Dialogue: The writing's on the wall for jobs

By JOHN ROUGHAN

Bill Clinton received some news the other day that probably gave him more pleasure than anything in his presidency, a remarkably good presidency when you stop to think about it.

He is set, when he retires in January, to be only the third President since the Second World War, and the first Democrat, to govern for a full eight years. He has survived because they have been quite phenomenal years of continuous growth and prosperity in the United States.

It is easy to say he had little directly to do with it. The boom can be attributed to a new technological wave and the stockmarket wealth that has ridden it, to the collapse of the Soviet Union and less military pressure on spending, and to the demise of closed economies, opening nearly all of the world to capitalism and trade.

It is not perfect or permanent; nothing in dynamic economies is ever that. It probably rests too heavily on technological phantasms.But the bubble is proving resilient.

If anyone in public office is given credit for the good times it is most likely to be the chairman of the US Federal Reserve, Alan Greenspan, who has run monetary policy with a fine touch throughout.

Yet governments, while they cannot do a great deal to create national wealth, can do much to destroy it. It will always be to Clinton's credit that he has not overspent, has used American firepower judiciously, banked Budget surpluses against this generation's retirement and left Mr Greenspan unhindered in his inflation watch.

So when it was announced the other day that unemployment has dropped just below 4 per cent, the President deserved all his evident sense of satisfaction. The figure is getting as near as doesn't matter to full employment. (There is an allowance for the transient and the unemployable.)

Employment is the only economic statistic that matters in the end. All economics, all politics, are ultimately about employment because work, for most people, is more than an income - it is their primary means of social participation and a large part of their sense of personal worth.

When Clinton's former Labour Secretary, Robert Reich, was here as a guest of the Labour Party not long ago he compared American job arrangements unfavourably with Europe's, where unemployment is twice as high - 8 per cent on average, 10 per cent in France, Italy and Germany.

I wondered whether he would prefer to be low-paid in America or unemployed in Europe. Reich opted to be unemployed in Europe "because the safety net is better." I don't believe him. Unemployment, for the vast majority of people, is a misfortune beyond monetary relief.

Ever since New Zealand altered its labour market along American lines, it has reduced unemployment from European levels.

There is a number we should engrave on our memory right now - 5.5 per cent. Write it on the wall. It is the level of unemployment the Treasury estimates we will have at March of 2002, the next election year.

It is not a marked improvement on the 6 per cent or so that we have had for a while now. Nor is the prediction out of the ordinary. The Reserve Bank expects 5.5 per cent and the independent Institute of Economic Research 5.4 per cent.

But two things make the Treasury number worth filing away for future reference.

One: it was appended to the new Government's first formal economic report, the Budget Policy Statement issued in March. The Finance Minister signed the document and for the Government there will be no escape from the forecast.

Two: it takes no account of the imminent repeal of the Employment Contracts Act 1991.

Nobody seems to have yet ventured an estimate of the likely rise in unemployment when the labour market is more regimented and less able to strike variable pay bargains.

Union theorists steadfastly deny there is a connection between bargaining systems and employment levels, despite the fall in unemployment from 10.6 per cent in 1991 to 6 per cent by 1997. But Labour Minister Margaret Wilson is notably less confident.

With exclusive coverage of collective contracts and the power to enforce the same terms on all firms in an industry, unions will almost certainly destroy some jobs of marginal value to employers. Sometimes they are the kind of jobs that can get young, unskilled or inexperienced people in the door to show their worth and work into something better.

When payroll costs rise for any reason - higher wages for the same work, prolonged bargaining, maternity leave, mandatory training - employers review the staffing needs. It is not a difficult deduction. Nor will be the human costs we can calculate in a couple of years.