‘Too much job creation could hurt economy’

Press, 9 May 1980, Page 4

‘Too much job creation could hurt economy’

Too much emphasis on creating employment could saddle New Zealand with a range of industries whose net contribution to the economy was very small, a Lincoln College agricultural economist said yesterday. Professor B. J. Ros>s told the Planning institute’s annual conference that New Zealand should not react’ so strongly to the problem “that we lock oureelves into activities that are undesirable in different ways.”

He shared Hie concern of an Auckland planning consultant, Dr P. J. McDermott, that heavy investment during the 1970 s had not resulted in high returns, but said the problem “may not be as bad as he has assumed.” Dr McDermott had admitted that his view of the future was gloomy, “disturbing but plausible.” and that it could be questioned.

He said unemployment might best be attacked locally, and if the problem could be solved — at least partly — there was a better change of stemming its adverse social effects. Planners* could not assume a passive role. A return to economic growth during the 1980 s was unlikely, and planners could promote the stability that investors needed to make reasonable decisions.

Planners should ensure that economic growth was “not impeded by outmoded planning regulations and conventions,” he said.

Dr McDermott said his approach would “minimise the regret” that might result from a failure of conventional policy responses during'this decade. It would become less and less realistic to stick to “temporary, social palliatives,” such as small adjustments to welfare and employment systems.

He was' concerned that more workers would be doing jobs below*' their full capacity. That could be part

of a process of “de-skilling the work force.”

Trends toward parttime work, especially by women, seemed to point to that process. At the end of the 19705, an employment recovery “was made up almost entirely of women and parttime employees,” Dr McDermott said, “simply reinforcing a longer-term underemployment tendency.” People entering the working age group would outnumber those leaving it at least until the mid-19905, Dr McDermott said. That was a world-wide trend, common to both developed and developing countries.

While there was a growing number of workers under-employed, average incomes would be depressed. At the same time, skills needed to restructure production to reflect economic changes would attract top wages. Inevitably, there would be wider income disparities.

Policies aimed at providing employment and redistribution Of income- should concentrate on community services and construction. In the manufacturing sector, they should concentrate on textiles and clothing, wood and wood products, and basic metals, Dr McDermott said.

The need for personal services was likely to grow in the future as jobs diminished. Growth of personal services would create jobs while helping society cope better with needs of the under-employed. Professor Ross said that New Zealand had maintained relatively full employment and built up a wide range of manufacturing skills during the 19705.

But in ’ terms of income, “there can be little doubt that we have undertaken many activities where our resources of labour and capital have both been very poorly used,” he said. “In other words, we have

engaged in activities we should have left alone.”

Protection of the textile industry had raised New Zealand prices so much that the average household had to spend $l3O more a year on clothes, i '. ‘\ ’

Employment in the industry had been provided, Professor Ro&s said, “but at a very high cost",in real incomes for the ;bf society.” z

With higher real incomes in the 1980 s — 'partly by ensuring development in areas where producers were fully competitive with alternative supply sources from overseas — it would be easier to maintain social welfare payments at an acceptable level, and provide-jobs for those who wanted them.

“If things are going to be tough in the 1980 s, then it is even more important that we use our resources in the best possible way,” he said. ; The shifting of resources had a social cost, but since there would be a benefit, to society as a whole from restructuring, a “very strong case” could be made for favourable treatment of those who were displaced by new policies. All those unemployed because of the policies needed help with retraining programmes, relocation grants,

and generous allowances* Professor Ross said. He had found Dr McDermott’s scenario “so depressing that I had to try to refute as many of his arguments ds I could, in order to reassure myself that, all was not quite as bad as he painted it.” ; New Zealanders had built up a strong resistance to change over the good years, Professor Ross said.

“Feeling satisfied with our lot, we initially put very little emphasis on policies designed to promote growth, and instead concentrated on making life comfortable,” he said.

“In the short run, life for an affluent society is made comfortable by maintaining the status quo, and that is what we managed to do. “We have gone so long apparently being able to avoid change that the changes which are now being forced upon us are being resisted most strongly because we are afraid of change.”