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Thursday, 1 July 2010

Unemployed Youth the Bane of Waikato

By Steve Baron.

Unemployed teenagers walk down the streets of every town in the Waikato, spray cans hidden under their hoodies, usually looking for trouble.

I sat there listening to their derogatory comments as the local Senior Sargent drove past in an unmarked car. They knew who he was and he knew who they were, as he glanced sideways with a glaring eye. Teenagers have an unemployment rate over three times that of the entire work force. With an economic downturn fewer jobs are available, making them more vulnerable to unemployment. This is because of their lack of skills and work experience. Maori and Pacific Island youth face even higher unemployment rates and its a serious problem we need to confront.

Many years ago I found myself in a similar situation, unemployed and looking for a job to
keep me out of trouble. I walked into the Department of Social Welfare. I didn't want the dole, just help to find a job. I was interviewed by this scruffy slob of a bloke who got me to fill out a form, which amongst other things asked me what jobs I preferred. I listed Prime Minister and Minister of Finance, trying to show a sense of humor and motivation. He ripped the form apart and stormed out of the room in disgust. I yelled a few obscene words at him like... Quantitative Easing, Dead Weight Loss & Fiscal Deficit. This bought a gasp from the lady behind the counter who was amazed at my comprehension of economic language!

Well our esteemed Minister of Finance has just increased GST and is now considering
increasing the minimum wage. This gives me great cause for concern. Increasing the
minimum wage, or even having one at all, creates what economists call a 'dead weight
loss', which leads to unemployment. Such academic insights are learned in Economics
101. Raising the minimum wage is great for those who currently have a job but it adversely affects the uneducated unemployed trying to get a job. Put it this way, I'd rather see my child earning less than the current minimum wage, than being on the dole earning just over $100 a week and walking the streets looking for trouble.

There will always be those who argue everyone including teenagers are entitled to a
minimum wage so they can maintain a minimum standard of living. The reality is that these demands keep our youth, particularly those uneducated youth, out of work. They roam around with too much time on their hands and usually end up creating more than their fair share of crime. The government has offered some incentive for employers, by subsidising the wage of youth workers. Youth workers are abundant though and those who need work to keep themselves out of trouble rarely find it under these schemes. Political pressure almost guarantees the government will never remove minimum wage rates. This then falls on the local community, perhaps in association with Police, to find a way around the problem of unemployed youth. One way or another it will cost us, whether we do or don't find them employment.

Steve Baron is an author, freelance journalist and Founder of Better Democracy NZ.

steve@betterdemocracy.co.nz

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6 comments:

David said...

The government has handed over the creation of credit to the private banking cartel. Interest is controlled not by the govt but by the RBNZ another private organisation. When the people wake up to this fact and ensure the govt takes over the creation of credit....only then will the problem of unemployment, health, education etc be eased. As it is, debt financing created by these private cartels are carried by the taxpayers. It is to be clearly understood that banking is just a set of book entries (assets & Liabilities) with the assets being created by the people and offset by the banks (as a debt) thereby balancing the books.

Ian said...

Ian said

The politicians, many years ago, decided that the unskilled have a wage rate (Minimum Wage) and all employers, in the freedom to exercise their judgement, have consistantly shown they are not prepared to employ the unskilled at the rate set by the Minimum Wages Act. Consecutive governments have priced the unskilled off the employment market. THAT IS THE ONLY REASON THERE IS UNEMPLOYED!

I have been on driving jobs around Hamilton city seeing groups of health unemployed males 16-20+ years of age congregating in groups during the day in the suburbs. ALL my driving jobs actually require a fit person to assist with pickups. E.g. plastic recycling collection and bottle water deliveries. Every employer can employ one low skilled person say for or every 10 employees to do basic work. But because of the wage rate does not.

Solution.
That the unemployment rate goes down at say $2 a week.
Added incentive is that an employer can offer employment at the rate equal to the number of weeks unemployed. If unemployed for 25 weeks then starting rate is 25 weeks @ $2 is $50 off the starting wage. (With WINZ making up the difference to the minimum rate.)

Once employed the employer increase their pay at the same rate that dole went down ($2/hr) with WINZ making up the shortfall until the employers share of the wage is back to the minium rate. The new worker never gets less than the dole at any time when employed. And if he/she becomes unemployed again then he/she receives the dole at the rate equal to the rate at the time they were employed with a credit for the time employed. (Eg 25 weeks unemployed with 20 weeks working then unemployment benefit is only less 5 weeks at $2 being $10 off the dole payment.)

The incentive to get work is that the unemployed will eventually lose the dole if they don’t get a job. So the scheme is self-regulating.

And why would this not fly. Too many WINZ staff would lose their jobs in this self-regulating scheme!!

Christine said...

Unemployment is a crippling problem in this country. NZ needs to look seriously at her relationship with China - which is where such a huge percentage of the mundane jobs have gone. It's such hypocrisy to insist on a minimum wage for our citizens and then allow the jobs to be performed in China where people may do the work for little more than a bowl of rice a day. In the meantime we bump up the real cost of the goods to our country by paying our young people the dole, and trying to fight the crime committed by frustrated youngsters denied the dignity of providing for themselves and their families and of making a worthwhile contribution to society.

Steve Baron said...

Why would you build something you need for $2 when you can buy it from China for $1.50 Christine? Just doesn't make sense to me.

Anonymous said...

Steve Baron wrote, why pay 42.00 for something that you can buy from China for $1.50?

Well because it doesn't cost $1.50, it may be the price in China, but in NZ, you have unemployed, crime, depression, social problems,etc.

These all have added costs, that must be taken into consideration when you look at that bottom price.

We know why the Chinese keep thier currency artificially low, but why should our nation have to pay the greater cost for that?

Steve Baron said...

It's basic economics. You simply don't build something that will cost you $2 if you can buy it off someone else for $1.50. Perhaps you would like us to do away with internal plumbing so we can bring the nightcart man back and have people employed in this area? The answer is to find more highly skilled jobs for New Zealanders that pay better money and where we are far more competitive. We simply aren't competitive at producing the type of good China makes. If we do what you suggest we will only get "bugger thy neighbour" policies and world trade will reduce and we will all be worse off.