Think tank targets social cost of jobless youth

On the same day the New Zealand Institute of Economic Research panned the nine-day fortnight its namesake the New Zealand Institute has urged the government to focus on youth unemployment.

The prominent think tank has waded into the debate over New Zealand’s policy response to the escalating rate of joblessness, warning that getting it wrong could have a social as well as economic cost to this country.

In the run-up to this Thursday’s release of unemployment statistics from the Household Labour Force Survey, “it is timely to consider how an environment of rising unemployment should influence the policy choices of this government,” the institute says.

“The government should be seizing opportunities to position New Zealand strongly coming out of the recession in an attempt to restart employment growth and raise New Zealand’s long run growth potential.

“And the government must also be realistic about the potential social costs of rising unemployment and put in place measures to avoid a long-term social deficit.”

It says the opportunity to restart employment growth will come from investing in export competitiveness and expanding New Zealand’s presence in overseas markets.

The focus of this year’s Budget should be on “both the quality and the quantity” of job growth, according to the institute.

It also advises the government to limit the social cost of rising unemployment by refocusing spending to target society’s most vulnerable group – youth, particularly those in disadvantaged communities.

“Youth unemployment generally rises faster and stays at a higher rate longer in a recession,” the institute notes.

In 1991 the unemployment rate for youth aged 15-19 reached 23% at its peak. In 2008 the unemployment rate for that group was still high at 14.3% despite overall employment being around the 4% mark.

“The importance of keeping young people in positive training is already an issue and the potential social costs including rates of youth crime are high if the government does not act to support this group.”

The institute says the quality of skills training is crucial to whether workers make the adjustment to new jobs as the economy recovers.

It also has strong advice on what policy prescriptions wouldn’t work.

“Make-work schemes, boot camps and sub-standard training options don’t help - it needs to be meaningful long-term training that improves qualifications or pathways into increasingly higher skilled work.”

Unemployment will likely to hit hardest in Auckland and the government should plan for the possibility of double digit employment, warns the think tank.

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