Unemployment — always a problem?

Press, 13 April 1982, Page 20

Unemployment — always a problem?

By

OLIVER RIDDELL

in Wellington

The spotlight may not shine upon it as often as a year ago, and public attention may be distracted onto other issues, but unemployment remains a problem that will not go away. According to*a Planning Council report just published, unemployment is likely to keep getting worse until at least 1986 — four years off. ’ It is not true to say that nothing is being done about unemployment, although sometimes that impression is given. Job creation programmes and other incentives to employers continue to chip away at the problem. But they do not seem to make any appreciable difference to the number of unemployed or their makeup — mostly the young. The different Government-sponsored

schemes’ do keep the unemployed turning over but do not do anything about reducing their numbers.

In the long-term, the Government expects its growth strategy to reduce the numbe” of unemployed. The authors of the Planning Council study seem to agree with this, but in the short-term they have no cheer to offer at all.

Their study is called — “National and Sectoral Development: A Framework for Discussion.” It was compiled by Mr Eric Haywood, the chief economist for the Ministry of Works; Professor Bryan Philpott, Macarthy Professor of Economics at Victoria Univer-

sity; and Mr Peter Rankin, a consultant to the Planning;Council.

They analyse trends in a way that is intended to provide a firmer basis for policy decisions on development. Much of this work involves looking at

different models, . and tne trends these models throw up. They emphasise that only some very general and conditional conclusions may validly be drawn from the models at this early stage. They consider it is technically feasible for the economy to achieve the combined expectations of the different sectors within it. With good management. sufficient resources exist to provide the needs of growth in traditional industry and in proposed new areas of development — such as the large-scale projects. The key question is — will or should the reallocation of resources in the real world match the impersonal efficiency of the mathematical operations of the models?

Under the two models cited, both indicate that a period of improved but unspectacular growth in the first half of the

decade could be followed by rapid growth towards the end of the 1980 s. provided economic management is directed towards medium-term rather than short-term goals. Equally, both models indicate that if the balance of

payments deficit is to be kept within reasonable bounds, no significant improvement in the employment situation can be expected in the next few years. This is a projected result of the E resent trends of economic beaviour and not an inevitable forecast.

The. report found that significant problems were associated with estimating the exact num-

ber of people unemployed at any one time. The authors found it difficult to have much confidence in any available figures for the number of

people in employment or in the labour force. Although they do not criticise anyone, their comments are in line with other criticisms made of the method of compiling employment and unemployment statistics in New Zealand.

On the basis of their figures, the nation’s labour market will continue to get' worse (as it has) from the base position of 1980 they chose, until 1986. The growth in employment until then is expected to be less than the growth in the labour force itself. After 1986, the position is expected to stabilise, but one of the models predicted it would continue on at the 1986 position into the future. Although the report's indices suggest that the labour market by 1986 will have weakened by 1.9 per cent (25,000 people) from the 1980 base year, the authors point out that this does not mean that unemployment will increase by this degree. . The model showed that participation rates are affected by the level of economic activity. More specifically, if the economy grows slowly and jobs are less easy to find, the rapid increase in the rate of female participation in the workforce of the 1960 s and early 1970 s will not continue. Many of these discouraged workers will not register as unemployed or record themselves as unemployed in answering census questionnaires. This will make statistics on unemployment even less accurate than they are now. It will also mean that census results, which are generally taken as a more accurate reflection of true unemployment than the official unemployment figures, will themselves be increasingly inaccurate. This will strengthen the hand of those

who want household surveys to give the true number of unemployed rather than continuing to use Department of Labour statistics on the registered unemployed.

The report concluded that, as a result of this change, potential members of the workforce would not be entering it. Their failure to find work would not be reflected in the unemployment statistics.

Even with a slight improvement by 1990, there would by no means be full employment. The model saw 30.000 registered as unemployed and 19,000

employed on special work or private sector work programmes, plus increasing numbers of unregistered unemployed. The authors were very concerned at unemployment being unrecorded or disguised. They said close attention needs to be given • to the relationship between economic growth and employment, both in their model and in the real world. There are elements of this report which echo statements in the report of the working party of the National Research Advisory Council, chaired by Professor Ray Adams of Mas-

sey University, whose report on unemployment last year was dismissed by the Government and attacked by some noted economists as being "unscientific.”

The Planning Council report is both more scientific and more cautious. These are merits in the eyes of economists, although not necessarily of much use to the unemployed. According to both reports, the unemployed are like the poor in that "they are always with us." Whatever has already been done about unemployment, both reports confirm that it has not been enough.