Tuesday, March 09, 2010

Same unemployment rate - far fewer on dole

Got into an argument over at The Standard again. One of their writers claimed that the unemployment rate when Labour took office in 1999 was nearly double what it is now. Of course that is quite wrong. It was 6.8 percent in September 1999 and it is 7.3 percent now. Another writer then said the first had intended that the number of people claiming the unemployment benefit was nearly double. He is right there. But the situation was still not so very different as the total number of people claiming main benefits was higher then but only by 16 percent (yes I know the population has grown). So, as I have said many times before, and as is now accepted in places like the UK, the sickness, invalid, incapacity, disability benefits (call them what you will) are mopping up those who would otherwise be on an unemployment benefit.

Other reasons that fewer people are on benefits than was the case in 1999 may be;

1/ We are coming off a boom and people have greater assets/savings and are not qualifying for the dole, whereas in 1999 we were still recovering from the deep recession of the early nineties.

2/ Equally families and partners are better placed to support unemployed members

3/ Work and Income are being more stringent in their application of eligibility rules


Anonymous said...

You took careful, dispassionate, reasoned analysis to The Standard and didn't expect to get into an arguement?


Anonymous said...

This has to be structural rorting of the whole economy by Labour - rorts that haven't been undone by National.

Two big reasons:

The biggest reason is that you're not counting huge categories of benefits, notable WFFers. Basically WFF is bribing people to stay off the dole - without WFF the labour market would restructure much more quickly, so there would be lots more people on the dole.

The second reason is that in 1990 we were still living in the shadow of Ruth's cuts - AirNZ, Railways, PostBank were all private, the central government ministries etc were very very lean.
But Now Railways, Bank, Airline and of course all the government departments are once again packed with useless people.

NZ needs about 3-5 years with unemployment ideally up to 15%, certainly at least 10%, to force
real labour market reforms and rebalancing the economy. None of these people should be on any the dole or welfare.

Mark said...

Also the third option partially I suspect, with Work and Income putting those most committed back to work on the UB and the rest of the slackers are moved off on to SB and IB.

If WINZ could get a reduction in UB, SB, IB and DPB that would be a miracle.