Employment Relations Conference

  • Peter McCardle

Waipuna International Hotel, Auckland

Thank you for the opportunity to speak with you this morning.

Since becoming Minister of Employment late last year, I have had relatively few opportunities to speak directly with
employers. So I am pleased to have today's opportunity to discuss with you the Government's plans for employment policy
reform over the next two to three years.

It is also appropriate that my colleague the Minister of Labour Max Bradford has already spoken with you this morning.
Because the term 'employment policy reform' can, and often is used to describe those areas of government policy that
actually fall within the Labour Minister's portfolio responsibilities. However, as Max will no doubt have pointed out earlier
this morning, his responsibility is quite distinctly for wider labour market issues. My subject matter, on the other hand
focuses on those government policies that aim to assist the unemployed to take advantage of the job opportunities available
in the labour market.

The conference programme refers to my address as focusing on "Removing Barriers to Employment". As I have said, as
Minister of Employment, I am responsible for the Government's employment strategy as it relates to addressing
unemployment. So this morning I would like to use my time to outline for you the strategies the Coalition Government is
introducing to alleviate the barriers that unemployed job seekers face as they search for work and how the Government's
Employment Strategy will bring a more labour market responsive approach to employment interventions.

To give some context to this issue, and 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.

The last decade and a half has seen an explosion in unemployment, as you will be aware. 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
unemployed 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.

The Government has quite clearly stated in its Coalition Agreement, it is economic policy that largely determines the total
number of people our of work at any one time. There is little or no disagreement that fundamentally it is the economic
environment that enables business to expand and prosper, providing the conditions for sustainable job growth.

What employment policy can and must do is minimise the length of time that individuals remain out of work, it can minimise
the barriers those job seekers may face in their search for work by the way job seekers are viewed and treated while they
are between jobs.

Despite the 150 or so 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 still have nearly 70,000 long-term job seekers in this country.

Taking a closer look at the composition of the 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 spend out of work, because many have
been out of work for years.

At this stage, there are well over 6000 job seekers who have been registered unemployed for over four years. 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

Work is currently underway 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.

It is these long-term unemployment statistics that are the key drivers behind the Government's new employment policy

Our strategy quite simply has two objectives, both of which seek to break down the barriers the unemployed face in their
search for work.

The first is to reduce the number of long-term unemployed. 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

This involves a shift in focus from "activities" to "outcomes" - a move away from activity goals, such as placing 10,000 job
seekers onto Taskforce Green, to instead a goal to have, for example, no job seeker unemployed for longer than four years.

This new business year sees outcomes, not activities, becoming the focus of our employment policy accountabilities. The
success of the activities we purchase 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 employment activities.

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

It is useful to consider at this point the sort of interventions that are most successful in assisting long-term job seekers into
sustainable employment.

In my time as Minister, and in working to develop the 'outcome versus activity' approach, I have become interested in
overseas models on this very issue.

In helping each job seeker to overcome their barriers to employment, there are a number of possible lines of attack.
Obviously the most elementary is to first establish just what barriers each job seeker faces. Do they face the hurdles that
exist simply by virtue of the length of time they've been out of work - the loss of self-esteem, motivation and a loss of the
basic work ethic? Are their skills out of date and unsuitable to the modern workplace, again because they have been out of
work so long their skills are out of step with current workplace technologies? Or are they just so young they are simply
bereft of even the most basic of work skills?

In New Zealand we have had for many years a veritable smorgasbord of employment and training programmes that continue
to flourish today. Programmes for the young who've just left school, programmes teaching people how to look for work,
life-skills programmes, programmes targeting the exceptionally long-term unemployed, classroom-based programmes
teaching people job-skills, and so the list goes on.

However international studies are increasingly concluding that the most effective way to quickly assist job seekers into the
workplace, and keep them there, is by way of a combination of job-search assistance together with on-the-job training and
workplace support.

In other words, get the job seeker into the workplace first; and after that provide them and their employer with any support
needed to keep them in the job; which in turn enables them to move on to better jobs.

The principles and lessons from this approach are several. It seems in the first instance that universally job seekers benefit
most from help with their job search - that is, skills in how to find and get a job - especially when linked to a strong
emphasis on taking any job as a first step.

Secondly, supporting job seekers and employers, after the job seeker has been employed, with on-the-job training assistance
considerably improves the job seeker's chance of keeping the job, and progressing further in the development of their job

Thirdly, such an approach vastly increases many job seekers' chances of finding and staying in work quickly, as opposed to
undertaking classroom-based vocational skills training in the hope that increased formal training will eventually lead to

Lastly, overseas studies of such approaches, particularly in California, highlight the fact that the combination of job search
assistance and on-the-job training is a potentially lower cost intervention, with increased benefit than more resource
intensive interventions such as classroom-style training and subsidised employment.

These findings tend to confirm my own instincts from having spent many years working directly with job seekers and
employers. Most employers would tell me "Give me a reliable person who has the commitment and motivation to give this
job their best shot, and I will be able to teach them the specific skills of this workplace."

This year's more flexible funding structures within Vote: Employment will enable employers to get increased assistance for
on-the-job training, and on-the-job support in providing work opportunities for long-term job seekers.

In recognising that one prescriptive combination of interventions is not going to fit all, I am convinced that the key to
successfully breaking down the barriers faced by our job seekers depends largely on our ability to flexibly adapt
employment resources to suit the needs of each individual, within the labour market environment in which they seek work.

This view is very much at the heart of two other features of the Government's Employment Strategy - those features being
based on sound management principles.

If we are to get the best possible outcomes into work for our long-term unemployed, we must give our employment
professionals the resources and structures that best allow them to achieve those outcomes.

Hence the plan to integrate the government agencies currently providing separate services to the unemployed - the
Employment Service, the Community Employment Group, the Training Opportunities Programme resources of ETSA, and the
Unemployment Benefit assistance administered by the Income Support Service.

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.

The other management principle we will be applying to the new policy 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 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 on the East Coast, or in Canterbury.

A structure of Regional Employment Commissioners will be introduced to deliver on this regional focus.

Regional Employment Commissioners - who we hope to have in place by the end of this year - will be the best professionals
available, responsible for developing and implementing regional employment plans that deliver on the two employment

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

This new regional structure will have significant benefits for employers like yourselves. Regional Commissioners will be
looking to provide an appropriate range of interventions to move long-term job seekers into work. One of the most critical
factors in achieving that goal is to ensure that long-term job seekers are prepared and skilled appropriately to match the
recruiting needs of local employers.

Close partnerships between those delivering assistance to job seekers and local employers will be critical to ensure a
constructive match of supply with demand. Employers will be able to have greater input into the development of local
training and employment strategies within the local labour market context.

This will lead to a much closer link between local employment initiatives and local economic development opportunities.
For example, if I were the Regional Employment Commissioner in Auckland, I would be linking now with Auckland's
industry and commerce leaders to ensure that my long-term strategic plans to assist long-term job seekers matched with the
employment opportunities that will emerge from the Americas Cup Challenge that will transform this city's economy in the
year 2000.

Another benefit to you of the regional delivery approach will be its advantages for employers in offering a new structure for
business opinion to reach Central Government, region by region.

You as employers will be able to have a significantly increased influence over how millions of dollars of central
government's money is being used in your region. Depending on the labour market dynamics in which you operate, this may
mean you can influence an emphasis on getting people into jobs and supporting them on-the-job, or an emphasis on business
advice and support, or a commitment of resources toward education and training. A region by region approach will give you
much more say in the mix of employment interventions used to match job seekers to employers.

At the very beginning of my speech I mentioned the Government's Employment Strategy seeks to achieve two outcomes, the
first being a reduction in the number of long-term unemployed.

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.

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 suitable part-time community work or training while they are registered unemployed and receiving income support.

This commitment is a positive way to ensure that job seekers motivation and skills are maintained and improved while they
are looking for permanent work.

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 and does not take work away from the private sector. In my experience, an
additional means of achieving this is to involve employer and contractor representatives in the process of monitoring
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 paid workforce. The Upper Hutt Employment Trust has employed over three years
around 750 long-term job seekers in constructive community work, with no displacement, and no threat to commercial

The Government's commitment to keeping job seekers connected with the work ethic, and their communities will be
significantly progressed in the coming year. The Government plans to at least double the number of job seekers participating
in this programme over the next twelve months.

In conclusion ladies and gentlemen, I trust the Strategy I have shared with you contains some food for thought for you. It is
my hope that I have today helped to convince you as employers, that the government's commitment to reducing long-term
unemployment is correct, that you will play a part in it, and that it will have benefits not just for job seekers, but also for you
and your businesses.