Observation (CEACR) - adopted 1996, published 85th ILC session (1997)

Employment Policy Convention, 1964 (No. 122) - New Zealand (Ratification: 1965)

1. In its previous observation, the Committee drew attention to the persistence of a diversity of views between the parties concerned on the question of reforming the labour market. It requested the Government to continue to supply information on the results of the various training and employment programmes and stressed the need under the Convention to strengthen direct tripartite consultations. The Committee notes the Government's full and detailed report for the period ending June 1996 as well as the comments of the New Zealand Employers' Federation (NZEF) and the New Zealand Council of Trade Unions (NZCTU), and the Government's comments in reply to them.

2. The Committee notes that the strong growth in economic activity has resulted in an unprecedented increase in employment (by 9 per cent) and a significant drop in unemployment rates from 9.5 per cent in March 1994 to 6.5 per cent in March 1996 and in the share of long-term unemployed in total figures. The Government indicates that it is still concerned at the level of activity rates which remain lower than those during the 1980s; the persistent high unemployment rate for certain groups, such as the Maori and Pacific Island communities; the increase in the number of people receiving social benefits other than unemployment benefits; and the low productivity gain. Its strategy aims at an open and competitive economy relying on enterprises, price stability, strict budgetary management, flexible labour markets, and reduced taxation. The Government has supplied the Tax Reduction and Social Policy Programme, announced in February 1996, which aims at helping people to get jobs by boosting the available income of households from wages earned. The Government considers that real salaries have tended to increase since 1994.

3. The NZCTU states that it is in fundamental disagreement with the strategy, which does not respond to the requirement of the Convention as to a "coordinated economic and social policy". It considers that the State is withdrawing from applying an investment policy, and the drop in public expenditure on infrastructures and training ultimately threatens competitiveness and employment. In pursuing the sole objective of a stable currency, the monetary authorities are indifferent to the consequences of their decisions for employment. Deregulation of the labour market is resulting in greater dispersal of earned income and a drop in real wages.

4. The Committee requests the Government to continue to supply detailed information in reply to the questions under Article 1 of the Convention on the report form adopted by the Governing Body on the macroeconomic policies in question, attempting to analyse their results in terms of the essential purpose of the Convention, which is an active policy aimed at promoting full, productive and freely chosen employment.

5. The Committee notes the labour market policy measures designed to promote employment for the most disadvantaged groups, such as young people and the long-term unemployed, by concentrating on tailoring assistance offered to individual employment seekers. The Committee notes, furthermore, the modifications made in the various income support benefits to make them a greater incentive to seek work. The NZEF draws attention to two other youth employment assistance programmes in which it has cooperated. Meanwhile, the NZCTU refers to the risk in suspending any benefits for refusing a job offer, which infringes the principle of free choice of employment.

6. The Committee would be grateful if the Government would supply any available evaluation of the results obtained by these measures in terms of people obtaining employment. Furthermore, it requests it to specify how the system of unemployment benefits contributes to promoting full, productive and freely chosen employment in the terms of the Convention.

7. Article 3. The Government states that the Prime Ministerial Task Force on Employment comprises representatives of employers' and workers' organizations, and has led to one of the most extensive public consultations ever. The NZCTU considers that the fact that this is the only example of consultation which the Government can give confirms the unilateral manner in which employment policy was formulated and the Government's failure to comply with its duty to consult the social partners in order to ensure their collaboration in developing this policy. Recalling the conclusions of the Conference Committee in June 1993, the Committee would stress once again the importance it attaches to giving full effect to this essential provision of the Convention by carrying out regular consultation of the representatives of the persons affected and, in particular, employers' and workers' organizations, both when formulating employment policy and when implementing it. It trusts that the Government will be in a position to relate progress in its next report.