jamesz

Where’s the issue?

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One of the two key proposals of the job summit is to institute a nine day fortnight for manufacturing workers. Presumably the idea is to increase the flexibility of working hours and thus increase the number of people in employment.

The obvious question is, ‘what is the market failure here?’ Employers and employees are free to choose their working hours. Employers may employ more people for fewer hours if they so wish, yet they seem not to. Why then would we force people to work fewer hours? Read more

Matt Nolan

Cynical on the job summit: So sue us!

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I realise today that we came off as cynical about the job summit.  Jobs are important, and there are issues that businesses and the economy have to work through.

However, the type of discussion we saw through the Herald today was not the sort of thing that we were hoping for:  The biggest issue seems to be a nationwide cycleway!!

Now before you tell us off for being too negative I would like to point out that we did talk about possible government reactions on February 11th – at the behest of the Inquiring Mind blog.  It can be found here.  Our recommendations were:

  1. Move forward infrastructure when there is a hole in employment,
  2. Improve the structure of taxes (something we will discuss tomorrow),
  3. Integrate skills and education policy with unemployment policy.

Ideas that stick to this theme will be useful – but adding additional, pointless, infrastructure spending or arbitrarily fiddling with structural policies in the economy is not the way to sort things out.  However, as the different members of the job summit gave their speech’s, the useful updates from the Herald site gave us the impression that these were just the sort of policies that are being looked at 🙁

If you believe the “fest” was more successful, then tell us.  Within a few weeks it will be clear whether it was – once we see the set of policies released by both government and big business in response.  I am not holding my breath …

Will Taylor

Cycleway or Hydroslide?

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One of the more interesting ideas to come out of the jobs summit is a cycleway across the whole country, I find this comment on the stuff article to be particularly insightful:)

If you’re looking for ideas with tourist potential, I think a hydroslide the length of NZ has much more potential than a boring old cycle-way… If I was a foreign tourist looking for a travel destination with a difference, I think hydroslide is a better seller than cycle-way.

Also, imagine going over Cook Strait in a hydroslide. You could get out and play with the dolphins. You wouldn’t be able to do that if you had a big metal bike with you.

Matt Nolan

More suggestions …

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And some more …

Other ideas include:
* $10,000 interest free loans to new house buyers;
* Government-funded crisis managers to help companies in strife;
* A fund from the sale of government bonds to add liquidity to the consumer finance market;
* Tax holidays for struggling businesses; and
* The Government offering loan guarantees to small and medium sized businesses.

Why give home buyers money? What is the social benefit from someone buying a house!

Are we actually facing a liquidity constraint in the consumer finance market? I didn’t think we were? Households have decide they WANT to cut back spending given uncertainty.

Guaranteeing loans?? Sure, that is a great way to make sure we get productive investment going 😛

Crisis help and tax holidays are potential goers – although, there would need to be more detail before I could say I agree with it.

Update: At 2.15 Bill English said NZer’s will decide whether this is a “talk-fest” or a “do-fest”. What he means is that NZer’s need to be adaptable because this is a permanent shift. This is true.

However, if the whole adjustment needs to be done by NZer’s, what is the point of this “talk-fest”? Note I call it a talk fest because he is practically saying that the adjustment needs to be done by people outside the meeting, and that policy can’t really help.

Update 2:  From here:

Those in the building industry have asked for subsidies for wood frame homes arguing it will boost both the construction and forestry sectors

The lobbyists are having a FIELD DAY!!!

Matt Nolan

Job summit supporting culls to migration?

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Or at least that was a suggested option in the latest update …

Some of the ideas written on white boards around the conference centre include:

* Encouraging workers to take unpaid leave.
* Easing up on immigration
* Clarifying the carbon trading scheme
* Supporting businesses to develop hedging capability
* Giving tax exemptions for workers upskilling
* Bringing forward capital investment
* Targeting entrepreneurial migrants to invest and/or move to New Zealand

So we have a pile of capacity to provide for domestic spending, but NZ citizens don’t want to spend anymore – how exactly is preventing the inflow of other people who can spend domestically useful? Then they could all start working in export markets and “hey-presto” we’re in a great place.

Even if we were “concerned” about the medium term (we should be) let us remember – New Zealand has a small population. Increasing our population could conceivably provide us with some increasing returns to scale in the long-term.

Furthermore – if we were interested in maximising “global welfare” the case for allowing in immigrants would be unambiguous. However, I’ve noticed that this isn’t how we seem to feel as a nation …

(Update:  As Insider points out “easing up” might mean the opposite of what I assumed.  If that is the case, I would like to note that I am also not a fan of arbitrary increasing inflows – I prefer consistency and certainty surround population growth.  If we came to an international agreement for free international migration that would be a different story again …)

Matt Nolan

Leaving the labour force is not like unemployment …

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This from Laila Harre at the Job Summit:

Ms Harre said people also need to keep in mind the “hidden redundancies” amongst the casual work force.

She said workers in the casual sector who leave are simply not replaced and that amounts to a redundancy.

People leaving jobs and leaving the workforce are fundamentally different to workers who are unemployed – and that distinction is VERY important when trying to understand the market failure surrounding the labour market.

The market failure stems from the labour market not clearing:  There are people who want to work at the current wage, but can’t.  This provides a “surplus” of labour.  If people are leaving the workforce, then the supply of labour is falling, something that helps moderate the size of this surplus.

If a worker leaves the labour market and is not replaced, it is because there is no demand for their position anymore.  Trying to get treat this the same way as unemployment degrads the REAL difficulties associated with actual unemployment – and the fundamental market failure we should be interested in helping to address (if the government is able to).

Policy that attempts to stop people who want to stop working under current conditions from leaving is not helpful.  Hopefully the job summit will not lead to more thinking along these lines …