It is not the nation that pays the price - it is the individuals

In 1992 I became unemployed at a time when the national unemployment rate was nearly 11%, twice what it is now. So I was not alone. The Māori unemployment rate at that time was well over 25%, meaning one in four Māori workers were unemployed. While the rest of the country was struggling to come out of a recession, Māori had been in an actual depression. Many economists choose the figure of 20% unemployment as a major signifier of an economic depression. At that time the Māori unemployment rate was over 20% for five years, almost as long as the great depression of the 1930s. The National government of the early 1990s was not sympathetic. Finance minister Ruth Richardson’s austerity budgets resulted in cuts to unemployment and sickness benefits as if it was our fault for being unemployed or unwell. I was aged 30 with a wife and two young children with an 11% mortgage. I had to wait until the following year, but I took the opportunity to start my education pathway and, while I am well paid now, there are some things I don’t forget. I am grateful that I live in a country that provides an economic safety net, but I still remember with bitterness the “mother of all budgets” that targeted those with very little, so that later on, tax cuts could be given to those who had a lot more. The National government’s policies of the time also affected the wages of working people through the Employment Contracts Act. This allowed my father’s employer to turn up to his factory and state something like, “before we start negotiating we just want to tell you that there are thousands of people who want your jobs. This is what we are offering — sign it or go”. Currently unemployment is at 5.3% which is the highest level since 2016. While Pākehā unemployment is only 4.2%, Māori unemployment is 10.5% and the Pasifika rate is an even more concerning rate of 11.6%. Of greatest concern is youth unemployment with over 20% of Māori youth currently unemployed. However these aren’t real numbers — they describe statistics. They don’t count the real lives of people who are struggling. If we look at actual numbers there are 171,000 people unemployed today, with many many more underemployed, those looking for work but unable to find it. One hundred and seventy-one thousand people unemployed is a huge number and if our unemployment rate continues to rise to 6% we will have more unemployed people in New Zealand than the 194,000 during the dark times of 1992. One of the dangers when unemployment rises past 6% is that the downward pressure on everyone else’s wages accelerates. The far right becomes louder in its call for the economy to be more flexible in our employment practices and usually add a lie as the justification, saying that we need to have a more flexible employment “so that wages can rise”. I have yet to meet an employer who wants me to have greater flexibility so that they can pay me more. Act New Zealand has a long-standing aim to deregulate labour markets, to not just cut regulations but create this so-called “flexibility” that leads to lower wages. We already see this in the gig economy, where many workers for companies such as Uber end up working for less than the minimum wage. We then see pressure on other workers such as cleaners and care workers to be declared contractors rather than employees, giving employers greater flexibility to pay employees less. For that is the aim of our current economic system, not how can we do things better, but how can we do things cheaper by lowering the wages bill. Unemployment is a complex issue. Until recently the Reserve Bank had to report on the country’s Maximum Sustainable Employment level (MSE). If unemployment gets too low it places upward pressure on wages that may rise faster than the economy’s ability to handle it, thus causing inflation. This is what happened after Covid when our unemployment rate got down to 3.4%. While there were other factors such as supply chain issues that contributed to higher inflation, the Reserve Bank’s method to keep inflation down was to increase interest rates, to lower spending so that unemployment figures would rise. Our high unemployment rate is a cost the nation pays to keep its inflation rate down. Except that is a lie isn’t it? It is not the nation that pays the price — it is the individuals who end up unemployed, along with their families. They pay the price, they prop up our lifestyles all the while being looked down on for their misfortune. Dr Anaru Eketone is a professor in social and community work at the University of Otago. He writes the He Kōrero — A Conversation column for the ODT.

It is not the nation that pays the price - it is the individuals

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