

To therefore pay fit and able people to do nothing is one of the worst and most senseless things we can do to our job seekers.
It is not only a social loss, but of course it is also an economic loss. It is an economic loss to the individual and it is an
economic and social loss to the community.

For this reason, the Government's second fundamental employment policy objective is to maximise the number of job seekers
in appropriate part-time community work or training while they are registered unemployed and receiving income support.

[Overhead 5] To achieve these two employment objectives, the new approach comprises four mechanisms, which are
essentially based on sound management principles.

The first relates to my earlier comments about activities being the means to achieving the outcomes, instead of being the
outcomes themselves.

Outcomes, not activities, will become the focus of our employment policy accountabilities. The success of the activities we
undertake will be measured by the results we achieve in reducing long-term unemployment.

Significant progress has been achieved for the 1997/98 year in removing the so-called 'Chinese walls' that have existed
between the spending that successive governments have allocated for certain employment activities.

This year will see the opportunity for a more flexible and targeted approach to the way resources are allocated to address
the specific needs of job seekers. If one type of intervention proves successful in achieving a reduction in long-term
unemployment, there will be much greater flexibility to move additional resources into supporting that activity if that is
appropriate. This reinforces the concept that it should be the bigger outcomes that drive the activities, not the activities

To support this change to a focus on outcomes, the services we have to assist job seekers with their job search, training and
income support needs are proposed to be integrated.

Today there are four different Services dealing with the needs of our job seekers - in fact we have more, but we have four
major ones - the New Zealand Employment Service, the Unemployment Benefit resources of the Income Support Service, the
Community Employment Group, and the TOP Division of the Education and Training Support Agency. The Government
proposes that these agencies be integrated into a one-stop-shop, to improve the delivery of services to our unemployed job

The third component part of the new approach involves the regionalisation of employment resources. The resources
available to achieve the Government's employment outcomes will move from central control to regional control, and last
week's Budget indicates the Government's plans to make significant advances down this road by the end of 1997.

New Zealand is made up of many different labour markets, with many varying needs and characteristics. The mix of services
and interventions most appropriate to the needs of unemployed people should therefore largely be determined within the
community and labour market in which those job seekers live.

The fourth, and arguably most radical change to employment policy comes with the replacement of the Unemployment
Benefit with a Community Wage and Training Allowance.

As I said earlier, we spend around $1.3 billion every year paying fit and able job seekers to generally stay at home, losing
their self esteem, motivation and job skills.

The Government proposes to turn that negative payment into a positive resource for keeping job seekers connected to the
workforce, viewed and treated as much like other members of the workforce as is practically possible.

The 1997/98 budget for Vote: Employment allows us to significantly increase the number of job seekers involved in
community work this year.

Let me take you through each of the four component parts of the policy more closely.

[Overhead 6] As Government Agencies are structured at the moment, a job seeker deals with one agency for their income
support requirements, they go to another agency for job search assistance, and, as you here today will be only too aware,
their training assistance is provided through yet another agency.

It is my experience and view that we need a one-stop-shop structure which ensures that our job seekers are assisted by one
employment professional for all their employment and income-related needs. That employment professional must have the
range of tools and skills to meet the full needs of each job seeker.

The shift to the one-stop-shop approach is a sensible one, both from the point of view of being cost-effective, and more
importantly from the point of view of ensuring that the delivery of Government employment support is done in such a way as
to best meet the needs of our job seekers, not the other way around.

[Overhead 7] It is my view, and it is the Government's view that the best decisions about the most suitable employment
assistance in each community are made within those communities.

The mix of resources required to tackle unemployment in South Auckland is vastly different to the mix of resources and
interventions appropriate to the needs of job seekers here in Gisborne and on the wider East Coast, or in Canterbury.

For this reason, centrally-controlled employment resources will be regionalised, so that the centralised, Wellington-based
control we have today will be a thing of the past.

Staff involved in the delivery of integrated services to job seekers will have the flexibility to use their resources as well as
they can to produce the Government's employment outcomes in their particular labour market regions, within certain
principles and guidelines.

To ensure that the Government's outcomes of reducing the duration of unemployment and involvement of job seekers in
community work and training are delivered on locally, a structure of Regional Employment Commissioners will be
introduced. And as I said earlier, last week's Budget announcements mean that we intend to have Regional Employment
Commissioners in place by the end of this year (1997).

Regional Employment Commissioners will be the best professionals available, responsible for developing and
implementing regional employment plans that deliver on the two employment outcomes.

Commissioners will be supported and advised by Regional Employment Committees - committees made up of
representatives of Government & Community Agencies, Local Authorities, industry and business representatives and
employer and worker representatives.

With the support of their Committee, and the professionals of the Integrated Employment Service, Regional Employment
Commissioners will be accountable for the delivery of services to job seekers, a reduction in long-term unemployment and
the involvement of job seekers in community work and training in their Regions.

They will have the expertise and the resources to determine how best to achieve the Government's outcomes given the unique
labour market conditions prevailing in their particular region.

While the exact detail is still to be worked out as to how many regions and Regional Employment Commissioners there
might be, I envisage that we may well be looking at around 15 regions, but that is yet to be finalised, and as I said, those
Commissioners may well be in place by the end of this year, with their supporting Committees appointed shortly afterwards.

[Overhead 8] The commitment to involve the maximum possible number of job seekers in community work and training is a
positive way to ensure that job seekers are viewed as and treated more like any other member of the paid workforce while
they are unemployed.

Contrary to the suggestion that it could be a punitive measure, this change seeks to convert what is a negative payment of the
present unemployment benefit, which encourages fit and able people to do nothing, into a positive payment, which can be
used by the job seeker to keep them connected to the workforce, contributing to their community and maintaining their
motivation, dignity and skills.

No job seeker will be financially worse off under this new policy. Cost issues associated with undertaking community work
or training, where it is made available, are being considered as part of the policy development process.

It is absolutely essential that the introduction of community work for unemployed job seekers in our communities does not
see the displacement of the paid workforce. In my experience, an additional means of achieving this is to involve employer
and contractor representatives in the process of approving community work projects. There is a vast range of work to be
done in our communities that would not otherwise be done, and would not be work carried out by the regular workforce. The
Upper Hutt Employment Trust has employed around 750 long-term job seekers in constructive community work, with no

Another key aspect of the Community Work and Training initiative is that the part-time work or training must be suitable to
the job seeker. No job seeker will be asked to participate in part-time community work or training that is not appropriate to
their capabilities, suitable to their skills, or likely to enhance their ability to secure paid work.

As I said to you earlier, the Government's commitment to keeping job seekers connected with the work ethic, and their
communities will be significantly progressed in the coming year, through the expansion of the Community Taskforce
programme. The Government looks to at least double the number of job seekers participating in this programme over the next
twelve months.

While the full-scale community work and training design is yet to be finalised, the Government sought to make clear its intent
to achieving greater involvement of unemployed job seekers in constructive community work and training this year; and the
Community Taskforce programme was seen as the most logical current programme available to achieve that progress.

[Overhead 9] So what does this radical change in employment policy mean for you? How can your Council maximise its
contribution to the achievement of the Government's new employment objectives?

I am totally committed to the fact that in moving to the new approach over the next twelve to eighteen months, we must not
lose the good things we have now. The work that Councils, Enterprise Agencies and other community-based employment
initiatives achieve in assisting unemployed people towards employment and financial independence, is significant in the mix
of employment resources available in your communities.

That role will continue to be an integral part of the new approach. As I said, I am committed to maintaining the good things
we have now as we move towards the future.

The partnerships between local government, central government and communities must be nurtured and strengthened so that a
better deal is achieved for New Zealand's unemployed. The momentum that can be created through a partnership approach to
employment solutions far exceeds anything that central government could hope to achieve single-handedly.

That is why I am working with my Department to develop appropriate mechanisms to increase the involvement by
community organisations in the identification, development and provision of community work and training opportunities.

Regional Employment Commissioners will be looking at the good initiatives they have locally, and looking to assess the
contribution each of those current initiatives can make to the achievement of the Government's employment goals in their

You need to start thinking now about your employment-related activities, and how they will fit with the mix of interventions
and resources that will contribute to a reduction in long-term unemployment in your labour market.

[Overhead 10] There is a great deal of interest in the timeframe for the changes. The move to the new approach to
employment is not an insignificant task. There are many aspects to the changes, that require careful and thorough planning to
ensure successful implementation, and the realisation of the two outcome objectives.

While some oponents like to suggest that the employment strategy is not even going to make it off the drawing board, I can
assure you that last week's Budget announcements, together with the vast amount of policy development work that has been
and will continue to be progressed indicates the commitment I and the Coalition Government have to achieving this
far-reaching employment reform.

Currently there is an inter-departmental steering group, headed by Alf Kirk and comprising senior representatives of the
major government agencies involved in and affected by the changes, who are working on the policy development details.

Whenever there is significant change to Government policy, there are inevitably accompanying legislative changes needed.
This process, and the associated consultation will require about six months.

This means that full implementation; that is, the entire new approach being in place and up and running, is on track to be in
place by the second half of 1998.

However as I have said to you already, the regional approach, together with significantly increased numbers of job seekers
involved in community work will be achieved over the coming year.

Regional Commissioners will have a significant amount of ground work to do in the lead up to the start of the 1998/99
business year in July 1998. As such, they will need to be in place later this year in order to complete that preparation.

And the extra financial resources made available through this year's Budget mean we will be able to achieve an increased
focus on community work and training through existing our programmes.

[Overhead 11] In closing Ladies and Gentlemen, it is my vision that, in commencing towards the introduction of this
far-reaching new approach, we could reach a stage in the future - and not too far into the future - where we have no job
seekers in this country registered for longer than four years, or even better, perhaps two years.

And in this vision we will have an unemployment register in this country that is made up of more motivated and employable
job seekers whose skills are being enhanced, and whose connection to the workforce is being maintained while they are
between jobs.

No government can guarantee that people will never be unemployed. However what this Government can do, and is seeking
to achieve with the new approach I have outlined here today, is an employment strategy that ensures long-term unemployment
is minimised, and that our job seekers are highly motivated, and have the ability to remain connected to the workforce and
contributing to their communities as they move between jobs.

Ladies and Gentlemen, I thank you for the opportunity to share with you my and the Government's vision for employment. I
am sure there is food for thought in it for you, and it gives you an opportunity to start thinking about the contribution your
Council may be able to make to the achievement of those two very important outcomes; the reduction in the duration of
unemployment, and the involvement of job seekers in community work and training.