Squeeze ‘will hit jobs’

Press, 3 July 1979, Page 3

Squeeze ‘will hit jobs’

PA Wellington The Government’s present attempts to restrain inflation will cause an initial reduction in growth of the money supply and fewer jobs for unskilled workers, according to the Bank of New South Wales quarterly economic review.

“As long as New Zealand employers let overtime rise rather than employ new workers, the prospects for reducing unemployment will remain bleak, 7 said the report, which was issued yesterday.

It said that the economic recovery of 1977-78, based principally on expansive Government policies, had not yet promoted a sustain-

able recovery in private business. “The economic malaise is a long-standing one of structural imbalance,” the report said. “Restructuring of the economy should not only aim to produce a more productive allocation of resources. A reappraisal of society’s attitudes towards the distribution of income and the incidence of taxation is also required.” The bank said that the fundamental problem was the narrow economic base and constraints imposed by the balance of payments. “Stretched resources are being used to support comprehensive social welfare services,” the report said.

i “For more than a generation an excessive proportion of national income has been devoted to consumption of public goods and services, and too little has been invested in farming and industry.” The consequent stagnant production had accentuated servicing problems on foreign debt, and made it that much harder to achieve simultaneously the long-term aims of economic growth, full employment, and price stability. The bank said that deflationary policies were likely to boost the migration exodus. “Low margins for skills and high taxation in New Zealand have also awakened interest in jobs overseas,” it said.