Income slumps for years after job loss: report
Haylee Lewis has been struggling to find a new job after being laid off five years ago.
The 31-year-old worked at Seddon SuperValue for 10 months before being let go when Pak’n Save moved into town.
‘‘The reason I was given was that Pak’n Save was opening and they needed to cut staff,’’ said Lewis, who has spina bifida.
‘‘It has been fairly difficult and I’m also in a wheelchair so it’s limited what I can do.’’
Since 2012 she’s applied for more than 50 jobs with no luck.
‘‘As I got older it became harder and harder to walk long distances so at the age of 12 I got my first wheelchair. It has made my life easier but finding work in a small town impossible.’’
Lewis is one of many unemployed workers having a tougher time finding another job.
Research by Motu Economic and Public Policy Research Trust, a Wellington-based think tank, found being fired or made redundant had lasting negative effects on workers’ future employment and wages.
Laid-off workers were 25 per cent less likely to be hired the following year and their incomes remained substantially lower despite government assistance.
The research followed redundant workers between 2001 and 2010.
Motu senior fellow Dean Hyslop said more training wasn’t necessarily the answer.
‘‘To be honest I don’t think short-term training programmes will solve the problem,’’ he said. ‘‘For older workers, what they’re losing is job premiums they’ve built up over long periods of time with a firm.’’
Although employment rates improved gradually, five years on their employment rate remained about 10 per cent lower than for comparable workers.
If workers found another job their earnings were about 25 per cent lower during the first year, and about 15 per cent lower after five years.
Ministry of Business, Innovation and Employment (MBIE) skills and employment policy manager Hayden Fenwick said in a statement the research was funded to find out if job loss was an issue needing a policy response.
Fenwick said the ministry was assessing policy to tackle the issue of government assistance not covering the financial effects of involuntary job loss. But the issue wasn’t big enough to ‘‘warrant immediate action’’.
Those who lost their jobs during the 2008 global financial crisis were even worse off.
‘‘Displaced workers’ total individual income was about 30 per cent lower than comparable workers during the first year after displacement, and about 20 per cent lower after five years,’’ Hyslop said.
The impact of losing your job became worse for older workers.
Workers under 30 had about 18 per cent lower employment rates, and 20 per cent lower earnings if employed, but there were few longer-term effects.
The research follows the April OECD report Back to Work New Zealand, which found many New Zealanders who are made redundant in company restructures or bankruptcy are forced to take up new jobs with 20 per cent less pay on average, even after three years.