Scoop Election 08: edited by Gordon Campbell

On Auckland’s Recession

May 11th, 2009

Is the recession something that is mainly happening to Aucklanders? Last Thursday’s Household Labour Force Survey (HLFS) contained evidence to support that notion. Nationally, the recession effects are being felt and worse is being projected, but the figures for Auckland have been worse than elsewhere.

Look at those latest HLFS quarterly figures for instance, for the March 2009 quarter. On table three, while employment is down nationwide since the December quarter, the situation still remains better than at the same March period, a year ago. Table three shows that in March 2009 there were 2,173,500 employed as compared to 2,156,900 in March 2008. That’s an increase of 16,600.

The Auckland figures are in table six. Between March 2008 and March 2009, those employed in the Auckland region went down from 672,800 to 641,600 – a decline of 31,200. Since the same figures nationwide improved by 16,600 it means that outside Auckland, the employment situation has improved by 47,800 jobs over the past year! Whereabouts? Well, as the Statistics Department also points out, there has been a ‘significant increase’ in employment in the Wellington region.

It isn’t recession denial to suggest that regional differences exist in how this recession is being experienced. Plainly, the economy is in serious trouble, and declining. For the first time in six years, the unemployment rate has hit 5% amid signs of a ‘discouraged worker’ effect – where people give up searching for work – that otherwise would have pushed the unemployment rate even higher.

The unemployment rates though, show the same regional variation. In Canterbury, unemployment numbers are on the rise, but the March quarter rate was still only 4.6% – for which Cantabrians can thank good prices for sheep and beef, and the lower dollar – compared to a 6.5% figure in Auckland. Given such variations, it is hardly surprising that there have been anecdotal reports of people in the provinces saying – what recession?

The social and economic outlook though, is bleak. The job losses that have been so far been significantly concentrated in building construction and manufacturing – ie mainly in Auckland – will spread elsewhere to Wellington (in particular) if public service job are rolled back in the wake of Budget belt tightening. After all, one of the few counterweights to the rash of job losses and factory closures over the past year, has been the job growth in the health and education sectors.

One particularly significant employment growth trend has been among the over 65 age group, the only age group to improve its employment position during the last quarter. This reflects the so called ‘ desperate worker’ syndrome, as older workers hold onto work and continue looking for work for longer, because the value of their assets has fallen, and the worth of their retirement funds has been slashed.

Currently, benefit levels are still lagging far behind the employment/unemployment figures. One of WINZ’ achievements over the past five years has been to make good use of the economic boom to focus on people who might otherwise have regarded themselves as unemployable. For some, that has meant re-training – for others, it has entailed the buying of medical treatment and/or psychological counseling for conditions that had been a barrier to employment. As a result, there has been a wide gap in the numbers defined as unemployed, and those actually on the dole.

That gap may soon start closing. Currently for instance, there are over 115,000 people defined in the HLFS as unemployed but according to WINZ figures – only 37,054 people are on the dole. The rest are still actively seeking jobs, and are not on a benefit. Significantly though, that dole figure has recently doubled, from 18,896 a year ago – and that situation seems certain to deteriorate further in the coming months. With more people steadily losing their jobs and doomsday headlines about a lengthening recession, the ‘discouraged worker’ effect is bound to increase. Dole numbers will rise, and more closely reflect the unemployment situation.

For now, the global recession is still playing out differently in New Zealand than in the US and elsewhere. At 5% our unemployment rate is still better than the 8.5 % rate in the US, the 6.7 % rate in Britain. Surprisingly though, Australia’s unemployment rate actually fell in figures released last week and its retail sales figures also improved sharply. It may be that Australia’s econbomy will continue to shield New Zealand from some of the worst effects of the recession.

For now, the gloom emanating from Bill English and the relative optimism from John Key is not merely a political gambit of bad cop/good cop. Some genuine grounds for relatively positive thinking are evident in the figures. Key has been aware of this for some months. Here he is how he was expressing it back in February to the NZ Herald’s Audrey Young :

The sort of numbers you are seeing out of the United States where they lost 600,000 jobs in December, you’ve got to contrast that with what happened in New Zealand [in the December 2008 quarter] which was the unemployment rate rose but actually the economy created more jobs; there were more people looking for employment. The structure is slightly different…while there will inevitably be some impact on the economy, it won’t be carnage.

Or to be more accurate : so far, the carnage has been limited so far to Auckland.
The Hikoi in Auckland

Sticking with Auckland, the May 25 hikoi being planned to protest against the scrapping of the dedicated Maori seats on the Supercity council in Auckland is looking more and more like a meaningless diversion. It is hard to tell whether it would be worse if the hikoi failed – or if it succeeded. How will it benefit Maori urban communities if the system buckles, restores the three Maori seats and enables Maori to serve as an ineffective minority on a deeply flawed Supercouncil ?

Moreover, having those three Maori seats subservient to the powers that will be concentrated in the Supermayor ( and the officials he appoints ) will hardly be a mana- enhancing exercise. Powerless to affect Supercouncil decisions, the Maori representatives would then become complicit in the quashing of genuine community initiatives.

The hikoi’s goals are, in other words, largely an exercise in tokenism. One would have thought the Maori Party and the hikoi organisers were beyond being satisfied with the sort of empty victories being sought. For the Supercity backers, conceding a virtually meaningless form of minority representation to Maori over the council seats would actually be a very good way of undermining the wider protest against the Supercity concept, by looking as if they are being responsive – yet without having to surrender any real power to ram through council decisions.

For Maori as for Aucklanders in general, the only solution lies in outright rejection of the Supercity concept – not in being satisfied with a few baubles tossed from the top table.

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    1. 3 Responses to “On Auckland’s Recession”

    2. By Pete on May 12, 2009 | Reply

      Gordon, thanks for another thoughtful piece.

      I’m glad someone has highlighted what has been going on in Work and Income (note, not WINZ) over the past few years when the job market was good – it’s not been a case of empty suits sitting on their hands, which seems to be the reaction from many in the wake of the announced job losses at MSD today.

      Given that Auckland is in job-loss freefall, and other regions may soon be similarly affected, how can the government reconcile their proposed ‘redundancies’ in the Ministry for SOCIAL DEVELOPMENT with the need that will soon be evident in the families and communities around the country? And that’s ignoring the fact that the current government campaigned on a platform of reducing the public sector by ‘attrition’, not through forced redundancies.

    3. By | Acneguy on Jan 6, 2010 | Reply

      I think we are also seeing some signs of recovery from the Economic Recession. Of course, we have no idea of how long it will take to completely recover, but some say it’s going to be longer than for the other recessions in decades. I also scanned an article yesterday that said business owners need a new set of tactics to do well during recovery.

    4. By Kaitlyn Rogers on Apr 29, 2010 | Reply

      Our home business was really affected by the Economic recession, we have to cut jobs just to cover up our losses. fortunately, we have already recovered. |

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