Editorial: Impossible to protect jobs in global crisis

Opinion

The Budget forecast that unemployment would rise from the 5 per cent recorded in March to a peak of 8 per cent late next year. As statistics go, this was one of the more removed. It merely hinted at the number who would find themselves out of work.

More graphic and more telling was a new Social Development Ministry figure revealing that an extra 1000 workers a week are signing up for the dole. Inevitably, that raises questions about the effectiveness of the Government response and, particularly, the merits of February's Job Summit.

This was promoted by the Prime Minister as a "do-fest", not a talkfest that would produce only worthy sentiment. Now, it is being termed a gimmick by the Labour Party.

Of the summit's three big ideas - a nine-day working fortnight, a national cycleway project, and a joint bank-Government equity fund to help temporarily struggling companies - only the first has so far come to anything. The third, the equity fund, was killed off.

The summit, however, was never going to be a panacea for the looming growth in unemployment. The magnitude of the global downturn and the flow-through to export demand and domestic consumption decreed as much.

For some time, the Treasury, the Reserve Bank and private-sector economists have predicted job losses of the type now being experienced. Until recently, New Zealand remained relatively insulated from the shockwaves that have seen unemployment leap above 7 per cent in Britain and towards 10 per cent in the United States.

The relative strength of the banking sector helped, as did a wait-and-see approach by employers who, during a decade of prosperity, had struggled to fill their workforces.

It appears that period is over. The depth of the worldwide decline in demand for services and goods is rendering that policy impractical and prompting decisions on lay-offs.

The nine-day working fortnight was designed as an alternative to this by providing Government subsidies for employees who agreed to reduce their working hours. It appealed as a bold strategy to help companies ride out the recession without shedding staff they would require when demand picked up.

Not the least of its benefits was the training that was to be provided on the 10th day. Regrettably, this aspect was dropped. Yet if this made the scheme more attractive to employers, it is not reflected in the take-up.

So far, only 2241 workers are on the scheme, warding off 377 job losses, a far cry from the 20,000 to 25,000 that were expected to use it by December next year. It seems many employers do not want to be unable to lay off workers while they are being subsidised by the Government.

The scheme had its critics. They pointed to the risk that it could provide support to marginal companies in declining industries. This, in turn, hinted at the real possibility that the summit could have sparked the widespread use of job subsidies in various makework schemes. Happily, that did not occur.

There was no significant leap into the artificial protection or promotion of jobs, which could have put the economy out of kilter for a significant period after the international situation had stabilised.

Any government will, of course, agonise over a statistic that shows an extra 1000 workers signing up for the unemployment benefit every week. But the brutal reality is that it is impossible to protect jobs during a worldwide downturn. No summit can produce a miraculous cure-all or pave the way for a quickfire exit from the mire.

The Government's best course is to build a more robust, more productive economy for when matters improve. If this is done, the unemployment statistics, having peaked, should soon make better reading.