Employment and Income Trends and Economic Development Issues

Palmerston North Poverty Action Group

(a post - Hikoi initiative)

19 October 1999

The Chairperson and Members

Low Income Sub-Committee

Palmerston North City Council

Employment and Income Trends and Economic Development Issues

This report is to update the information in the report on the Changing Nature of Work, Employment and Income Support dated 8 September 1999.

A number of reports have been released since that report was written and they raise important issues and a number of related issues were discussed at the last meeting of the Local Employment Committee on 6 October.

Levels of Pay

A brokerage agency for tradespeople is operating in the city and the going rate for tradespeople is $8.50 / hour. This is half what most people consider a reasonable rate to be. This would go a long way to explaining the shortage of tradespeople in the city.

Salary rates are also reported to be low and suppressed with little recognition of the need for reward for increased levels of responsibility.

These low rates are a function of the reputation the city/region has of a flat, depressed economy with high unemployment.

Also because of this, a number of real jobs are being replaced by subsidised or unpaid positions, jobs for redundant workers often involve down-skilling and skilled workers are being replaced by lesser skilled workers

Income Levels in the Region

According to Statistics New Zealand in its report on the New Zealand Income Survey, June 1999 Quarter, the average weekly incomes for all people aged 15 years and over were lowest in the Manawatu-Wanganui region at $357, $21 lower than in Northland, the next lowest. The Wellington region had the highest at $523.

This goes a long way to explaining why graduates leave the area in seeking employment, the same applies to those with greater skills and experience.

Changes in jobs available

The number of travelling sales rep positions is declining as the area per rep increases.

The position of PA or Personal Assistant/Executive Secretary has almost gone as an occupational category, with the "executive doing their own word processing, with one Executive Secretary servicing a number of Executives if one is employed at all.

Changing attitudes

With more companies operating in the region owned and controlled from overseas, and the contractual nature of most appointments, including from overseas, the knowledge and understanding of the local community and economy is falling and similarly the commitment to the city and region. Managers tend to be more interested in their own career advancement than that of the company or its staff. This also is a world-wide trend for the same reasons. Good examples of this are given in the attached article for the Financial Time, "Tribal Workers".

A further development of possibly greater concern is that the courses in Business Management at Massey University appear to give the students little appreciation of the people dimension of business operation and development. This further supports the increasing emphasis on the personal career development of managers and executives rather than the development of the company and its staff. This has significant implications for the relationship between companies and the community.

The Plight of Young Workers

A good expansion of the issues facing young people is a recent article for the Boston Globe (attached) - the dominance of low paid, insecure Mc jobs.

Fewer students from low-decile schools are going on to tertiary institutions. In just four years the number of students going to university from schools ranked in the 1 - 3 decile range has declined by 23% and polytechs have had a decrease of 17%. Figures for students from wealthy areas have increased at universities by 25%. University of Auckland pro vice-chancellor Anne Salmond says the trend is worrying and that most developed countries have solutions like scholarships in place for low-income students. She says that current policy does not support a 'knowledge economy'. Salmond: "We cannot afford a situation where access to tertiary education becomes the domain of those in higher socio-economic areas."[1]

A recently released report on youth unemployment in Manukau by Ernst & Young calculates that the direct and indirect costs of each unemployed person under 25 years of age in the region amount to $58,760.

As youth unemployment is twice the average it is currently around 15% with that for Maori and Pacific Islanders likely to be twice that again.

The Living Conditions of the Poor

A study carried out by the Anglican Family Centre in Lower Hutt on 400 families[2] selected by AC Neilson from 10 cities, including Palmerston North found that

· a quarter of these households pay 50% or more of their net income on rent or mortgage. Almost 45% pay more than 40% of their income, and 73% pay more than 30% on housing costs.

· 64% of these households were in debt, 36% had debts of $1,000 or more, and 20% had debts of $2,500 or more

· 49% had been unable to provide a meal for their families at least once in the previous three months, because they could not afford it. 28% had not been able to provide four or more meals in the same time period

· 47% had at least one member of their household who suffered from a chronic illness

· 56% had household members who did not visit the doctor when they needed to because they could not afford it

· 56% had members who could not afford to pay for medicine or a prescription at least once in the previous year

· 40% were living in over-crowded houses

· 42% received support from their families

· 24% used foodbanks and other community support.

A report about to be released by the New Zealand Network against Food Poverty[3] states that:

· At least 4% of New Zealand households nationally, and up to one third of households in the lowest income areas, do not have access to the variety of foods they need for a healthy life.

· Urban foodbanks estimate they supply up to 10% of households in their areas, including people who are in work.

· This is putting the health of poor people at risk, with limits on food purchasing, and significant nutrient deficiencies recorded in the recent national survey, mostly for vulnerable population groups.

Budget advisors throughout NZ are struggling under the increased workload according to the Federation of Family Budgeting Services. President Robyn Evans says their 154 affiliated services have had 40,000 new clients this past year, an increase of 30%. Debts of clients exceed $56m and Evans says these debts are not large credit card or hire purchase arrears, they are the basic living costs of rent and power. Evans says cases are becoming more and more time-consuming as volunteers become involved in negotiations between clients and creditors, as well as interpreting consumer, tax and social welfare legislation. The Federation includes 1,600 budget service volunteers.

The Palmerston North Financial Freedom Trust reports a doubling in load over the last 12 months.

Council's Employment Policy

Part of the employment policy is that the Council produce an annual report on employment issues in the city, including performance measures set out in the policy ie: growth in the number of jobs in Palmerston North and an analysis of trends in employment; specific areas of job loss and growth, part-time and full-time work.

It is disappointing that this has been absorbed into "Our City Now" before even the first one has been produced.

A further policy is that: The Council will monitor developments and trends in employment and unemployment in Palmerston North. This will include future employment opportunities and training needs.

"Monitoring is about knowing what is happening in the local community and the trends that are likely to impact upon it."

Council's Economic Development policies

"There is a strong link between economic development and employment"

"Overall, the employment growth figures for 1991-1996 show that Palmerston North has underperformed the national economy …"

"Employment growth figures for the two year period 1995-1996 show that Palmerston North has underperformed the national economy in almost all significant sectors."

Policy area 1. Council will proactively support existing businesses and in the creation of new local businesses and attract new businesses.

Policy Area 2. Council will actively encourage the diversification of the City's economy …

Economic Development Strategies

Business Development: Retention and growth of existing businesses, creation of new local businesses and attraction of new businesses remain an important priority…

Infrastructure and Strategic Investments: The Council recognises that one of its core functions is the provision of adequate infrastructure and strategic investments to attract new businesses and families to the City …

The Questions

What are the characteristics of the businesses already in the City?

· Are they locally owned and operated?

· Are they making a profit?

· How many of what types of jobs do they offer?

· How have these changed?

· What are the projections for the future?

What sort of business do we want to grow and or attract to the City?

· That are sustainable into the future?

· Locally owned and controlled?

· That are likely to stay here?

· That offer full-time jobs?

· That offer well-paid jobs?

What are the best types of economic development which should be encouraged in the city?

· Locally owned and operated

· Sustainable

· Likely to stay here

· Provide full-time jobs

· Pay good wages and offer good conditions including for training.

What are the infrastructural investments that can be made to encourage such developments?

Recommendation

That this report be received for information.

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Ian Ritchie
for the Poverty Action Group.

NOTES: