Scoop Election 08: edited by Gordon Campbell

Gordon Campbell on job creation, and Paula Bennett’s welfare numbers

September 13th, 2012

When governments brag about the jobs their economic policies are creating, the public should regard the figures as being as reliable as a John Banks’ mayoral expenses declaration. During only the past week for instance, Finance Minister Bill English has claimed a net gain of 50,000 new jobs over the last two years, a figure that National backbencher Katrina Shanks inflated in Parliament to 60,000 while promising 154,000 more new jobs over the next four years. Meanwhile, the economy continues to flat-line, or at best, show barely perceptible growth. What’s going on here?

Well, for one thing the statistical foundation is open to question. The basis for the government’s claims has been contested by the Statistics Department, which has said the Household Labour Force Survey being used by the government to generate its glowing figures was not the most accurate measure of job creation – mainly because it measures unemployment, not job creation and destruction. By their calculations (using the so called Linked Employer/Employee Data Set) there has actually been a net loss of 13,000 jobs between May 2008 and June 2011 – as 452,000 new jobs were created while 465,000 jobs were lost. Oops.

Bill English is not admitting defeat just yet. That Data Set, he claimed on RNZ this morning, doesn’t include the figures for the self-employed of whom he said, there were plenty in Wellington and elsewhere. True enough. Yet some interesting things would happen, English failed to add, if you did count them. Yes, many jobs lost in the public service would still show up on one side of the ledger. But on the other side, large numbers of such people would then qualify for the ‘job created’ column, because they would now be definable as a self-employed contractor looking for work. The effect would be to neutralise the job loss statistics – and anecdotally, there are a lot of people in Wellington who are living in denial as self-employed contractors while telling their friends they are currently “between contracts.”

That’s one method by which we can generate jolly optimistic figures for job creation amid a flatlining economy. Another method is via part-time work, which can also alter the job creation/job loss equations. In both cases, what we’re seeing is the increasing casualisation of employment. This is not something that any government should be bragging about. Nor is the underlying problem one that is limited to New Zealand. As this article (“All Work, No Pay”) published overnight in the Economist magazine indicates, the explanation for why and how jobs continue to be created while economic conditions continue to stagnate is quite puzzling:

Some economists reckon it is explained by the growth in part-time jobs. The number in part-time employment is the highest since records began in 1992. The large chunk of workers who have left full-time work—640,000 since May 2008—is nearly matched by the block of 628,000 new part-time workers. The new part-time staff are mostly self-employed and growing numbers of them say they could not find full-time work.[evidently, the Wellington Syndrome occurs elsewhere, too.]

Yet, if part-time work is responsible for the gap between GDP and jobs, one of two things must be true. Either the part-timers work fewer hours in all than full-timers, or they are simply less productive. The first is not true: the total weekly hours worked has risen by 15 million since 2010. The second may be true, but evidence points both ways. Low-productivity sectors employ part-timers to a greater extent than high-productivity sectors. But according to a Cambridge study in May, the shift in jobs from high- to low-productivity sectors only amounts to 0.25% of the productivity shortfall.

More puzzling still is the disparity between employment, which has risen rapidly, and unemployment, which has barely moved. 236,000 more are in jobs, yet unemployment has only dropped by 7,000. The difference is made up by persons who now say they seek work. Some of these are the elderly, who are shunning retirement to work longer; some are former students; some come from the growth in population. Most are none of these. Most have simply decided they want to work. [No puzzle here. This is a sign of mounting desperation.]

The only reliable truth, the Economist concluded, is that the job creation/job destruction figures provide an ideal platform for politics as usual, regardless of the suffering concealed by the mere numbers.

Expect Labour to point to the lack of growth and the sticky unemployment. Expect the Conservatives to boast of the extra jobs.

Could we expect any government department any time soon, to carry out research into the social impacts of casualisation? Hardly, given the current climate of terror within the public service. Is any university department doing any research into the impact of casualisation on productivity? Are the self employed more – or less – productive, and/or innovative? Such issues barely figure in a political debate that consists of slogans shouted across a void.

The $78 Billion Question Only Paula Bennett Is Asking

Social Development Minister Paula Bennett is such a troll, it can seem pointless to rise to the bait. But yesterday’s claim – dutifully run as the lead on the NZ Herald website– surpasses even her own usual high standard of offensive stupidity. According to Bennett, if everyone on a benefit last year stayed on it for the rest of their lives, the cost to the nation would be $78 billion.

We can all play this game. Hey, if tax avoidance is allowed to run at recent rates for the rest of the century, what would it cost – maybe…$200 billion? Or $425.7 billion? Hard to tell. If rugby allows its laissez faire attitudes to concussion to persist, what ratio of current players will end up with Alzheimers in later life? A lot? More or less than a third? If we equipped the Defence Forces with a brand new fighter wing of F 22 Raptors, how much would that cost? Well…much less than $US79 billion obviously, so maybe Bennett can capitalize the $NZ78 billion we didn’t spend on benefits and buy a fleet of F22s.

Seriously…since the $78 billion phantom figure is being used to justify beneficiary bashing aka welfare reform one has to patiently point to Bennett’s own latest departmental statistics. They show the numbers on main benefits to be in decline:

At the end of June 2012, 320,000 working age people were receiving main benefits. This compares with 261,000 in June 2007 and 328,000 in June 2011. The number of working age people receiving main benefits decreased by 3,000 (1 percent) in the 12 months ended June 2008, rose by 70,000 (27 percent) between 2008 and 2011, then decreased by 8,000 (2 percent) between 2011 and 2012.

Mindful of the $78 billion spectre if we left things as they are….let’s look at the DPB figures. They’re also decreasing, even before the welfare reforms properly kick in:

At the end of June 2012, 112,000 working-age people (aged 18–64 years) were receiving a Domestic Purposes Benefit. Over the year to June 2012, the number of Domestic Purposes Benefit recipients decreased by 1,000, or 1 percent.

Of the clients receiving a Domestic Purposes Benefit at the end of June 2012:
Nearly one in two (46 percent) were aged between 25 and 39 years, while one in five (20 percent) were aged 18–24 years
17 percent had a current earnings declaration for their current spell on benefit. This indicates some participation in paid work (during the last 12 months) while receiving a main benefit
three in five (62 percent) had a youngest child aged six years or under, while 11 percent had a youngest child aged 14 years or over.

Now look at the duration, the time spent on the DPB. Of the clients receiving a Domestic Purposes Benefit at the end of June 2012:

one in four (24 percent) had received a Domestic Purposes Benefit continuously for less than one year
two in five (41 percent) had received a Domestic Purposes Benefit continuously for between one and four years
10 percent had received a Domestic Purposes Benefit continuously for ten years or more.

Clients who had received a Domestic Purposes Benefit continuously for 10 years or more made up less than one percent of the total working-age population at the end of June 2012.

So a quarter of those on the DPB were on and off the benefit in less than a year. Two thirds were on it for less than four years. Now let’s see….the average life expectancy for women in New Zealand is 82.2 years. If the duration of time on the DPB for the vast majority of women is less than four years, then it’s a gross insult for Bennett to calculate the cost to society as if they were on welfare for their entire lives. In reality, for most of those who go on the DPB in their late twenties in the wake of marital or relationship breakdown (and go off it within four years) that’s a miscalculation of about 50 years! And that’s before one points out that these women are raising the next generation of children on their own and are paying tax on the DPB and nearly 20 per cent of them are already declaring earnings and paying tax on that as well. In return, Bennett and her ilk are happy to depict them as freeloaders.

Oh and in case Bennett and her talkback radio pals try to claim that it has been her policies that are engendering the (slight) signs of positive change, her own departmental staff would disagree. The decrease in DPB numbers, they say, is due to other reasons: “This pattern reflects changes in economic conditions.” As it always has done. Meaning: it is not the mindset of those on welfare that is the problem with the welfare numbers. Those fluctuating numbers reflect the state of economic policy. If Bennett and her colleagues want to see reform of the welfare statistics, perhaps they should start by looking in the mirror.


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    1. 10 Responses to “Gordon Campbell on job creation, and Paula Bennett’s welfare numbers”

    2. By donna on Sep 13, 2012 | Reply

      Bill English was very naughty using the Household Labour Force figures to try to argue 50,000 jobs had been created. What a shame Moaning Report let him get away with it.
      Analysis of the LEED data shows the economy has been creating more part-time than full-time jobs since the mid-1990s. Having been promised 170,000 new jobs in both the 2010 and 2011 budgets (that’s 14,000 per quarter for three years for those who are counting), crowing about a few (upcoming) jobs here and a few more (upcoming) jobs there falls way short of National’s promised job-rich Nirvana.
      It is into this flatling economy that National is expecting those on unemployment, sickness and domestic purposes benefits to find work. Whipping up hysteria about dope-smoking, kidnapping, warrant-skipping, fraudulent bennies is increasingly failing to distract from jobs losses that now number in the thousands.
      I know i would much rather the government focused on creating an inclusive society where everyone had the chance to contribute than focusing on so-called welfare reform aimed at penalising the vulnerable. This lot’s determination to punish the poor and their children sickens me.

    3. By Daniel on Sep 14, 2012 | Reply

      I like the way MSD is protecting the 7000 ‘RSE Scheme’ jobs for foreigners in horticulture and viticulture while at the same time make extra demands on those who can’t find jobs.

      I thought getting people off the ‘Benifit’ was the goal paula.

    4. By Mark on Sep 14, 2012 | Reply

      While there are such and such an amount unemployed what doesn’t show through is the number out of work who have partners with incomes above thresholds meaning they are unable to get a benefit.

      Also how does all those thousands leaving for Australia affect statistics?

    5. By Alfie on Sep 14, 2012 | Reply

      One other thing which I find offensive about Paula Bennett’s latest $78b claim is that she used a company in Australia to come up with that silly figure. It’s so loose and lacking any basis in reality that one person with an Excel spreadsheet could surely model it within a week.

      But instead we’ve paid over $800,000 to an aussie company. Who selected them? Was there any nepotism involved? Is there nobody in NZ qualified to carry out the task?

      The same company is apparently going to receive an additional $800k every year for an indefinite period to keep providing the updated figures that the minister wants to hear. That’s a nice little earner for someone.

      One of the “revelations” in the Minister’s statement was that a person who goes onto a benefit at aged 18 will cost the country more than someone who starts receiving a benefit later in life. Well, blow me down with a feather! Did we really need an $800k consultant to point out the blindingly obvious?

      Your comment that Bennett “surpasses even her own usual high standard of offensive stupidity” is right on the nose Gordon. She’s a shocker, even by this government’s standards.

    6. By ?? on Sep 15, 2012 | Reply

      what Alfie is on about. Why isn’t Labour jumping on the waste?

      Or are they thinking anyone who cares about the waste knows the figures are Bennett bullshit and it’s a waste of time to highlight them?

    7. By Lindsay Mitchell on Sep 15, 2012 | Reply

      Gordon, As I have pointed out in the past you do not understand the data relating to time spent on the DPB. The cut and paste data above relates solely to continuous spells, not average all-up duration of stay.

      The Ministry can only track uninterrupted data back to 1996 due to an IT systems change. So based on a point- in- time calculation made about DPB recipients at the end of 2005 researchers found:

      “• just over half had spent at least 80% of the history period observed (the previous 10 years in most cases) supported by main benefits

      • a third appeared to have become parents in their teenage years.

      This reflects the over-representation of sole parents with long stays on benefit among those in receipt at any point in time, and the longer than average stays on benefit for those who become parents as teenagers.

      Had the research considered all people granted benefit as a sole parent, or all people who received benefit as a sole parent over a window of time rather than at a point in time, the overall profile of the group would have appeared less disadvantaged.”

      You said,

      “According to Bennett, if everyone on a benefit last year stayed on it for the rest of their lives, the cost to the nation would be $78 billion.”

      The lifetime costs are based on the likelihood of staying on a benefit – not simply assuming everybody now dependent will stay dependent. That is why the estimates for the UB are so much lower than for the invalid’s benefit or DPB. Calculating the way you have described would result in a much higher number.

      Alfie, People who come into the benefit system at 18 stay much longer because they lack educational qualifications, work skills, have grown up in benefit dependent homes, have histories of social problems and CYF involvement,drug abuse,school absenteeism etc.

      To be fair those entering the benefit system at 18 also include young adults with an intellectual disability whose prospects of supporting themselves are not realistic.

      People who go on a benefit later in life generally have a work history and greater chance of becoming self-supporting again.

    8. By John on Sep 15, 2012 | Reply

      As the OECD suggests, remove the minimum wage. Make all forms of home help tax deductable – end of unemployment.

    9. By Joe Blow on Sep 16, 2012 | Reply

      @ Lindsay Mitchell

      And as I’ve told you before Lindsay, these stats you keep coming up with are jigged too. The report doesn’t hide this fact:

      “Had the research considered all people granted benefit as a sole parent, or all people who received benefit as a sole parent over a window of time rather than at a point in time, the overall profile of the group would have appeared less disadvantaged.”

      The point is that a higher proportion of the people assessed at a point in time will have longer histories on the benefit because the people who have short stays on the benefit will be less likely to be on the benefit at the point in time when the survey is conducted.

      Why isn’t the government pushing stats over a window of time rather than a point in time?

      You keep throwing around the headline without getting down to the nitty gritty… just like this government does!

    10. By Lindsay Mitchell on Sep 16, 2012 | Reply

      I quoted that fact so clearly wasn’t trying to hide it either.

      “Why isn’t the government pushing stats over a window of time rather than a point in time?”

      Because the government isn’t overly concerned about people who are on the benefit for short periods. Neither am I. That’s what social security it is for.

      What I’m concerned about is children born onto a benefit, or who end up dependent on one by the end of the year (in 2011, 22 percent of all babies born) and stay there for many years; in poverty, with heightened risk of poor health outcomes and low or no educational achievement, without the example of a working parent or a functioning committed two-parent relationship.

    11. By Joe Blow on Sep 17, 2012 | Reply

      @ Lindsay

      I apologise Lindsay. I didn’t notice that you had pointed out the stats are jigged in your comment above.

      I still think that the government’s over emphasis on certain stereotypes (“subgroups” as they call them) makes it look like just over half are long-term beneficiaries when the actual proportion is much much smaller… I believe that the stats are serving an ideological purpose rather than trying to help the most destitute minorities in our society…

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