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New jobs law still lacks realism

Thu, 31 Mar 2011

Employers have welcomed new laws, operative tomorrow, that make it easier to hire workers, reward them and reduce red tape while doing so.

This is encouraging but is modest in the extreme. As David Lowe, employment services manager for the Employers & Manufacturers Association (Nothern) says, the 90-day trial employment periods, which will now apply to all organisations, is.

“… a victory for commonsense as the evidence is clear that under trial periods employers have hired sooner than they otherwise would have, and the smaller employers to whom it previously applied have used the provision responsibly. We note the Australian union movement recommended their government adopt a 90 day trial employment period.”

But it is unlikely to undo the damage of Labour’s abolition of youth rates, which is having a much more insidious effect on longer-term employment rates for those entering the workforce.

OECD data shows New Zealand’s youth unemployment is a higher multiple of the adult rate than any other comparable country except Sweden.

The longer someone is kept out of the workforce, the less well-off they will be in the long run.

The University of Canterbury’s Eric Crampton in his excellent study of the issue, quotes US research that shows where minimum wage rates differ in various states, those where the rate is higher have lower earnings later in life:

“These persistent effects suggest that kids who fail to get jobs because of high minimum wages always stay a few steps behind their counterparts who gained early experience.”

It should be unnecessary to add that latest Statistics NZ figures, from 1978-2009, or any period within it, show productivity (by whatever meaure) was highest in those sectors where unionism is low – communication services, agriculture, and finance and insurance – and lowest were unions are strong – construction and manufacturing.

Multi-level ministerial advising
While researching the spread of state power, and its natural tendency to become bigger, more inefficient and costly, I found some interesting admissions from the organisation that protects the privileges of public servants.

In a revealing submission to Graham Scott’s so-far unreleased review of spending on policy advice, Public Service Association national secretary Brenda Pilott says papers submitted to cabinet ministers required up to eight layers of signoffs, leading to “paralysis and stagnation.”

She also notes that the senior policy managers, who alone front up to ministers, do

“not know the content as well as the advisers who wrote them, who are not present. This can be frustrating both for the Minister, whose questions are not fully answered, and for the adviser who then has to work/rework on the basis of the report-back from senior managers.”

Ms Pilott goes on to explain that the lowly policy writers have no contact with the ministers they are supposed to be serving and this is because the “gatekeepers” are more interested in keeping things sweet for the minister:

“…this led to filtering so advice becomes what the Minister ‘wants to hear’ rath than free and frank advice.”

This is Yes, Minister! territory and I have personally been told by ministers just how frustrating it is to have squads of advisers turning up at meetings to discuss trivial issues and then face another merry-go-round before anything is decided.

The Economist has analysed what can be done about bringing the state sector under control in an excellent survey, "Taming Leviathan." It is instructive that countries from China to Sweden are taking government out of a range of activities from education and welfare delivery to heath and superannuation.

Safer or sorrier?
The fuss over the continuing saga of trying to bring Japan’s stricken nuclear power station at Fukushima under control is fading and it has allowed a more balanced perspective of risks to emerge.

The scare headlines have gone but food boycotts imposed on key ingredients for sushi rolls will probably stay for a while ¬ no country’s politicians lose public support by banning another country’s products if there is a well organised lobby.

New Zealand was one of the few western countries not to be panicked by a fear of “radiated” food from Japan. And no wonder. New Zealand food exports to Japan far exceed what we buy from them (mainly soy sauce, pickled ginger, seaweed and wasbai for sushi bars and restaurants).

Japanese authorities were rightly indignant at the bans, though the protection of their own patch from imports is an eternal disgrace to its political and trading system.

The dangers of eating Japanese food were greatly exaggerated. According to scientist Bill Durodié, a fervent opponent of the precautionary principle and now based in Singapore, says:

Eating the spinach non-stop for a year (perish the thought) would give you a radiation dose equivalent to about one CT scan. Drinking the milk endlessly would be even less of a problem. In fact, you would be sick of eating and drinking these products long before any of them could make you sick from radiation poisoning or cancer.

Durodié goes on to argue that this mis-match of weighing risk – that it is better to be safe than sorry – has come at a “tremendous cost” to society – “many leaders are driven more by events than by principles, and populations that are used to having their prejudices pandered to rather than challenged.’

Indeed, this irrational fear of nuclear radiation has prevented sensible solutions to storage of nuclear waste. In the New York Review of Books, Jeremy Bernstein explains why the lack of a long-term storage solution is at the bottom of the problems in Japan – not the release of fast-decaying iodine 101.

Film festival fancies
With minimal fanfare, another film festival has snuck up ahead of the mid-winter bonanza one. This one is aimed at showcasing some big titles headed for the art house circuit while giving others exposure they aren’t likely to get elsewhere.

I draw your attention to six that are on my must-see list: three American documentaries of public policy interest and three dramas, two of the French.

Waiting for “Superman” is a study of the US public education system and why it is stymied – wait for it – not by lack of funding but teacher union intransigence. Director David Guggenheim homes in on an example where a private academy, paying good teachers for performance, has done wonders in the poorest area of Harlem.

Freakonomics is a collection of four mini-documentaries based on the best-selling populariser of economic truths and myths by Steven Levitt and Stephen Dubner. Among the contributors are Morgan Spurlock (Super Size Me), Heidi Ewing and Rachel Grady (Jesus Camp) and Seth Gordon (King of Kong).

Another contributor to Freakonomics is Alex Gibney, the best of the big US documentary makers if not the best known. His Client 9: The Rise and Fall of Eliot Spitzer is self-explanatory and received much higher praise than Freakonomics.

From France comes Of Gods and Men, considered unlucky not to receive that country’s nominated for the Oscars, and Potiche (literally, “trophy wife”). The former, about monks in Algeria threatened by Islamist terrorists in the 1990s, has impressed all its viewers, while Potiche turns on Catherine Deneuve taking over her husband’s business after years of being neglected. She gets her revenge by reversing his policies.

In Rabbit Hole, Nicole Kidman gives one of her best dramatic performances as a grieving mother who with her husband is coming to terms with the loss of their child. Based on the acclaimed stage play by David Lindsay-Abaire, who also wrote the screenplay.

The festival runs in Auckland, Wellington and Dunedin. More details are here.

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New jobs law still lacks realism