CTU Economic Bulletin No. 31

The October 2002 CTU Labour Market bulletin includes Sustainable Business Network, Consumer Prices, Labour Shortages, Trade, International Investment and Work Stoppages.

Comment

Recently the Businesses for Social Responsibility and the Environmental Business Network merged to form the Sustainable Business Network. At the same Conference where this took place, the NZ Business Council for Sustainable Development comprising 42 businesses released a Business Guide to Sustainable Development Reporting. This guide which argues that "what gets measured, gets managed" is an example of a range of initiatives by an increasing number of NZ businesses on issues such as triple-bottom-line reporting, waste minimisation, ethical investment, accounting transparency, business/NGO partnerships, work-life balance, energy use and cultural awareness.

This doesn't mean they have abandoned the economic bottom-line. There will be business failures among such companies but it is interesting to note that the Dow Jones Sustainable Business Index has outperformed the overall Dow Jones Index over several years.

Meanwhile the Ministry of Economic Development will soon release a report that indicates a large majority of firms engage in community sponsorship or donations.

Stephen Tindall at the launch of the Guide to Sustainable Development Reporting suggested that once a reasonable number of firms reach an acceptable benchmark on an environmental standard (such as waste minimisation) the Government should legislate to ensure all firms must maintain this standard.

Unions would support such an approach in terms of standards on the social-bottom-line.

For unions, there are opportunities and risks all bundled up together in this new wave of ethical and multi-dimensional business practice. Many of the issues they are working on overlap with worker and union concerns. Unions are also represented on the Global Reporting Initiative. Where unions are present in the workplace, they are sometimes included by firms as recognised stakeholders.

The Guide mentions unions - but only once. Many of these firms operate as if relationships with their employees do not require collective organisation in the form of a union. No doubt there will be a range of experiences among unions with firms that hold themselves up as "ethical" or "socially responsible".

But it is clear that more and more firms are identifying with a sustainable development approach, and that unions need to maximise the opportunities and minimise the risks.

At its best, this represents a genuine opportunity for workers and unions to work co-operatively with employers that publicly state their aim to operate as best-practice employers in a triple bottom-line context (or quadruple bottom-line if you think the cultural dimension is not covered by the social aspect).

At its worst, it is yet another example of firms using marketing hype in an attempt to boost sales by massaging public perceptions, and using direct communication with staff with an intention to deliberately undermine unions. At the very least unions need to develop our own position on what we expect in terms of a triple-bottom-line process.

Consumer Prices

Consumer prices rose by 0.5% in the September 2002 quarter and 2.6% in the September 2002 year. A full table is attached and the updated CTU Real Wage Calculator has already been sent out to CTU affiliates.

Credit services, electricity, tobacco, alcohol, and personal and health care prices contributed to the quarterly increase. Food prices rose by 0.2% in September and by 1.4% in the September 2002 year.

Meanwhile, officials continue to monitor domestic milk prices to see if they fall in line with international trends. Note also that the weightings used in the CPI have changed slightly with decreases in food and housing and increases in transport, household operations, and apparel.

The CPI uses a "basket" of goods and services and then allocates a weighting to each spending category. The weightings were last changed in June 1999 to reflect the removal of interest rates from the all-groups CPI and now they have changed again from June 2002. The weightings now are: Food 17.21%, Housing 19.63%, Household Operations 15.35%, Apparel 4.69%, Transport 16.90%, Tobacco and Alcohol 8.72%, Personal and Healthcare 8.37%, Recreation and Education 8.56% and Credit Services 0.58%.

Labour Shortages

The Auckland Chamber of Commerce Survey indicates that 39% of businesses are finding it harder to find skilled staff compared with 3 months earlier. The shortages are extending to so-called "unskilled" workers also.

The latest Manufacturing Performance Survey states that "continued shortages of skilled and unskilled staff remain a major constraint for firms".

While there are numerous policy responses to this situation with a mix of improved employment matching, skill development, and migration being the main ones mentioned, in theory wages should be rising at a faster rate as a result of labour and skill shortages.

Wages remain on average 26% lower than in Australia. With the continued prevalence of individual agreements, it could be that employers are generally only increasing wages "at the margin" - in other words for the next individual they hire. It could also be that after over a decade by many firms of trying to hold wage costs down, employers just can't quite adjust to the notion that it is in everybody's interests for wages to rise!

Trade

Exports showed the usual seasonal rise in September and were up by 2.4%. But this was still down 6% on last year.

Imports fell by 4.5% which was not anticipated as they usually rise at this time of year. Imports were however up by 2.7% in the September quarter and 4.1% compared with the September quarter last year. Quarterly exports were down by 7.6% compared with a year earlier.

The higher dollar and lower dairy prices are the main reason. The average foreign currency price of NZ commodity exports rose 0.8% in September but remains 10% lower than a year ago. On a volume basis imports are estimated to have grown by 8% over the year, and exports volumes up by 3.5%. New vehicle imports are up by 20% over the year.

The current account deficit is now calculated at around 3.2% of GDP, up from 2.2% in the March 2002 year and now forecast to reach 4.5% in the March 2003 year.

Meanwhile manufacturers in a NZ Institute of Economic Research survey indicated that 24% of them expected a rise in export sales for the September quarter. One of the positive factors is the demand for NZ manufactured exports by the Australian building sector. And the new Manufacturing Performance Index of 200 manufacturing companies also showed they were relatively buoyant.

International Investment Position

New Zealand's net international investment position as at 30 June 2002 was negative $99.7 billion.

Work Stoppages

Fourteen work stoppages ended in the June 2002 quarter. There were 46 stoppages in the June 2002 year, a far cry from 1977 when there were 562 stoppages, but higher than the 30 stoppages in the June 2001 year. Of the number of employees on strike in the quarter, 57% were secondary school teachers. Twenty-nine private sector stoppages and 17 public sector stoppages ended in the June 2002 year.

This compares with 18 private sector and 12 public sector stoppages in the June 2001 year. Manufacturing sector strikes accounted for 18 of the 46 stoppages compared with 4 in transport and storage, 5 in Health and Community, 5 in Personal and other services and 6 in Education.

Interest Rates

The new Governor of the Reserve Bank held the official cash rate at 5.75%. The next review is on 20th November. A change is unlikely but the key consideration will be assessing the strength of the domestic economy against a fairly slow global outlook.

Meanwhile, in the USA their dollar is falling as inter-bank loans are in some cases down to 1.75%. Most banks have cut interest rates 11 times in the last 12 months. Such low rates are a disincentive to holding US dollars.

Migration

There were 95,400 permanent and long-term arrivals in the year ended September 2002, up 20,700 or 28% on the September 2001 year. In contrast, there were 18,100 or 24% fewer permanent and long-term departures (58,300) in 2002. The overall result was a net migration gain of 37,100, compared with a net outflow of 1,700 in the previous year.

The main contributors to this turnaround in net migration were non-New Zealand citizen arrivals (up 17,200), and New Zealand citizen departures (down 17,600).

There were net inflows from China (14,600), India (6,500), the United Kingdom (5,900), South Africa (3,100), Japan (2,300), Fiji (2,200) and Korea (2,000) in the year ended September 2002. Conversely, there was a net outflow to Australia of 12,800, less than one-half the net outflow of 28,400 in the September 2001 year.

The Census figures show that 19.5% of the NZ population was born overseas. These people come from the UK and Ireland (32.3%), Oceania which is mainly Australia and Samoa (24.9%), and 12.8% from North East Asia.

Review of Fringe Benefit Tax

The Government has announced a review of FBT with submissions due by 13th December. While there is no intention of removing FBT, the Government says there is "scope for improving its effectiveness, simplifying it and reducing the associated compliance costs."

Retail Sales

August retail sales were up by 0.7%. On an annual basis retail sales are up by 8.4%.

Rural Debt

Farmers have been investing improved returns into fertiliser, repairs and maintenance. However, there has been a 40% increase in rural debt over the past three years which probably reflects higher property prices as well as more confidence in getting a return on investment.

But cool weather in the last two months and some signs of drought are likely to combine with lower commodity prices to reduce incomes next year.

Building Consents

Building consents were up by 12.9% in September following a 14.9% decline in August. Excluding apartments, consents were down by 1%.

Number of Businesses

The number of non-farming businesses increased by 24% between February 1997 and February 2002. As at February 2002, there were 281,339 non-farming businesses with GST turnover over $30,000 per year.

These businesses engaged approximately 1,468,000 full-time equivalent employees, which was an increase of 10% from 1997. Small business contributed most of the increase in the number of businesses, with the number of non-employing businesses increasing from 127,774 in 1997 to 177,961 in 2002.

The property and business services industry had the largest number of enterprises in February 2002 (91,584), engaging over 193,000 full-time equivalent persons. The manufacturing industry was the largest employer with approximately 247,000 full-time equivalent persons engaged as at February 2002.

The Auckland region is New Zealands largest in terms of the number of non-farming business locations (108,789), and full-time equivalent employees (approximately 511,000).

For further information contact Peter Conway on 04 802 3816 or peterc@nzctu.org.nz

ANNUAL INCREASES IN C.P.I.

:

- Year to March 1987 18.3
- Year to June 1987 18.9
- Year to September 1987 16.9
- Year to December 1987 9.6

- Year to March 1988 9.0
- Year to June 1988 6.3
- Year to September 1988 5.6
- Year to December 1988 4.7

- Year to March 1989 4.0
- Year to June 1989 4.4
- Year to September 1989 7.2
- Year to December 1989 7.2

- Year to March 1990 7.0
- Year to June 1990 7.6
- Year to September 1990 5.0
- Year to December 1990 4.9

- Year to March 1991 4.5
- Year to June 1991 2.8
Year to September 1991 2.2
Year to December 1991 1.0

- Year to March 1992 0.8
- Year to June 1992 1.0
- Year to September 1992 1.0
- Year to December 1992 1.3

- Year to March 1993 1.0
- Year to June 1993 1.3
- Year to September 1993 1.5
- Year to December 1993 1.4

- Year to March 1994 1.3
-Year to June 1994 1.1
-Year to September 1994 1.8
-Year to December 1994 2.8

-Year to March 1995 4.0
-Year to June 1995 4.6
-Year to September 1995 3.5
-Year to December 1995 2.9

-Year to March 1996 2.2
-Year to June 1996 2.0
-Year to September 1996 2.4
-Year to December 1996 2.6

-Year to March 1997 1.8
-Year to June 1997 1.1
-Year to September 1997 1.0
-Year to December 1997 0.8

-Year to March 1998 1.3
-Year to June 1998 1.7
-Year to September 1998 1.7
-Year to December 1998 0.4

-Year to March 1999 -0.1
-Year to June 1999 -0.4
-Year to September 1999 -0.5
-Year to December 1999 0.5

-Year to March 2000 1.5
-Year to June 2000 2.0
-Year to September 2000 3.0
-Year to December 2000 4.0

-Year to March 2001 3.1
-Year to June 2001 3.2
-Year to September 2001 2.4
-Year to December 2001 1.8

-Year to March 2002 2.6
-Year to June 2002 2.8
-Year to September 2002 2.6

QUARTERLY INCREASES IN C.P.I.:

-Quarter to March 1987 2.3
-Quarter to June 1987 3.3
-Quarter to September 1987 1.6
-Quarter to December 1987 2.1

-Quarter to March 1988 1.8
-Quarter to June 1988 0.8
-Quarter to September 1988 0.9
-Quarter to December 1988 1.2

-Quarter to March 1989 1.1
-Quarter to June 1989 1.2
-Quarter to September 1989 3.5
-Quarter to December 1989 1.2

-Quarter to March 1990 0.9
-Quarter to June 1990 1.8
-Quarter to September 1990 1.0
-Quarter to December 1990 1.1

-Quarter to March 1991 0.6
-Quarter to June 1991 0.1
-Quarter to September 1991 0.4
-Quarter to December 1991 -0.1

-Quarter to March 1992 0.4
-Quarter to June 1992 0.3
-Quarter to September 1992 0.3
-Quarter to December 1992 0.3

-Quarter to March 1993 0.1
-Quarter to June 1993 0.6
-Quarter to September 1993 0.5
-Quarter to December 1993 0.2

-Quarter to March 1994 0.0
-Quarter to June 1994 0.4
-Quarter to September 1994 1.2
-Quarter to December 1994 1.2

-Quarter to March 1995 1.2
-Quarter to June 1995 1.0
-Quarter to September 1995 0.2
-Quarter to December 1995 0.6

-Quarter to March 1996 0.5
-Quarter to June 1996 0.8
-Quarter to September 1996 0.6
-Quarter to December 1996 0.7

-Quarter to March 1997 -0.3
-Quarter to June 1997 0.1
-Quarter to September 1997 0.5
-Quarter to December 1997 0.6

-Quarter to March 1998 0.2
-Quarter to June 1998 0.5
-Quarter to September 1998 0.5
-Quarter to December 1998 -0.8

-Quarter to March 1999 -0.3
-Quarter to June 1999 0.2
-Quarter to September 1999 0.4
-Quarter to December 1999 0.2

-Quarter to March 2000 0.7
-Quarter to June 2000 0.7
-Quarter to September 2000 1.4
-Quarter to December 2000 1.2

-Quarter to March 2001 -0.2
-Quarter to June 2001 0.9
-Quarter to September 2001 0.6
-Quarter to December 2001 0.6

-Quarter to March 2002 0.6
-Quarter to June 2002 1.0
-Quarter to September 2002 0.5