Editorial: Job creation lacking in PM's policy

WINZ office in Tokoroa. Photo / Greg Bowker

There is nothing objectionable in the Government's proposed new way of handling young beneficiaries and school dropouts. A commendable carrot-and-stick approach is identifiable in the plan to support every at-risk high school dropout into training and restrict the spending habits of teenage beneficiaries. Yet there is also nothing in the Prime Minister's announcement that creates jobs for young people. There, the Government still has work to do.

The new proposal must be viewed in the context of the country's alarming teenage unemployment figures. Statistics New Zealand said this month that the rate for those aged 15 to 19 had risen to 27.6 per cent - the highest since the official survey began in 1986, and the highest since the Great Depression of the 1930s if teenage unemployment followed the same pattern as adult joblessness in earlier years. Further, according to the New Zealand Institute, teenagers' share of the country's total unemployed is, at 26.2 per cent, by far the highest of all developed countries.

Such figures suggest it is not enough for John Key to place the onus for job creation on a private sector that will respond confidently to Government policy. The Government's influence needs to extend beyond macro-economic settings. It must turn its mind to other ways of encouraging employers to hire and train young people with little or no experience. One possibility is reinstatement of a youth minimum wage. Supporters of this suggest it would make it far easier for young people to get a foot in the door.

Whether the rate's demise has increased youth unemployment, however, is debatable. The global recession has reduced job opportunities across the board, and made assessment difficult. According to Mr Key, the Treasury's research has been inconclusive. But earlier work from the same source and by overseas researchers suggested the withdrawal of the rate actually resulted in 16- and 17-year-olds increasing their hours worked by 10 to 15 per cent. Indeed, youngsters had been encouraged to leave school earlier than usual in pursuit of the higher wages on offer.

There is at least a sense in the Government's latest proposal that lessons learned overseas are being heeded. Foremost among these is that funding spent tackling a problem in its embryonic stage can save a lot in the long run. The $20 million to $25 million cost of this policy will be money well spent if it has a positive impact on those described by Mr Key as "disengaged youth".

Identifying at-risk school-leavers is overdue, as is the linking of them with support services, which will receive bonuses if they place them in work or mentor them through a training programme. The danger that these services may focus on easier cases is real, but hardly a reason to query the policy's feasibility.

The most controversy has been raised by a plan to control the spending habits of teenage beneficiaries. The Government would pay essentials such as rent and power on their behalf, and provide a pre-loaded and monitored payment card that could be used for food but not to buy liquor and cigarettes. Such restraint on spending seems fair enough when those affected are under 18 and often vulnerable. Only if applied to those of an older age would it represent an unreasonable intrusion.

But all this will go only so far if young people are starved of job opportunities. By the time the Government, if re-elected, introduces legislation to implement this proposal early next year, it should also have devised a strategy for real job creation. Given the country's teenage unemployment statistics, nothing else will suffice.