Not easy finding work for young

An uproar from the Opposition greeted Prime Minister John Key's policy announcement that 16 and 17-year-olds would receive stricter monitoring if they were on a benefit. Labour and the Greens say young people need jobs, not welfare reform. In a two-part series, business editor Dene Mackenzie investigates where the jobs will come from and who will pay.

Prime Minister John Key last weekend laid down a strong policy challenge to New Zealand in general, but Opposition parties in particular, when he announced welfare reforms.

The Government intended to amend the Privacy and Education Acts to require schools to tell the Government when 16- and 17-year-olds leave school during the year. That information on those young people could be shared between the Ministries of Education and Social Development.

Most political pundits were expecting National to announce a plan of benefit reform before the election and now, most believe the focus on youth is the first step in a series of changes to be announced.

So far, Mr Key has announced that the Government is going to fund community and other organisations to provide comprehensive and concentrated support to teen beneficiaries.

"They are vulnerable, many [of them] have a child. They typically come from disadvantaged backgrounds and many have complex and multiple problems.

"While some of them have supportive parents or other good role models in their lives, many have grown up with little access to positive adult guidance."

They needed a competent adult to help raise their aspirations, he said.

The plan is for some essential costs, such as rent and power, to be paid directly on the young person's behalf. Money for basic living costs like food and groceries will be loaded on to a payment card that can only be used to buy certain types of goods and cannot be used to buy things like alcohol or cigarettes.

A limited amount of money will be available for the young person to spend at their own discretion.

The blogs were full of criticism and support. The criticism came from young parents on a benefit who said they were being treated like children. People pointed out that it was illegal for 16- and 17-year-olds to buy cigarettes or alcohol. But when did that stop anyone?

The Otago Daily Times regularly reports on stings of outlets selling both those products to underage customers.

The support came with examples of people telling Work and Income they were paying $150 a week in rent when it was only $100 and pocketing the change, landlords saying they had been stung for rent because tenants disappeared leaving arrears and young people giving excess benefit cash to others to buy booze.

Labour spokeswoman on youth affairs Jacinda Ardern and Green Party co-leader Metiria Turei were both critical of the Government's attempt to address youth unemployment.

"Our young people don't need welfare reform, they need jobs," Ms Ardern said.

Mrs Turei said the welfare changes would do little to help disengaged young people unless accompanied by meaningful job-creation policies and increased training opportunities.

The ODT decided to ask a range of people about the creation of jobs, where they could come from and who could pay for them.

The answers, while predictable, threw up some interesting concepts.

JACINDA ARDERN
Ms Ardern suggested changing monetary policy to better support exporters was one way to help create sustainable jobs. She was vehemently against the concept of make-work schemes or fixed-term jobs of about six months that returned people to the scrap heap.

The forestry industry had recently lost 1000 jobs almost solely because of the high value of the New Zealand dollar, she said.

While acknowledging that global forces were at work, Ms Ardern believed better monetary policy levers could be put in place to control the dollar.

She also wanted greater incentives put in place to encourage more private research and development in New Zealand. While governments had contributed to R&D, there had been little private investment because of a lack of incentives. Increased investment would create high-tech, high-wage jobs for young people.

"Over the last three years, so much money has been spent and still the level of unemployment for 15- to 19-year-olds is 27.6%, the highest on record. We haven't achieved a lot."

As expected, Ms Ardern also said Labour's "fairer tax system", which included capital gains tax, would shift investment away from property and into the productive economy.

"We need to start talking about fundamental change rather than creating make-work schemes or unsustainable jobs."

METIRIA TUREI
The Greens will release the party's job package on August 31 and, while some details remain under wraps, Mrs Turei has already announced some of the policy in Dunedin.

Building more state houses throughout New Zealand would instantly increase employment in the constrained building industry and increase the skills of young people while the country awaited the rebuilding of Christchurch, she said.

The home insulation scheme could be extended. It had already created 2000 jobs.

"Not only are homes a lot warmer, we have created employment through the scheme."

The Government should not be the sole creator of jobs, Mrs Turei said. An investment by private enterprise was critical to reducing youth unemployment.

The Greens favoured a "green energy bond" which would be issued instead of partially selling state-owned energy companies. The money would be raised from New Zealanders and used to expand New Zealand businesses involved in sustainable technology and create jobs.

Mrs Turei said a long-term economic plan was needed for job growth but she believed things like building state houses, instead of selling them, and the green energy bonds would have an immediate effect. There was also a shortage of houses in Auckland and if those houses could be built, much of the job shortage for young people would be solved.

While acknowledging that solving the skill shortage for employers while increasing the skills of young people was not easy, Mrs Turei said it was important to say that the Government did not need to do everything. It could use its substantial asset base to encourage job growth.

Cuts to state funding for training places had hurt the construction industry. Without those cuts, New Zealand would have seen New Zealand construction companies employing New Zealanders.

JOHN SCANDRETT
Otago-Southland Employers Association chief executive John Scandrett is firm in his views that jobs are created only by the private sector.

"If a job gets created by the public sector, or by a charity, then it's funded either by tax dollars or donations that were both initially created by the private sector."

To ensure the private sector created the maximum number of jobs, everyone had to do their part to ensure barriers were not inadvertently put in the way.

Barriers could include things like unnecessarily high taxes, too much regulation and difficulties getting consents.

Those were all things the Government could do something about in a job creating supporting capacity, he said.

"The Government should concentrate on removing the barriers that get in the way of the private sector creating jobs."

For a business to be successful and sustainable, it needed to be competitive. It would not stay in business if it could not successfully compete against other firms producing the same goods, Mr Scandrett said.

Firms usually gained a competitive edge from: developing proprietary technology; being able to access people with relevant skills; developing their own firm-specific skills; being close to sources of relevant raw materials; being close to large markets for those goods; having experience in producing those goods; ongoing competition itself, sharpening the firm's ability to compete.

Most of those things had to be developed over years, within a competitive environment, he said.

A government could not set up an "instant business" and expect it to be able to compete successfully against established, skilled well-resourced companies.

"Governments can only deliver valuable supporting capabilities," Mr Scandrett said.

JOHN CHRISTIE
Otago Chamber of Commerce chief executive John Christie raised the issue of people staying in their jobs longer for a variety of reasons, including realising they did not have enough money to retire on or just enjoying working for longer and feeling productive.

However, that provided fewer opportunities for young people.

The "cold hard facts" were that New Zealand needed more jobs.

The limited labour market was causing pressure at both ends, he said.

Mr Christie believed that small and medium-sized enterprises (SMEs) were the largest creators of jobs. While many people believed large corporates created most of the jobs, it was the SMEs taking on one or two staff members when needs arose.

Those workers were more likely to be kept on through hard times than when a large company restructured, and jobs with SMEs were more likely to be long-term, sustainable positions.

The Government had a role in policy setting, helping with trades training and perhaps training subsidies to encourage employers to take on unskilled staff.

"Employers are more likely to take a risk with a young unskilled worker if the Government is putting some money in the pot.

Employers will take someone on if they are confident it is a sustainable proposition. They don't want to take people on and lay them off six months later."

One of the things the Government needed to address was its overseas borrowing. By borrowing up to $380 million a week on average, the Government did not have the luxury of subsidising too much at any one time, Mr Christie said.

SCOTT MASON
Accountant and business consultant Scott Mason says there are two key components to generating job growth, especially in the SME environment - opportunity and confidence.

Opportunity captured both that there was demand for whatever product or service the person would be directly or indirectly contributing towards and that there were skilled people available.

"This is by no means a given in every industry but it is fair to say that the economic indicators suggest there are plenty of opportunities coming our way."

There were natural ebbs and flows. The primary sector was "on fire", despite the high dollar. As a business adviser, he was seeing plenty of opportunities.

However, all the opportunities available could be put in front of those making the decisions to employ, but if they did not have the confidence to pursue them, the opportunities would be lost.

Confidence was, in some ways, the opposite of risk, he said.

Business relied on the Government to create a positive environment, whether by ensuring fair workplace laws, ability to create change through the Resource Management Act, fair tax systems and talking the "good talk".

External forces beyond the control of businesses could affect confidence and undermine or enhance the willingness to take risk. Turbulent markets, exchange rates and the availability of finance played their part, Mr Mason said.

Internally generated confidence also played a part, especially if the business was experiencing some momentum through landing a contract or even just having a positive chat with friends.

- dene.mackenzie@odt.co.nz