Remuneration in a Recession Conference

It’s hard to believe that only last year, conferences on human resources were focusing on the challenge of how to attract and retain the right staff in a tight labour market. It seems that no matter whether there is low unemployment or high unemployment, there are always challenges to be met. But where there are challenges, there are opportunities.

In the last few years, employers have gained skilled and talented staff. As conditions change this year, the last thing they want is to have to lay those staff off. Savvy employers know that history tells us that our economies are cyclical, and letting go of skilled and talented staff will cost them time and money when the economy picks up again because they’ll have to find, attract and hire great staff all over again.

Not only that, but because New Zealand has a small pool of skilled and talented labour, businesses who lose their human capital now will be competing with each other for staff.  Today’s challenge in the labour market is how to manage staff so that the business maintains sustainable cash flow and doesn’t lose valuable workers and skills. Our challenge as the Government is to provide the right support and legislation to encourage the retention of jobs and skills – support and legislation such as the Job Support Scheme and the voluntary 90 day probation period.

Both of these initiatives recognise that times have changed since the last recession – globalisation and the internet have made communities and societies more aware of how interconnected we all are. It just doesn’t make sense anymore to anyone – not the business, not the worker and not society – to simply lay staff off to save costs. Yes, there may be an immediate bottom line saving in out-going expenses, but this comes at a cost to the worker, at a cost to communities, and at a long-term cost to the employer when the value of finding, attracting and hiring quality staff is taken into account.

The Government wants you to be able to retain your human capital. We want you to be in a position to support your staff. It is to the benefit of the whole country if we can keep people either in jobs or in training. It means that people are retaining or improving their skills, it means the employers are maintaining their skilled workforce and it means that psychologically, as a country, we don’t face the social and economic affects of a high unemployment rate.

At the recent jobs summit a number of options were discussed about how the Government could use the current climate as an opportunity to build skills and come out of the cycle ready for the upturn with a better trained workforce than we had before. One of these ideas has already been put into place for businesses employing more than 100 workers, the Job Support Scheme. We’ll pay $12.50 an hour directly to employees for up to five hours a fortnight so employers can negotiate a reduced fortnight with their workers. This will reduce costs for large businesses and avoid possible redundancies, plus keep skilled workers doing their skilled jobs. It’s just one of many ways this Government is working to support New Zealanders in this time of economic challenges. It demonstrates the power of working together to find creative solutions and it demonstrates the power of taking immediate action.

But helping people to keep their jobs isn’t just about maintaining incomes. It’s about helping people to feel like they’re providing something of value to our society. A job can provide confidence, shape and define individuals, sustain families and create productive economies.  Seeing a parent working for a wage also provides children with a good role model for their own future.

Working and supporting yourself and your family gives a person a real sense of pride and achievement.  Losing a job for some people is like losing their identity.  We’ve all heard stories about a person who lost their job and for weeks afterwards couldn’t tell their family - got dressed for work and stayed away from home during  work hours to keep up a fiction of still being employed. 

Many people losing their jobs right now have never been out of paid work before and have that kind of deeply shocked reaction to finding themselves out of work.  They need support to know what help is available, and that’s it’s ok to ask for help. Because unfortunately, in some cases, businesses won’t be able to avoid laying off workers.

Work and Income, has set up a programme called Redundancy Support to work with employers facing this tough choice. Employers can discuss their situation, and Work and Income then coordinates all the possible support available. This includes coordinating between the employer, and other groups like Inland Revenue and Department of Labour, Industry Training Organisations, union representatives, Career Services and community groups, to provide information and support the employer and the workers at-risk of redundancy.

Yes, some jobs are being lost right now, but there are still businesses looking for workers and there are still jobs available. We want to help people to get into those jobs as fast as possible and Redundancy Support gives workers ready access to the services available to support them in finding another job. 

This support may be provided at the workplace, at a Work and Income office, or in a community hall.  Work and Income will go wherever it is needed and the support on offer includes:

•          referral to new job opportunities
•          help in CV preparation and letter writing
•          information about the impact of tax on redundancy payments
•          help to up skill or retrain
•          interview skills
•          information about the ReStart package.

The approach taken with Redundancy Support recognises that New Zealand is a small country, what we do affects others, and when we work together, we can help each other in the best possible ways. Employers win because they’ve got support to do the right thing by their workers, and can sometimes find ways to keep more people employed. Workers win because they’ve got support at one of the most difficult times in life – facing redundancy – and can sometimes find their way straight in other jobs without having to even receive any Government assistance. And this means we as tax payers win because we’ve reduced the cost of helping out those workers.

One excellent example of the success of this approach is the recent Work and Income employment expo held at Taieri College in Dunedin. The expo was organized as part of the ReStart package in response to a series of local redundancies announced at Fisher and Paykel and Cadbury. Over 300 people attended the expo, which hosted employment stands from the defence forces, education providers, recruitment agencies, business support agencies and business franchises.

Manning one of the employment stands at the expo was Stu Mitchell. He lost his job at Fisher and Paykel, but after attending the first expo in November, was offered a job at Drivetech. He’s rapt about being able to find that job as a direct result of Redundancy Support. In fact, he was back at the expo in February – but instead of looking for a job he was helping others find them.

Stu is just one of the many people to benefit from this Government’s fast response to the changing economic conditions as it came into power. For example, we wasted no time putting ReStart in place because people needed assurance that help is available as we move into tougher, more uncertain economic times. And ReStart isn’t just about helping people back into jobs. It also provides short-term support to low to moderate income families with children, and to people with high housing costs, who have been made redundant. It is there to help people get back on their feet, and it’s working.

Even in a recession, some industries still have trouble finding the right people with the right skills to fill the job. I’m sure the Business New Zealand survey in which nearly 40 percent of businesses reported they were still looking for skilled staff has been discussed today. We want to make sure when people are training, they’re training in areas that will lead directly to jobs now and in the future. We will listen to employers, find out what they need, and then help people to train in those areas. And we’re doing this at the moment. Up skilled workers are matched to local employers from the sector and post-placement career support is provided to help them achieve sustainable employment.  The programmes – known as Industry Partnerships - are developed for industry, by industry to ensure that training is relevant to employers.

This Government is also supporting small businesses through these challenging times with our recently announced relief package, designed to help small to medium-sized businesses ‘lighten the load’. It improves the business environment for small to medium-sized business by reducing the impact of taxes on firms' cash flows, improving firms' access to credit, and reducing business compliance costs. These concrete steps will make small and medium-sized businesses more efficient and therefore more likely to hold on to jobs for their workers.

Changing economic conditions are tough for everyone, but for those people already vulnerable - including those with health problems, disability, violent or unsupportive home environments, and those who have unstable childcare arrangements – it can be even tougher. These are the people who are first to lose their jobs, and last to be re-hired. When workers were hard to find, employers were sympathetic and supportive of workers with difficult personal or family situations.  People who have been provided with such support can sometimes turn out to be the most loyal and hardworking employees.  

One way we’re encouraging employers to look past the issue and see the person is with the introduction of the voluntary 90 day probation period. This is a great example of partnership working for everyone. Government provides the appropriate legislation. Employers have the support to then take a chance and hire someone who really wants to work hard. It’s win-win all round.

Another vulnerable group in times of economic challenge is our young people. This Government believes in our youth, and we want to show our support for young people in a very real way, especially now when there is a danger that a lack of employment options for 16 and 17 years could see them bored and aimless, with all of the resulting social disruption.

However, we will not just let 16 and 17 year olds go on a benefit.

We expect that all young people under the age of 18 should be in work, education, or training.  We want to give all young people equality of opportunity, but also the responsibility, obligation and motivation to better themselves no matter what their circumstances are.

Our solution is to support our young people with the introduction of the Youth Guarantee.

The Youth Guarantee will address the issue of large numbers of young New Zealanders leaving school without any qualifications, and the wasted potential and lost opportunities this represents.  We will provide quality education that ensures even troubled youth can achieve their potential, and contribute to our society and economy. 

We’ll do this by creating access, free of charge, to a programme of educational study towards school-level qualifications. It includes opportunities for those who might be more motivated in non-school settings.

Young people are also supported through the Youth Transition Service, a free service that aims to improve a young person's long-term independence and wellbeing.  It works with local providers to assist young people into further education, training, work or other meaningful activities such as skills training, housing support, counselling, careers mentoring, and alternative education. Youth Transition Services brings together these services with others like financial literacy, into a package that suits the needs of each young person who is at risk of falling through the cracks once they leave school. The services are funded by central government and implemented in partnership with the Mayors’ Taskforce for Jobs, and we intend to work with Mayors to see how we can further strengthen this relationship.

In the midst of all the bad news – and I know that some days it does seems to be all bad news – it’s important to remember that New Zealand’s financial sector has held up better than most other countries and so there has been less damage to our economic confidence.  None of our major banks have come anywhere close to failing. Our financial system remains sound. Plus, as I’ve just outlined, this Government has already initiated several programmes available to support a wide variety of New Zealanders through the current challenges.

However, you don’t have to wait for us to come up with the ideas or the funding. You have the power to be creative and innovative within your own business. You can work with your employees to come up with solutions that work for you. You can network with other businesses and industry in your area to see what’s working for them. Shared knowledge is a valuable currency. And in some respects, the best thing this Government can do is not get in your way. I promise that compliance will be reduced and we will challenge every new regulation to make sure it is making your life easier – not harder.

So talk to your employees and be up-front about your business challenges and needs. Give your employees the opportunity to contribute to solutions. See the business as a partnership between you and your employees –it’s not so much that they work for you, but that they work with you to achieve your business goals. Be creative in your responses to situations. For many businesses it will be impossible to reward hard-working employees with a pay rise this year. Think about other ways you can reward your workers – ask your employees what would work for them.

Remember, work is about far more than just an income. It’s about identity, it’s about contributing to a better New Zealand, and it’s about being part of something bigger than yourself. If we can all work together to keep as many New Zealanders working as possible, we will all benefit. So be creative, be innovative in your response and turn the challenges into opportunities.

Thank you.