Cruel reality of recession
Tens of thousands of us will soon be jobless – but the wave of redundancies will affect some parts of society worse than others.
Half the interior of the clubrooms of the City Rugby Club, in the deprived Whanga¯ rei suburb of Otangarei, is filled with stacks of cardboard boxes stamped with the Ministry of Social Development’s logo.
About 15,000 have been dispatched from here, filled with either food or hygiene products, to families across the north by the Te Hau
Awhiowhio o Otangarei Trust. Fortunately, trust chief executive, Martin Kaipo, is also the rugby club president. Kaipo wears many hats in the community.
Otangarei is an unkempt suburb of low-slung, pastel-coloured houses, almost half of them owned by the state.
The trust’s head office sits in the main parade of shops. From the doorway, operations manager Janine Kaipo (Martin’s wife) eyes up two young men doing a burnout outside. ‘‘Just testing they’ve got enough tread on the tyres,’’ she says wryly.
When we wander outside, a couple of Black Power members give Martin Kaipo what Paddington Bear would call a hard stare. Completely unaffected, he returns the glance, and saunters on. ‘‘See, just like Once Were Warriors,’’ he says drily.
Kaipo points at various buildings the trust leases, and those he has ambitions for. With 50 staff, he says they are the biggest employers in the suburb. A majority were unemployed when he recruited them. Some were in gangs, whom he told to ‘‘to relinquish their past’’.
‘‘There’s a choice: you can be a servant to the trust, or a servant of your cause.’’
Kaipo did the same, many years ago. He was a Black Power chapter president who quit when his brother was convicted of murder. He’s been shot at and had arson attacks, but is unbothered by it, and has built the trust up over almost three decades to provide social services, while studying for bachelor’s and master’s degrees.
A deep recession would affect Otangarei’s people more than most. Compared with the rest of the country, more people here live in state houses, have a lower level of formal education, are in single-parent homes, or have manual jobs.
At the 2018 Census, only 7 per cent had personal income over $50,000 – against more than 31.5 per cent nationally. Some 22.1 per cent of people were unemployed against a national figure of 5.8 per cent. Ma¯ ori unemployment will almost certainly end up at double the national rate. Four out of five people in Otangarei are Ma¯ ori.
This is a community that knows the raw impact of widespread joblessness. As the unemployment crisis created by Covid-19 develops, more communities will come to know that hardship.
And the struggle for people in places like Otangarei will become greater. But Janine and Martin Kaipo aren’t afraid.
‘‘I don’t see doom and gloom,’’ Janine Kaipo says. ‘‘I think this is one time our resilience will come into play and we will help people move. I think new jobs will be created and the Kiwi ingenuity will kick in.’’
Where will unemployment bite hardest? The Government’s multi-billion dollar wage subsidy scheme gives some clues. At least half of all jobs were supported by the subsidy, but a Sunday News analysis zeroes in on the industries where uptake was highest.
Ninety-seven per cent of jobs in rental, hiring, and real estate services, an industry that includes car rental companies and real estate agencies, received the 12-week subsidy.
More than 50,000 jobs in this industry were affected by the circulation of people coming to a halt and the rent protections that were put in place.
The next most heavily-subscribed industry was wholesale trade, in which 93 per cent of jobs (85,000 people) received the subsidy. More than 500,000 jobs across construction (83 per cent of employees subsidised) and retail trade, accommodation, and food services (76 per cent) industries were supported. Fletcher Building, the largest construction materials supplier in New Zealand, received $67m to support 9694 jobs, second only to Air New Zealand. Fletcher has reduced its workforce by 10 per cent. Construction firm Fulton Hogan secured $34m.
In hospitality, SkyCity and Millennium & Copthorne applied for subsidies for more than 4000
This feature is part of a three-part Stuff investigation into the post-Covid unemployment crisis. For more visit Stuff.co.nz. Project team: Steve Kilgallon, Felippe Rodrigues, Carmen Parahi, Lawrence Smith, Sungmi Kim, Andy Fyers and John Hartevelt. workers combined. SkyCity has announced 900 redundancies and Millennium & Copthorne 910 job losses. However, the majority of employers to receive the subsidy were much smaller than the large, well-known businesses.
Small businesses with fewer than 20 employees make up 97 per cent of all enterprises and employ more than 30 per cent of the working population.
More than half (53.7 per cent) are ‘sole traders’ and have no staff.
Even accounting for the differences in scale, businesses with fewer than 20 employees received 54 per cent of the $11b paid out.
Perhaps the least publicised of heavily impacted industries are in the primary sector, where, in April, jobs filled in the sector – which includes agriculture, fishery, forestry, among other industries – fell by 4.3 per cent, a contraction not seen since May 1999. This was more than double the 1.7 per cent contraction across all industries.
Workers in the primary sector make up about 4.5 per cent of the workforce, but represent almost 12 per cent of losses so far. Those workers were 4.3 times more likely to lose their jobs than labourers in the goods producing sector and 2.4 times more likely than those in the service sector.
Silver Fern Farms, PGG Wrightson, and New Zealand King Salmon, of the O¯ ra King, Regal and Southern Ocean brands, are a few of the businesses that received millions in wage subsidies.
First Union president Robert Reid was made redundant twice in the 1980s – after the stockmarket crash, and during the economic reforms of the late 1980s. Reid was working in a car factory in Wellington.
‘‘The free trade policy of Rogernomics meant all the car factories closed in New Zealand. I took my redundancy along with the thousands of others.’’
He found work in the footwear and clothing union. Two years later, the factories closed and more people lost their jobs. Mass unemployment was exacerbated by a tightened welfare system.
Many of those tougher rules continue, though some of the criteria has been temporarily relaxed during the Covid-19 crisis.
‘‘The post-Covid economic situation is going to be worse than anything we have seen. The economic projections of how many people will be losing their jobs and how quickly they are losing their jobs will make this the worst economic crisis we have seen since the Great Depression.’’
Ma¯ ori economist Matt Roskruge says institutional racism will almost certainly rear its head as redundancies pile up. Often Ma¯ ori staff are the first to be let go for whatever reason, he says. They’re disproportionately in more precarious work, have fewer fixed hours, and work in sectors that have been disproportionately impacted.
Ma¯ ori also often have barriers to opportunities, such as fewer resources, more family commitments and less ability to travel for work.
Kaipo says people in Otangarei are resourceful and resilient – they have to be. His trust employs three work brokers, who advocate for long-term unemployed, with the trust providing wraparound services to get them ready for employment. Covid-19 has changed the trust’s focus.
‘‘Our first priority was around the long-term unemployed, but now we’ve shifted our thinking and said ‘we’ve got to get these fellas who’ve been laid off back into work’,’’ says Kaipo.
He calls them the ‘‘new vulnerable’’.
‘‘The good thing about them is they’ve got a willingness to work and we can find that work... We have employers saying all we want is a keen worker, who can work shifts, and those types of fellas fit in straight away.’’
How could the ‘‘new vulnerable’’ – most of whom will not have an advocate like Kaipo at their side – be better supported? Reid was on the Welfare Expert Advisory Group that advised the Government on the future of the social security system. The Government was told it would need to invest $5b a year for beneficiaries to survive.
‘‘[The welfare system] is completely broken and can’t be tinkered with. It needs to be fixed. Our welfare system is not fit for purpose.’’
He says the report is a blueprint to support the country through a period of high unemployment. Part of Reid’s shopping list for a post-Covid recovery includes reforms of vocational training, with greater provision for people to retrain. He’d also like a focus on job creation, including in infrastructure and construction, community environmental jobs such as cleaning rivers and refurbishing marae, as well as a massive housebuilding scheme.
Roskruge reckons some iwi are well-positioned to invest in high-growth opportunities. ‘‘Ma¯ ori companies tend to carry less debt. So there are opportunities for the Ma¯ ori economy to pick up bargains, diversify and be well-positioned for when things inevitably get better.’’
He says tech giants like Google, Facebook and others are picking up a lot of cheap technology companies.
‘‘For Covid19, you’re really looking for pre-existing wealth or where there is capacity to borrow. There’s bargains to be had.’’
While some iwi are in strong financial positions, Ma¯ ori as a whole, are not. The cruel thing about economic shocks, Roskruge says, is those who have got cash can use it to make more. People who find themselves in a more precarious position become worse off. ‘‘It tends to be quite cruel... The recovery rewards people with resources to invest in the recovery.’’ Both Reid and Roskruge agree it’s time for a change of perspective on the unemployed. The advisory group learned also about the Non Acceleration Inflation Rate of Unemployment – an optimal unemployment rate that helps with a natural job flow, Reid explains.
‘‘What really annoyed me was people who were unemployed were being told it was their fault... but our economy requires there to be unemployment.
‘‘If the goal of the economic part of the Government, Treasury and the Reserve Bank, is to have around about 4 to 5 per cent unemployment, why is the Government and community being so mean then to people who are unemployed?
‘‘In fact we should be giving them medals because they’re helping the economy.’’
Just a job would do for Mikaere, whose real name we have chosen not to use. Any job. The tall, 16-year-old, is along for the ride with Trust youth worker Tommy Wihongi, who is delivering hygiene packs to families.
Mikaere is effectively in Wihongi’s care, part of a mentorship scheme for youth on bail. He’s due back in court on Thursday, when he will petition to be allowed to move to Auckland.
Mikaere would like to become a youth worker like Wihongi because ‘‘I’d understand everything they are going through, because I’ve been through it too’. But he can’t see his future in Whanga¯ rei.
He’s been in state care since he was two, and over the past five years, never in the same place more than six months.
‘‘His family doesn’t want him,’’ says Wihongi. ‘‘My family don’t want me,’’ echoes Mikaere.
Earlier, a man in a Black Power T-shirt had driven, stony-faced, past us as we did the deliveries. ‘‘My uncle,’’ says Mikaere.
He’s a nice kid. He’s clearly got the odds stacked against him. And Wihongi wants the best for a kid he says has so much potential. ‘‘We tend to fall for these young fellas,’’ he says.
If he’s allowed to go to Auckland, Mikaere wants to work. ‘‘Just something that will put dinner on the table for me and my partner, so I don’t wake up in the morning knowing I am going to be hungry today.’’