Editorial: Find how to match up people and jobs

A country's unemployment rate is an indictment of its failure to fully use the capacity and capabilities of its people. A person able and willing to work but unable to find a job is as wasteful to the economy as a piece of idle machinery, the more so when the human and social consequences of unemployment are added. And particularly so when spending on social welfare could obviously be better directed into education, research and national development.

The merit of such spending becomes even more dubious when placing people in jobs can be such a frustrating process. The labour market is slower to adjust than any other, and the normal laws of supply and demand apply sluggishly at best. Many a taxpayer dollar can be spent for little reward.

The seven successful economies featured in the Herald's Our Turn series have tackled unemployment in a variety of ways. But even approaches as different as the American market model and the European social partnership concept have elements in common. Both, for example, set clear limits for the time that a person can be paid the dole for doing nothing.

In the United States, a two-year limit on unemployment assistance was introduced five years ago. Within three years, it helped to halve the numbers on welfare, admittedly in a buoyant economy. In Denmark, the law is softer but applied no less dogmatically. The state offers either training or a job, in either the public or private sector, to young people after six months of unemployment and to people over 25 throughout the three years that their unemployment benefit lasts. Those who turn down offers lose their benefits. This approach motivates people to find work of their own choice before they are required to take whatever is offered.

New Zealand is similar to Denmark in some respects. After six months, the unemployed should be steered into training or subsidised work. But our system is half-hearted in its execution. We are, in fact, trying to have a bet both ways. While Denmark spends 28 per cent of a person's average annual output to help the unemployed back to work, New Zealand allocates 12 per cent. That, however, is considerably more than the 3 per cent spent in the US. Our progress towards an American-style jobs strategy extends only so far.

When companies collapse or lay off hundreds of workers, New Zealand also steers a middle course. Redundancy is not considered part of everyday life as is the case in the US, where, like bankruptcy, it carries no stigma. American companies' ability to hire and fire is considered a natural result of the ebb and flow of their fortunes. Restrictive welfare benefits and the wide spread of incomes provide the individual incentive to retrain or do whatever is necessary to find another job.

At the other extreme is the Queensland state Government, which goes to considerable lengths to usher redundant workers back into jobs. Its Worker Assistance Programme provides grants of up to $5000 to every worker to help with preparing a curriculum vitae, job interview techniques, retraining and shifting to a new job elsewhere in Queensland. Subsidies are also given to new employers who take on such workers.

Here, however, theory comes up against labour market practice. For both social and economic reasons, labour has traditionally been loath to switch occupation or location. Rapidly changing technology might have undermined workers' occupational loyalty, encouraging retraining. One town's job losses might be matched by another's job creation. But the Worker Assistance Programme has confirmed that even Queenslanders remain unwilling to shift to a different town or city.

Such human foibles are apt to undermine even the best-laid plans to align people and employment. That, in turn, suggests the ultimate solution is for an economy to provide the kind of environment that creates sustainable jobs - the sort of environment created by Canada when it signed a free trade agreement with the US. That one move has created three million new jobs for Canadians.

New Zealand can continue to tinker with job strategies, misdirecting millions of taxpayer dollars in the process. But real progress will flow from a global vision that embraces the likes of free trade pacts. Jobs created artificially are unlikely to last; those created by sowing the right seeds will.

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Simon Collins

Letters to the editor (newspaper)

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The jobs challenge

Common core values

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