Simon Collins: Employing new strategies to save jobs

Eight months into the sharpest global downturn in living memory, most New Zealand employers are still holding their nerve remarkably well.

The country is suffering, of course. Unemployment jumped from 3.8 per cent to 5 per cent in the year to March and is forecast to keep climbing over the next year to 7 or 8 per cent, comparable with the Asian crisis a decade ago.

Auckland, always more vulnerable with its export-dependent manufacturers and property-fuelled service sector, has been hit specially hard. Its regional unemployment is up from 4.7 per cent to 6.5 per cent.

It's still early days, and employers that have not cut back may not be able to hold on much longer.

But the evidence to date is that they are holding on to their workers much longer than expected. Employment dropped by just 1.1 per cent on a seasonally-adjusted basis from December to March, and at last count was still 0.8 per cent higher than a year before.

Work and Income says it still lists 5000 vacancies nationally, although its website listed only 368 jobs in the Auckland region when the Herald checked last week. It says new vacancies listed nationally rose from 833 to more than 900 in the four weeks to last Wednesday. "Despite rising unemployment, we're still seeing some increasing demand."

Red Middlemiss, an EPMU union organiser covering the Central North Island timber industry, says employers are holding on to skilled workers - even in a sector that has taken a massive hit from the house-building slump in New Zealand and worldwide.

"There are a lot cutting back. Most of them have consolidated," he says. A few big sawmills are replacing dozens of smaller ones, and several have asked staff to take paid or unpaid leave.

"But there is still just as much wood coming out of the forests," Middlemiss says. "They continue to put timber out because they need the tops of the logs for chips for the pulp mills. As long as the logs are looked after, they sit on the skids and they will go eventually.

"They are reluctant to get rid of people. I know of plants that have got no orders at all yet have kept the same staff on doing maintenance and training and stuff. They are trying to hold on to skilled staff. It's just as severe if not more severe [as in past recessions], but they have learnt the lessons of the past. They know that if they let their skilled staff go, it's hell to pay when it comes back up."

Industry Training Federation director Jeremy Baker says trainee and apprentice numbers have held up in all industries except residential construction. "By and large employers are actually responding quite differently in this recession than in the past. There is no doubt some firms are shedding labour, but the general picture is the opposite.

"Whereas in the past, employers let people go to save money, they are doing their best to hold on to people; they have learnt through the last two recessions that by getting rid of people, they cripple themselves in the long term."

The Government has attempted to build on this sentiment. Its "Job Summit" in February tried to enlist business leaders in a joint effort to at least partly cushion local workers from the global catastrophe. Its goals were modest. Although there has been some ramped-up investment in roads and broadband, and, last week, home insulation, the marginal spending involved has been much less in relation to the size of the economy than in countries such as Australia, the US and China.

The summit's only big-ticket item, a proposed $2 billion fund to have been backed jointly by the banks and the Government to take shareholdings in struggling businesses, was abandoned amid concerns it might have undermined banks' financial stability.

Instead, the Government has offered a subsidy of just $812.50 over six months ($12.50 an hour for five hours a fortnight) for up to 10 times the number of workers that an employer would otherwise have laid off. The only condition is that none of the workers in the scheme can be laid off during the six months.

Only seven companies had taken up the subsidy for 758 workers by May 15, saving 143 workers from redundancy. The Ministry of Social Development has had inquiries from a further 96 firms.

There have been minor tweaks to training policy, and Trade Me started a new job-alert service for Work and Income clients last week that emails people new jobs listed in their region each week.

But these have made only marginal changes to a Work and Income system that has in the past few years become much more focused on helping people into work. The agency already lists job vacancies nationally on its website. Although at the moment it screens all applicants before connecting them with employers, it will shortly give employers an option of posting their own contact details directly on the site. By August it will also give employers access to part of its list of jobseekers in each region, including their skills and work histories.

Training subsidies are available for "disadvantaged" workers in any industry - such as people with a disability who may also get a wage subsidy - and those registered with Work and Income in industries with skill shortages.

Even in these tough times, there are still growth sectors. One is public transport. About 10 per cent of the 212 workers laid off at Carter Holt's Putaruru sawmill late last year (see separate story) have retrained as bus drivers, mainly for Go Bus in Hamilton, and Auckland's Howick and Eastern Buses are adding about 20 new drivers to their existing 179 this year.

"There is a 10 per cent overall increase in public transport [in Auckland] and we have shared in that," says Howick and Eastern human resources manager Sheryll Otway.

Work and Income pays new recruits during Howick and Eastern's four-week initial training course. The company gets Work and Income's support free but pays its recruits normal wages during the rest of the three months it takes them to qualify as bus drivers.

Similar industry partnerships cover sectors such as contact centres, hospitality, meat processing, office administration, plumbing, retailing, roofing, shearing, truck driving, warehousing and building and construction.

Even in the building industry, where consents for new dwellings plunged by a third in the year to March, there are still patches of light. Building and Construction Industry Training Organisation boss Ruma Karaitiana says almost half the 2800 apprentices who lost their jobs in the 14 months to the end of March resumed training with new employers.

"We started off at 9500. We're down to 7900, a net loss of 1600," he says. "But there are just over 1200 who we have managed to put back into jobs."

How long this can last is still open to question, of course. But at least so far, redundancy is not quite the absolute consignment to the dole queue that it was a decade or two ago.