Industrial relations tied to rise in unemployment

Press, 14 September 1988, Page 10

Industrial relations tied to rise in unemployment

By

OLIVER RIDDELL

in Wellington

Treasury forecasts are for registered unemployment to rise 34,000 to reach 136,000 by March 31 next, and by another 8000 to reach 144,000 by March 31, 1990.

The Secretary to the Treasury, Dr Graham Scott, tied these increases to New Zealand’s industrial relations structure. He told Parliament’s Finance and Expenditure Select Committee yesterday that this structure and its regulatory environ- 1 ment contributed to un-’ employment. Any macro-economic scenario had to deal with the fact that the structure and environment, as they stood, tended from time to time to throw up a wage round that was inappropriate. “For example, there are real risks for future levels of unemployment in a. 7 per cent wage round now being proposed,” Dr Scott said. '

The Treasury forecast that registered unemployment would reach 8.4 per cent of the workforce by March 31, 1989, with a forecast fall in full and part-time employment of 28,000 during the same period. In the year to March 31, 1990, employment would recover somewhat to rise 9000, he said. Important factors influencing this would be the next round of wage settlements, and the strength and timing of the economic recovery. Developments in unemployment would also depend on migration flows and on changes in participation in the workforce by people of working age, both of which were sub-

ject to wide margins of uncertainty. A Treasury paper for the Tripartite Wage Fixing Conference outlined an ' economy that was likely to weaken for the first half of 1988-89, but have a modest improvement in the second half. Ms Elizabeth Tennet (Lab., Island Bay) asked Treasury representatives in front of the select committee which sectors of the economy they expected to grow and where job opportunities would emerge. The assistant secretary (general economics), Mr Howard Fancy, said the Treasury did not want to point to any one sector. No specific work had been done on economic

models to identify areas of employment growth, and there was a potential for growth in all sectors, he said. The prediction of 144,000 registered unemployed by March 31, 1990, was a mid-point figure from a range of predictions, and had been reached in consultation with the Labour Department. Dr Scott promised to give the select committee the' detailed assumptions on which the 144,000 .figure had been based. Miss Ruth Richardson (Nat., Selwyn) said employment growth was dependent on growth in the economy, and with negative growth in the economy employment growth

could hardly occur. Mr Trevor Mallard (Lab., Hamilton West) asked how the Treasury could give advice on employment schemes such as Access when it did not know where job growth would occur. It was not the Treasury’s role to define or , design detailed schemes, Dr Scott said. Its role was to participate in debate on the issues and how well money was spent, on monitoring and advising. He defined an “active labour market policy” as an attempt by the Government to become more involved in the process of adding skills to people and having them placed in industries with a

future. There would be Government involvement, but the form was a matter of judgement. The Government believed it should intervene anywhere it could be shown such intervention would be successful, but it was a very complex question to determine success in advance. The Treasury would react to a proposal to intervene rather than advocate a policy of intervention, Dr Scott said. The Treasury’s function was to ask hard questions on proposals, not to provide the proposals, he said. >’ “No single body could take the responsibility to perform both functions.”