Nat's welfare policies #2 : "Stickin' it to the mentally ill."

On page one of their welfare policy background paper, National complains that there has been a "steady increase" in the number of people receiving the sickness benefit since Labour came to power.

In reality, the number of people on the SB has only grown by 5,000 since 1999. As a percentage of total working age population, the SB has gone from being 1.2% in 1999 to ... 1.2% of the population in 2007 - so no increase at all.
page 38 of the 2007 Labour Market Report and page 1 of the background paper at the National Party's semi-official blog.

The claim of a "steady rise" in the number of people on invalid's benefit also has little substance. In 1999 1.7% of the working age population were on the IB, compared to 2.4% in 2007. It should be noted however that this figure was incrementally rising throughout the 1990s under National. We have an aging population, and as people get older, they're more likely to suffer from an incapacitating illness. So the small rise that has happened during Labour's tenure would probably have occurred had Labour retained National's policies.

So for starters, the entire rational for National's proposed welfare reforms policy (an "out of control" welfare state) is invalid.

Another interesting point .... National sees it important to note that 38% of SB recipients and 30% of IB recipients are on the benefit because of psychological or psychiatric conditions. As if mental health issues aren't real, and don't affect people as physical illnesses do.

Indeed, on page 4 of the document it is stated that National
will require plans (of people on invalids and sickness benefits) to be focused squarely on preparing people for work. But I hear you say, what if someone suffers from schizophrenia bi-polar, or some other potentially severely debilitating mental illness? Wouldn't puuting them in that situation be potentially dangerous?

On this point, National offers some soothing words, claiming that:

people who are seriously ill or disabled will be treated with compassion and will never face any kind of work obligations.

But on the same page it is pointed out that The (Social Security) Act also allows Work and Income to require a person to get a second opinion from a doctor agreed between the parties or, failing that, a doctor nominated by Work and Income.

National sees the "increase" in the number of people on a benefit due to mental health issues as a problem, and they'll appoint their own Tory doctors (rather than regular doctors) to decide which mentally ill people should be forced to meet "work obligations" (they will be required to spend at least 15 hours per week in employment, training, or job-seeking activities). If the mentally ill person fails to meet any of these requirements three times in a twelve month period (i.e. they have an "episode" etc) they will be without income for 13 weeks. Needless to say, this holds the potential for some very nasty outcomes.

The standard's piece on this issue is also well worth a read

Nat's Welfare Policies #1. Single Parents: "kick 'em when they're down".

The National Party has just announced that, should it be able to form the next government, it would require DPB recipients .... to spend at least 15 hours a week either in employment, training or job-seeking activities once their youngest child turns six.

The outcome of this will be that stressed out single mothers and fathers with multiple children, will have more pressure added to their lives, and that pressure will be passed onto the dependants in the household in negative ways.

The Labour Party-led Governments have offered huge incentives for welfare-dependant parents to get into work, such as Working for Families (which effectively removes all tax on work for these people), and heavily subsidised day care for pre-school aged children (things National would have never introduced). These polices, along with a buoyant labour market have lead to a huge decrease in the number of people receiving the DPB, and now, less than half of the people who currently receive it, have been doing so for over a year.

So Labour has offered the carrots, and it's working for everyone. Now National wants to step in with a stick. This fits in with the Nat's historical approach to welfare policy, which has been to cut the level of benefits available and/or tighten the eligibility criteria for benefits (they did both in 1991).

Successive Labour-led Governments have retained National's benefit reforms, and have continued to increase benefit levels according to CPI, rather than index them to average earnings, or something similar. So equality isn't a consideration in either main party's welfare policy any longer.



As a result, people on a benefit are surviving on a bare subsistence income, and are excluded from participation in mainstream society. So it's no surprise to find out that virtually no one remains unemployed for long if they have a choice. In fact, page 82 of the 2007 labour market report shows us that only 0.5% of the working age population have been unemployed for more than 6 months.

So, the people that have been on the DPB for an extended period, are likely lacking options. They have good reasons, and probably don't enjoy their position very much. National's policy of compulsion is going to be forcing people who are already enduring a situation of considerable hardship, into a position that's so undesirable, they choose their current position over it.

As justification for its attack on solo parents, National decries NZ's low sol-parent employment rate (44%), whilst celebrating the success of the Nordic countries, which have comparable figures of 70-80%. See page 7 of the background paper . What National doesn't reveal is the fact that, these results have only been achieved through a generous welfare state, which provides very cheap day-care ($50 per-week in Sweden) and long periods of paid maternal leave (13 months at 80% of total normal pay). These of course are policies that National wouldn't dream of introducing, so it's a bit hypocritical for them to be citing these countries as success stories.

Overall, it's classic National Party "kick 'em when they're down" stuff.

[edit: it should also be noted that this policy, along with National's proposed reduction in employment rights would result in a wage cut because it will force more people into the labour market i.e. if you're forced to work at least 15 hours per week you're receiving virtually no DPB anyway, so this is about kicking people off the DPB.

This will cause an expansion of labour supply (particularly in the low-skill, low-wage sector). Contrary to what Key says, it won't "lift people out of the poverty trap", it will lower wages for all low-income workers).]

National seeks referendum on MMP, and a return to "elective dictatorship".

The Dom-post recently reported that the National Party is seeking a referendum to find out whether the public wants to continue with MMP, or move to another system.

Publicly, John Key is saying ... "I don't think they'll go back to first past the post.", and that the public will probably vote in another "proportional system".

But given past efforts by the right's backers, aimed at opposing power-sharing systems, we can expect that if National puts our electoral system on the chopping block there will be a huge campaign for a return to a "two party" system. After all, it was this system that allowed National to rule alone in 1993 with just 35% of the popular vote, while the two major left-wing parties combined received 52% of the vote.

Further, because a party could rule alone, it could pursue its own agenda, unchecked and unmoderated by other parties.

These two aspects of the system combined lead to the situation in the 1990s, where a small group of people within the National Party cabinet were able to push through very publicly unpopular, and radical legislation such as the Employment Contracts Act and sale of NZ rail (neither of which were foreshadowed in their 1990 election manifesto).

It was these aspects of the First Past the Post system that caused academic Andrew Mulgan to refer to it as an elective dictatorship.

It would be a huge step backwards for New Zealand's democracy if we were to return to this system, and despite the soothing words of John Key, one would be foolish to believe that an agenda doesn't underly his intention to hold this referendum. Yet another good reason for us to stay clear of a National-led government.

The New Right Revolution: Business Profits Soar, Wages of Ordinary People Stagnate.

Well, the graph says it all really. According to the available data, the "Gross Operating Surplus" (profits) of New Zealand's businesses grew at an average rate of 10.65% between 1994 and 2001, while "Median Personal Income" (the income of the "average" New Zealander) grew at just 0.19% per annum between 1991 and 1996, and 2% between 1996 and 2001.


This massive reallocation of resources from the pockets of ordinary New Zealanders to primarily large corporations, which are in many cases foreign owned, was a direct result of the National Party's Employment Contracts Act, which saw wage increase levels plummet, and profits soar.

Labour has closed the gap between growth in corporate profits (average growth of 5.1% between 1999 and 2005) and growth in the incomes of ordinary people (average growth of 3.24% between 1999 and 2006), but they're still out of balance. To put more money in the pockets of ordinary New Zealanders, and less in the pockets of foreign owned corporations, Labour needs to keep on increasing the strength of work rights legislation, particularly in the areas of minimum wage, and union bargaining strength.

Certainly, we don't need National's proposed Industrial Relations Legislation, which will weaken work rights, driving wages down, and corporate profits up.

Stand!

During a political campaign period it's easy to get caught up in a negative attack mindset, and forget the real reasons for being involved in furthering humane political ideals. But in fighting a monster, one must be careful to not become one.

So, with this in mind, I’ve been listening to this song recently, and have found that it really epitomises the positive approach to fighting for a better world. Aside from that, it's generally uplifting so is great when you're not feeling the best.

The lyrics aren't always audible, so I'll post them beneath the vid.

Stand
In the end you'll still be you
One that's done all the things you set out to do
Stand
There's a cross for you to bear
Things to go through if you're going anywhere
Stand
For the things you know are right
It s the truth that the truth makes them so uptight
Stand
All the things you want are real
You have you to complete and there is no deal
Stand. stand, stand
Stand. stand, stand
Stand
You've been sitting much too long
There's a permanent crease in your right and wrong
Stand
There's a midget standing tall
And the giant beside him about to fall
Stand. stand, stand
Stand. stand, stand
Stand
They will try to make you crawl
And they know what you're saying makes sense and all
Stand
Don't you know that you are free
Well at least in your mind if you want to be

Everybody
Stand, stand, stand

Kiwis are overworked says new study.

Well, the Department of Labour has confirmed what we all knew. New Zealanders are working ever longer hours, and now, one in three full time employees are working over 50 hours per week.

The cause of this can be traced back to the National Party's Employment Contracts Act 1991 - which destroyed unionism in NZ (union membership dropped from 55% of the workforce in 1990 to be just 20% in the late 1990s), and consequently workers have a relatively weaker bargaining position, and are less able to withstand demands by employers to work longer hours. In fact this is an international trend, in countries with lower union coverage.

The Employment Contracts Act also did away with overtime pay for working long hours, weekends and nights, meaning that it became more attractive for employers to seek increased output/profits through requiring employees to work longer hours, rather than investing in productivity-increasing capital/machinery. As a result, our productivity growth ($ output/labour hour) has been falling behind Australia's over the last 20 years, resulting in slower wage growth. Contrary to what National has been saying, the wage gap between NZ and Australia isn't due to us being over-taxed, in fact we are the third lowest-taxed developed country on the planet (if you count Mexico as developed), and are in fact taxed far less than Australians are.

If we really want to enjoy a good lifestyle with high wages and reasonable working hours, we need to demand that employers pay a higher wage rate for every hour worked in excess of the 40 hour working week that we were promised in 1938 by the first Labour Government. Otherwise we'll just end up working longer and longer hours, and have no time left over to enjoy what we have earned with our hard work. This law change was proposed earlier this year by Labour, but was dumped after alarmist claims by the National Party, that it would be limiting peoples' choice to overwork (in fact they would still have that choice, they would just be paid more).

National's 2008 Industrial Relations Policy. A return to the Employment Contracts Act?

Well National, in acknowledgment of its potential unpopularity, has with little fanfare, released its industrial relations policy. Predictably, they're trying to paint it as moderate by equating it with the current "Employment Relations Act", but a closer look reveals that this is far from the case.

As a policy statement it's very bare bones (another of their "one page wonders"), and the devil of course would be in the detail of the eventual legislation.

It does however contain several noteworthy features:

1) Ostensibly the worst aspects of the Probationary Employment Bill have been done away with (mediation is to be available to workers who have been unlawfully treated).

However, it's difficult to say just how useful mediation would be under this proposed regime.

For instance:

During the trial period, either party may terminate the employment relationship for performance without a personal grievance claim being brought.

So a worker may be ostensibly fired for "under performance", but because there is no requirement for due process (official written warnings, based on valid reasons like persistent lateness), an employee may be fired for having the wrong sexuality, the wrong religion, the wrong fashion sense, or refusing to carry out unpaid overtime or unsafe tasks. There will, in practice, be no protection against arbitrary dismissal.

In a recent post I showed that this aspect of the Nat's IR policy will mostly impact on the poorest and most vulnerable workers. I also explained how the lack of enforceable employment rights would lead to "downward wage pressure" for the same workers who were hammered last time National were in power.

2) National will allow union access to workplaces with an employer's consent, which cannot be unreasonably withheld.

This is where the detail will really count, as a union's access to a workplace, will be entirely dependant on what National defines as "unreasonably withheld". My bet is that, in practice, an employer would be able to deny unions access under the flimsiest of pretexts (i.e. Employment Contracts Act 1990s). This of course is aimed at making it harder for workers to improve their wages and conditions of employment through organising collectively. The net result will be lower wages and higher profits for foreign businesses - which will mean more of New Zealand's wealth disappearing overseas.

3) Restore workers' rights to bargain collectively without having to belong to a union.

This will mean a return to the bargaining arrangements of the 1990s - where an employer could arrange a lawyer (or another representative) to draw up a collective agreement. Here's an extract from my thesis which show's what this meant, and may mean in practice:

that the trade union role in negotiating employment contracts was not recognised with no provisions for the registration of unions as the legitimate representatives of workers (Deeks et al., 1994: 100). As such employers weren’t required to bargain with their employee’s union if they chose not to. Employers were able to appoint independent representatives such as lawyers, as bargaining agents for employees, and there were many instances where employers would just pressure employees into revoking the authorisation of their chosen representatives by way of a lockout (Danin, 1997: 202). Furthermore, an employer could legally prohibit a barging agent from seeking authorisation to represent any employee through disallowing them access to the workplace (Danin, 1997: 222). Also, unless the employer allowed it, unions weren’t able to enter workplaces in order to police the contract, so being a member of a union simply became pointless for many employees (Dannin, 1997: 223).

So in practice this will likely mean that employers will be able to force employees to accept the terms of employment drawn up by a representative of their choosing.

4) Require the Employment Relations Authority to act judicially in accordance with the principles of natural justice, including the right to be heard, and the right to cross examine before an impartial referee.

National wants to turn the Employment Relations Authority into an expensive, lawyer driven court, making it harder for employees to have their rights enforced, and easier for employers to deny the rights of workers through a war of financial attrition. The provision which will ....

Allow injunctions and important legal questions to be heard in the first instance in the Employment Court, and allow a general right of appeal to the Court of Appeal....

.....will have the same effect. It was this expensive, lawyer-driven approach to dispute resolution which meant that only half as many employment disputes were received and disposed of every year during the late 1990s compared to now. So in practice this will mean that employment rights become a privilege of the wealthy.

The Standard covers the rest of this issue excellently (as usual) and Jafa Pete has also completed a comprehensive analysis.

National Prepares to Make War on the Poor

In the previous post, I looked at what the practical legal implications of the "Probationary Employment Bill" would be, should National come to power. In this post, I look at the likely victims of this legislation, and just as I had suspected, it's NZ's poorest and most vulnerable.

According to the 2007 Labour market report (pg 56) 466,000 people are employed in the Retail Industry, and the Hospitality Industry combined. This amounts to 23% of all people employed. Now, the vast majority of these workplaces employ less than 20 people. For instance, in 1990 the Service Workers Union (cleaners etc) covered 12,000 work sites, with an average of only 7.5 workers each - and there's no reason to believe this would have changed much since then. Also, in 1990 the Northern Distribution Union (primarily active in the retail industry), represented 7211 workplaces that employed 5 staff or less and only 166 workplaces employing 16 staff or more.

So it seems likely that most of the people working in these industries would be subject to National's proposed legislation. These are the people who had their wages hit hardest by National's Employment Contracts Act in the 1990s. In fact the average hourly wage rate in these industries went from being 75% of the national average in 1991, to just 65% in 2005.

Also, as can be seen in the graph below, wages in these industries fell in real terms, during the decade of the 1990s, and in the case of the hospitality industry, never recovered, whilst wage growth in the retail industry has recovered marginally since 2002.




Sources: 2005 and 2007 Labour Market Reports, pages 78 and 124 respectfully.

To adjust for inflation the RBNZ CPI calculator was used.

Workers in these industries are also primarily employed on a part-time basis (around 60% of them work less than 30 hours per week). So these workers have the lowest weekly incomes of all New Zealand's workers (see part 6 of the 2005 labour market report). They are the poorest and most vulnerable workers in NZ, and National wants to take all their employment rights away, so they can be more easily exploited by business owners.

New Zealand already has one of the highest levels of income inequality in the developed world (see page 59 of the social report), and National proposes to make this situation worse by eroding the wages and working conditions of the poor even more. Without any enforceable employment rights, unpaid/underpaid work and general denial of statutory employment rights would become common place in these industries, where labour costs are estimated to be around 70% of non-stock spending costs - Pringle (1996: 94) New worlds and fresh choices? : continuities and discontinuities in industrial relations practices in New Zealand’s retail grocery supermarkets.

But what else did we expect from the National Party?

National's 90 day Probationary Employment Bill. The Best Employment Rights Money Can Buy?

In the middle of 2006, the National Party succeeded in getting a private member's bill drawn, called the "Employment Relations (Probationary Employment) Amendment Bill". It provoked huge protests all around the country, and was eventually thrown out due to lack of support within parliament.

Now the National Party has made this Bill part of its 2008 election platform. This is a major issue because it has the potential to affect around 20% of workers (people who are employed in workplaces with less than 20 employees).

The aim of the legislation is to give small business owners the right to hire people for a three month period during which, the employer:

... may at any time ... terminate the employee's employment forthwith.

Under the current law, in most instances the employer must issue several formal warnings before proceeding with dismissal, and the warnings must have valid grounds - i.e. persistent lateness. Under National's proposed law an employee may be sacked for any reason whatsoever, as the employer would not be required to explain the reason for the sacking. This of course leaves employees open to all sorts of abuses. For instance, an employee could be sacked for the following reasons:

1) Refusing a demand to grant sexual favours for an employer (breaches the Human Rights Act 1993).

2) The employer doesn't like the religion or sexuality of the employee (Once again, Human Rights Act).

3) The employer owes the employee wages in arrears, but doesn't wish to pay those wages (breaches the Wages Protection Act 1983).

4) The employee refuses a demand from the employer that they work unpaid overtime (Wages Protection Act 1983).

5) The employee decides to join a union (breaches the Employment Relations Act 2000).

6) The employee refuses to undertake a work-related task that is hazardous (Employment Relations Act).

Now currently if an employer does any of these things, the employee is entitled, under the Employment Relations Act, to seek a free mediation session (the average waiting time for this service is three weeks), through which they will most likely be compensated for being unlawfully treated.

Under National's proposed law, an employee would not be entitled to seek a free mediation session in order to see their rights protected (section 69AD.3). Instead the employee would have to pursue a civil court case, which would mean many thousands of dollars in lawyer's fees, a wait of months (instead of weeks), and an intimidating formalised court setting (in fact for numbers five and six there would be no resolution process available because the ERA would be invalidated).

All these added barriers to justice would mean that employees, not being able to afford the process in terms of money and/or time, would simply give up. We know this because, during the decade of the National Party's Employment Contracts Act (1991-1999), employees had to rely on the employment tribunal (which involved legal costs of around $5,000 per day) for employment dispute resolution. Consequently, only 5,000 employment-related cases were resolved per year, whereas now twice as many such cases are received and disposed of every year.

Through re-introducing an expensive, legalistic approach to employment dispute resolution, National would in effect be removing all employment rights for many thousands of workers.

Edit: jafapete and the standard have also done some interesting work on this subject.