No magical jobs solution —Douglas

Press, 26 January 1989, Page 7

No magical jobs solution —Douglas

By

OLIVER RIDDELL

. in Wellington

The Government cannot wave a magic wand to cure the problem of unemployment, according to the former Minister of Finance, Mr Douglas.

He has outlined 11 key steps the Government ought to take to reduce the level of unemployment but warned that today’s unemployment level was the cumulative result of poor economic performance over the last 20 years.

Contributing to that economic malaise were protectionist attitudes, restrictive labour practices and bad Government investment decisions over many years which had eroded New Zealand's position as a competitive trader.

“We ended up with too many people employed in areas making a poor contribution to the wellbeing of the nation and adding to the costs which everyone else has to carry,” Mr Douglas said. “You can’t create jobs that way and, obviously, a

lot of disruption is involved in getting people out of those inefficient areas. “A time-lag occurs and real job growth doesn’t occur until you get the costs down,” he said. “You have to face up to that and it can’t be solved by pouring money into

phoney jobs to ‘mop up unemployment.’ That just adds the old costs back into the system and damages prospects for real jobs. "The idea that you can somehow escape from the dilemma (created by past policies) is nonsense, and

it can be dangerous nonsense,” Mr Douglas said. His 11 key steps towards higher employment were:— • Firm monetary and fiscal policies to cement in rates of inflation which were low by international standards.

• Keep the taxation system internationally competitive to attract investment and avoid loading excessive costs on to producers. • Recognise that it was counterproductive to seek increases in real wages without increases in pro-

ductivity. • Accept the need for new wage bargaining structures and more flexibility within the 40-hour week, with industry and enterprise agreements. • Develop more flexible training and education systems which did a better job for both the

trainees and for industry. • Move to more flexible immigration policies which attracted investment and increased the level of workforce skills. • Give the business community and public consistency, with a clear forward view of economic

policy directions to build confidence. • Maintain a dialogue with key unionists to enlist their help in improving productivity and labour relations. • Continue an aggressive restructuring of

sheltered sectors which were still adding excessive costs to productive efforts. • Stop the previous continuous increase in Government spending by obtaining much better value for the taxpayer’s dollar.

• Revise the tax benefit system to reduce or eliminate poverty traps and welfare traps. The system punished many people who tried to earn an extra dollar or tried to move off benefits into the workforce, said Mr Douglas.