Matt Nolan looks at unemployment and calls for policies that help match employees skills to employers requirements in a positive way. Your view?

Matt Nolan looks at unemployment and calls for policies that help match employees skills to employers requirements in a positive way. Your view?

By Matthew Nolan*

The unemployment data over the past year has been especially nasty.

Not only has the unemployment rate been rising, but the proportion of the unemployed who have been so for over six months has also climbed.

Long-term unemployment is a vexing social issue, which is particularly costly for the individuals affected but also imposes costs for the whole of society.

Although it might not be a problem we can necessarily “solve” it is one we should recognise – and an area where we can try to reduce the costs to those affected.

Much has been made about New Zealand’s high unemployment rate; with large groups of people screaming at the government and Reserve Bank that something must be done to get people into jobs – either by shutting off their benefits or “creating jobs”.

In truth, unemployment is an unfortunate side-effect of the fact that the world changes through time and that sometimes things go wrong, and no amount of screaming at or about beneficiaries is going to change this.

If, as a society, we really want to help those who are struggling we need to actually pick up on who these people are – and why they are suffering.

One of the lessons from the reforms of the 1980’s and early 1990’s was that it wasn’t brief periods of unemployment that caused harm, it was long-term unemployment.

In 1987 not only was unemployment low, but the proportion of people unemployed who were out of work for six months or more (long-term unemployed) was only 27%.

Following a series of unfortunate events, unemployment rose over 11% by 1991 and a massive 44% of these people were long-term unemployed. Furthermore, this proportion remained above its 1987 level until 2003, as employers were relatively unwilling to take a chance on people who had been out of work for a sustained period of time.

The costs of long-term unemployment

These periods of long-term unemployment come with costs.

The most obvious cost is the harm to the individual looking for work – remember someone who is unemployed is saying that they are looking for work and haven’t been able to find it, a situation that extremely disheartening and upsetting.

However, even moving away from the emotive costs, there are cold hard monetary ones as well.

When a person is out of work for a considerable amount of time some of the inherent skills they developed (or would have developed) in work will be lost. This deterioration in human capital implies a loss in the value that can be created.

Furthermore, employers will be more suspicious of potential employees who have been out of work for a considerable amount of time – making it less likely they would “take a punt” on hiring someone, and if they did they would be less willing to risk using them for certain tasks.

In these ways, long-term unemployment comes with significant personal, social, and economic costs.

In order to get an idea about where we are now, we can look at what proportion of the labour market has been made up by long-term unemployed people over the last 25 years. Let’s call that the long-term unemployed rate and draw a graph (the data is from Statistics New Zealand):

So how does where we are now fit into this discussion about long-term unemployment?

Since the global financial crisis struck, the number of long-term unemployed people has risen. In the 2012 calendar year, the average long-term unemployed rate rose to 2.0%, its highest level since September 2000.

Encouragingly, this is still low relative to what New Zealand experienced through the 1990’s, but it is starting to reach a level where we should pay attention.

As we can see from the above graph, the jumps in long term unemployment occurred during recession in New Zealand.

Long term unemployment is primarily a problem when the domestic economy slows and firms become unwilling to hire.

As a result, far from an indication that people are being lazy and that we should tighten benefit conditions (which at times seems to be the current government’s focus) this is an indication that people are willing to work, but cannot seem to find appropriate jobs either during or in the years following an economic crisis.

A period of elevated long-term unemployment is likely to occur again, irrespective of government policies, with the Reserve Bank reporting that matching in the labour market has deteriorated.

The way to understand this is to think that there is currently a gap between the skills and abilities potential employees have (both perceived and real) and the skills and abilities the employers require.

Where are these matching problems especially bad?

One area where this matching problem is especially concerning, and where this recession is as bad or even worse than the early 1990’s is in the area of youth unemployment.

As we mentioned earlier, one of the big costs for both the individual and society is the loss of skills – or the failure to gain skills – due to unemployment.

With the annual average unemployment rate of 15-19 year olds over 25% (and 20-24 year olds facing an unemployment rate of over 13%) there is a significant group of young people who are unable to build up their human capital at present, due to the lack of available work. This reduces their future ability to earn income and to join in as an active member of society.

Given that both of the issues of long-term unemployment and youth unemployment are problems of matching and gaining skills, as a society it may well make sense to help support people when finding their way into work.

Furthermore, it would make sense to work with businesses to articulate the skills and abilities they require, giving potential employees some information regarding what sort of training they can, and should, get.

The recent push by the government to boost apprenticeships, combined with the long standing policy of Work and Income New Zealand to help match employees skills to employers requirements are a positive way forward.

And following an economic crisis of the size and scope of the one we’ve recently experienced, and the gradual but persistent shrinking of the manufacturing sector, more of these sorts of policies are required to limit the harm for those who find themselves at the wrong end of the labour market.

Right now this isn’t the same sort of national disaster as the problem of long-term unemployment was in the 1990’s.

Let’s ensure it doesn’t become one, by focusing on helping people train and find roles that suit them and the demands of employers, rather than concentrating on putting the foot down on beneficiaries.

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Matt Nolan is a senior economist at Infometrics. You can contact him here »

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Attitude problem + social welfare problem + a wee bit lack of jobs problem
 
Arrived in NZ on mid-2003 as an international student and have always been empolyed since 2004.
 
So far, all media are critisizing the problem of lack of jobs. The real problems are actually the attitude and the social welfare system.
 
Randomly pick a unempolyed youth, ask her/him how many years of education she/he has done, 9 out 10 would tell you that they have been doing none since form 6 or lower.
 
Likewise, the empty tummy pupils are hungry not all because of short of money, as we are all short of money. The key problem is their parents are lack of responsibility and obligation to raise their kids well. I know ppl with much lower income but their kids with much fuller tummies.
 

In the first two lines you identify four problems.  However you fail to recognise that the fourth is one of the paramount reasons for our current unemployment problems.  That is immigrant job-takers.
 
Levels of education acheived in NZ are far greater today than at any previous time.  Many of the unemployed actually have Bachelors or higher degrees.  Yet unemployment is at persistent high levels.  Why?
 
Because there has been a focus on immigration to boost NZ's growth rate, rather than a focus on truly growing the economy sustainably.  This has allowed immigrant job-takers from less developed countries to flood the country taking jobs at lower pay rates than locals would accept.
 
This might be good if you want your hotel rooms or offices cleaned cheaply, or to earn bigger profits from your fast food stores, but it doesn't help locals move ahead.
 
I have nothing against highly skilled immigrants in areas where there is huge demand for their skills.  I also have nothing against job-creators coming here to create jobs.  I also would have nothing against wealthy persons coming here provided they support themself and draw no benefits (incl healthcare etc).
 
The problem is that 25 years of failed "growth by immigration" policies has left an underclass of locals now virtually dependent on state assistance.
 
Focus needs to shift towards truly growing the economy through innovation and developing new business ideas.  New Zealand has huge natural resources in terms of land and water that can further be developed, it has huge potential to process those primary products and develop further businesses around the manufacturing and innnovation required for that.
 
Wage earners contribute but are ultimately takers.  Innovators and business creators are givers.  The economy does not need arrival lounges filled with more takers...

I find your reasoning laughable!
 
Immigrant job takers makes under class locals being virtually depandent on state assistance.
 
I bet that underclass locals would still be viertually depandent on state assistance even without immigrant job takers.
 
It is the problem of lucrative and easy-to-cheat welfare system as well as some kinda attitude passed on by generations.
 
Also, do you mean immigrants from less developed countries are below minimum wage labours? I'd urge you to have a look at NZ immigration Act and looks closely on the conditions for being a skilled migrant or business/investment migrant.

Unemployment in NZ in the 1970s was under 1% for most of the decade.
 
The official number of people unemployed in 1959 was 21 people.  Yes 21 people.
 
What's gone wrong??
 
A lack of bottom-up business innovation.
 
A lack of investment in job creation.
 
A surplus of migrants dependent on taking jobs rather than creating them.

1970 vs 2013.
 
Do you realise how dynamic the world has become nowadays? How can you compare something from 1970 with something in 2013, not mentioning a huge wave of deregulation during 1984 to 1986.
 
The reason that migrants can take those jobs is because locals cannot.
 
Take a look at ChCh. Govt would very very much LOVE to handle jobs to the unemployed but businesses cannot use them because of no/short of skills.
 
Would you blame the lack of skills for some locals on migrants as well?

Much of the work in ChCh requires no skills or skills which can be quickly acquired.
 
Locals can easily get jobs here often at strong pay rates.  There is no immigration need for anyone but specialists.
 
1970 was not long ago, and remarkably NZ did not look significantly different apart from the nationality of the average Aucklander.
 
Immigration has bought very little economic benefit to NZers except for those lucky enough to own property where foreigners want to live (in Auckland) and not rebuy in the same area (ie very few people).
 

http://www.immigration.govt.nz/NR/rdonlyres/6E0E1E3B-0029-4146-8631-9C89...
 
The above shortage list is not long by your standard, perhaps?
 
http://www.newzealandnow.govt.nz/working-in-nz/practical-info-visas/job-...
 
Check up the long and mid term shortage.
 
http://tvnz.co.nz/business-news/christchurch-looks-abroad-boost-worker-n...
 
Have another look here.
 
Why do not write JK a letter to shut the border and fencing off all Foreigners?
 

xing, since your a newbie you probably don't know I'm a ChCh based property developer/investor.
 
There are jobs available, but the only real shortage is for engineers and project managers.
 
My plumber has been laying off staff because of the lack of new construction (and because most repairs don't involve much plumbing).
 
Even my drainlayer only describes the situation as "improving".
 
There is work, but there are plenty of locals capable of working as painter/decorators and plasterers with only a few weeks on the job training.
 
Gerry and John are out of touch in the need for workers.  Knowing Gerry personally I can assure you that he does have a tendency to be overly ambitious...

Them really was the days Chris, at least from employment perspective. Employees had a genuine sellers market.  One sunny Friday in September '73 I decided to go get a job since I had 3 months up my sleeve until my next contract.  Drive out to Wiri, drive into a couple of places. The personal officer (I think that's what they called them then), showed me around, enthusiastically extolling the virtues of a career with them. I said I'd think about it and get back to them. Then I went to Nestles and the guy took me into the Nescafe plant just as 200kg of freshly roasted coffee beans tumbled onto the cooling tray. mmmmm
 
Started the next day. You could do as much overtime as you wanted. Down side was when your gross pay exceeded about $260pw Muldoon snouted out 66c for every extra dollar.
 
If you introduced them to a new worker who stayed 3 months they paid a bonus of $150, a useful amount back then. That must have been the peak of the employment boom. By the time I left Auckland unemployment had gone from zero, to 500; first oil shock. Even 4 years later national unemployment was still a tad under 2%.  It was a great time for Mr Joe Average and one of my most heartfelt desires is that such time will occur again before I start daisy pushing.

Zing: as a recent blow-in, your patronising and condescending posts are hard to take

Who is Zing????
 
Truth is not always pleasant, I guess.
 
I am sorry if I hurt anyone's feeling.

Well said iconoclast.

Chris J - I think there is an attitude issue as well.  Some people with Bachelor or higher refuse to work within other areas.  This is an attitude issue because I know several young people who decided to take any job to get any work experience they could. They still look for work in the field they trained in while working but they are prepared to get out there and give it go.
 
I know of employers who had unemployed people turning up for interviews and the unemployed had only one interest and that was in getting the piece of paper signed that would inform WINZ they had been trying to get a job. If you turn up in your PJ's or face full of attachments for a front of house type of job then you are really not serious about a job.
 
I think it is stupid to be allowing so many immigrants in when we have unemployment at very undesirable levels. However the immigrants do want to work and many have made an enormous committment to come to NZ so their drive and determination is far higher than many on the benefit.  NZ needs a committed work-force.
 
I don't see unemployed people bouncing out of bed harrassing employers for a job on a daily basis. If I had someone repetively knock on my door for a job I would create one for them because I know they want to work.
 

Chris, at what point do you consider an immigrant to be a NZer, ie number of years contributing (paying taxes etc)? 10, 20, 50? I'm just wondering because depending on the (subjective) duration you pick, you might find that a very big chunk of NZers are in fact immigrants. Which may explain why the Census form doesn't have a "NZer" check box but a whole lotta other choices (eg, NZ European is what I think you'd probably have to check?).
 
Also, you might want to take a look at immigrant population per country http://en.wikipedia.org/wiki/List_of_countries_by_foreign-born_population. If you then take a look at the unemployment rates per country http://en.wikipedia.org/wiki/List_of_countries_by_foreign-born_population, it doesn't look to me like there's an obvious correlation between the two (eg Switzerland, Kuwait, Singapore, very high percentage of immigrant population, very low unemployment).
 
And by the looks of it, it's not just immigrants who may cause people to lose their jobs http://www.stuff.co.nz/the-press/business/8376054/Labourers-lose-jobs-to...
 
So anyway, there may well be a problem with immigration policies in NZ (it wouldn't be the only, or main problem though!) but with all due respect, your conclusions about the apparent evil of (many) immigrants may be a bit skewed. 

Elley, once people are here it has largely become irrelevant whether they are a recent immigrant or a "New Zealander".  (BTW I am did fill in NZ European - which is what NZ born Europeans have always called ourselves - but it was a bit surprising that there wasn't a European option in the Census question as in previous years, as someone born in Britain for instance wouldn't have traditional called themselves a NZ European, they would have just called themselves a European).
 
Back to my point.  Too many migrants without the skills, money or resources to do anything but move to the largest city and search for some arbitrary employment is just completely pointless.  Allowing seemingly endless tides of these kinds of people taking up roles in clerical work, cleaning, driving, or worse still - unemployable is just complete lunancy.
 
I understand your case is quite different to that (moving to the regions (Oxford is sort of the regions!) and specifically skilled as well?).
 
We need to seriously ask ourselves - why let people in unless there is a net benefit to the country?  Especially when we don't have the housing or employment to support them, unless they are bringing that employment.
 

 

OK, so your main issue is with unskilled migrants taking up unskilled Kiwis' jobs. In another post you ask "What's gone wrong??". I would like to suggest that maybe NZ hasn't adapted to the changing world as well as it should have.

 

What I mean by that is that it seems to me that there are 2 main skills in NZ and virtually nothing else: builders & farmers. Now, there is nothing wrong with being a builder or a farmer but what I find staggering is the number of people working in those areas or wanting to work in those areas (arguably unskilled or low/middle-skilled areas) compared with say, the technology sector. It's a sector that has been booming in the period you are looking at, during which things went wrong, but NZers can't meet the demand in those areas. Why doesn't NZ take advantage of having a great number of unskilled migrants willing to do their unskilled jobs (which is what they apparently do anyway) to create incentives for young people to go into areas that are not only in demand the world over but pay well and also (hopefully) have a future?

 

Just take a look at Seek and Trademe Jobs: a search for IT jobs on Seek today will give you 2256 vacancies in IT in NZ. The same search for building jobs gives 644 results and farming 97 results. On Trademe jobs, if you click the "6-figure jobs" link http://www.trademe.co.nz/jobs/six-figure-jobs, over a third are in IT. Not that IT is the only option but you have to admit that these days it is a necessary evil and a tool used by pretty much everybody one way or another (and therefore a large demand for people who can create those tools).

 

So why does there seem to be such a push for young kids to go to work, unskilled and with no hope of ever getting off the minimum wage (see recent unemployment figures for 15-16-yrs-old, what are they even doing there)? Or to burden themselves with a Uni loan to end up with a master's degree in Fine Arts or similar that is very unlikely to translate into a reliable job.  I've read ads in the local paper and school newsletter encouraging young kids to quit school and train in the trades, as if it was the be all and end all of education.

 

Maybe if there was instead an emphasis for the young generation to train in sectors actually in need of high-quality employees, there'd be a better match between people looking for work and the actual jobs out there and that'd help unemployment rate? And it sure wouldn't hurt NZ to become a bit more of a tech place.

 

As for my case being different to that of an unskilled migrant - well, at the end of the day we did buy a house in Chch initially (on Jan 1st 2003: contributed to the housing boom?) and now own a lifestyle block in a beautiful area (a piece of prime NZ?). On the other hand we do have specific skills and significant experience in the tech sector. With the skill shortage in this area in NZ, I guess that in that respect us coming here hasn't hurt anyone. Well I hope anyway.

Elley, you are obviously the ideal migrant.  However my point is take a look around what's happened in Auckland.  Low end jobs are filled with recent migrants and their children - that's a problem.  Why take ANY unskilled english as a second language migrants with no money??  It makes no sense when there are so many of the same already in NZ struggling to find work.
 
In regards educating NZers to take higher skilled jobs.  That is not possible - many people couldn't work in IT if their life depended on it even with years of training.  Many others wouldn't want to.
 
Immigration has just become too much of a hot potato with everyone trying to be politically correct and not offend anyone from Wogistan.

Yes Chris, I get where you are coming from. There's a similar issue in France, especially in the south, except it's with Arabs not Asians (although over there, they probably get more often accused of taking advantage of the welfare system than of taking the jobs).
 
I am wondering if the immigration issue will sort of fix itself though. NZ is becoming less of an attractive destination I think (low incomes, housing and cost of living have increased a lot in 10 years, negative publicity caused by the EQ etc) and it may be that not so many will want to come over. Or maybe it'll be worse instead - those coming will be the really desperate ones, who may not be the ones who actually benefit NZ.
 
As for English as a second language, I can't deny my accent (not trying to get rid of it anymore, apparently it's sexy) but you have no idea how annoyed I get with people on message boards like this one who can't make the difference between "their/there/they're", "your/you're" and "it's/its" to name just a few. I am aware that my English is far from perfect but the worst offenders with these particular examples seem to be native speakers ;) 

Also, I wasn't suggesting that everybody goes train in IT. IT is just an example. I just find NZ's economy very unbalanced, and too reliant on the primary sector. Diversifying a bit wouldn't hurt. And I do believe that at least a proportion of NZers could work in higher skilled jobs if they'd been supported/oriented towards different career paths rather than what seems to be the traditional building/farming option.

It's not a bad suggestion though to go train in IT if you have half a brain. The pay is up in the top 10% and for some reason the flow of graduates and trained people in IT hasn't increased in the last decade or so as you would have expected, so consequently there is a skills shortage worldwide. Get in!

SGV - If rumours circulating Chch at the moment are true then their could be 2 to 3000 people around the country made redundant in the next 3 or so months. Most of this group work for one large corporation.  And most of this group sit at desks behind computers.

I set up a consultancy which is now in USA, NZ and Aussie. Not in IT however uses many quat./processing apllications. Unless you have inherent ability, complete dedication and a passion for you area you will not make it against others, especially on the world stage. 
Is it then really surprising many want to be builders/real estate agents and work on the farm?
They are happy to work on becoming competent..they want money and  a life. People will take an easy ride if it is an option.
Otherwise you have to find the opportunity in other fields, stumble on the right mentor, then work on not being held back...then you will see if you have the ability against others, handle the deadlines, learn to deal with stress, politics and finally the ability to influence others and win recognition... then after all that reflect if on balance you enjoy your work life as you have become a seasoned professional.
I know which is an easier option today. I'm just over 40, when i came though their were a handful of IT grads in this country, just a few years later it was in the thousands...
 
 

..then after all that reflect if on balance you enjoy your work life as you have become a seasoned professional.
 
Maybe?

Yes, three CEOs of silcon valley start ups have committed sucide this year already, attended two of the funerals...that was on my mind when I penned the earlier comment. What a waste and the families left behind....

There has been a perfect storm over youth employment:  the factors:

  • abolition of yoof pay rates (notice the timing of the rise on that there Graph)
  • retreat from the market of starter-level businesses
  • rise of credentialism which tends to cut out them as cannot handle constant formal testing
  • lowering of work ethic (as our common tater above points to, being from a culture where if ya dinnae Work, ya dies...)
  • Substitution of soft subjects for hard stuff like chem, physics, propertioes of materials, etc.  Certificate in Kapa Haka, anyone?
  • Teaching as a female dominated activity. 
  • Structural creep in the socialisation and raw intellectual horsepower needed at the first rung.  This is worth dwelling on a little.

 
 Consider a mechanic of yore:  knee-deep in oil, spanner in hand, head under bonnet.  Now today:  tablet in hand, plugged into the on-board vehicle diagnostics.  Then a surgical strike on the few components that will be at issue.  Consider the skills and attitudes needed...and whether schools and vocation-oriented TE, actually prep these kids for that life.
 
Consider IT, especially applications.  Ya cannot even start thinking about a career here unless you have above-average IQ, good spatial and analytical skills, good business sense or background, wide life skills, and quichk integration into new groups (clients).
 
Consider fitting and turning.  Used ter be man-handling a massive machine, and taking care not ter run the cutting tool into the chuck.  Now it's CNC up the wazoo.
 
See a trend here?
 
Overall, the answers (which are certianly possible) tend to be unpalatable:

  • Remove child labour rules and let kids work from say age 9 or 10.  Best socialisation, and early recognition of actual potentials rather than compulsorily trapping them behind a desk till they're 17
  • Re-institute yoof pay rates.
  • Re-jig the gender balance in such teaching as remains (everyone's actually a teacher....despite what the Guilded Ones say)
  • Sandwich courses (work then learn then work some more, learn some more) - common still in e.g. Germany and other enlightened countries
  • Wind down the soft courses and credentialism.  Most a them bitsa paper are perfectly worthless.  Employers of course know this, but the rest of the crew haven't gotten the memo.

 
I think that would just aboot Do It....

I trust you also advocate the rejigging of gender balance in practically every other profession in the country so there are still plenty of options for women to make a living
Is this how far we have got up the bashing group du jour ladder?
Watch out you might be next

Wow,
 
If I were JK, I'd appoint you as the Minister of Edu, and Associate Min of Social development, and Women's affair.
 
 

Why is the female domination of the teaching profession a problem?  You demonstrate very well that there is less employer demand for "traditional male" skills such as spanner holding and massive machine man-handling.   So chldren don't need an education that prepares them for that.    What then would bringing more men into teaching achieve? 

Role models for young males, perhaps?
 
Because unemployed, alienated, economically worthless young males are a fairly traditional source of hi-jinks, when one looks across the vast historical annals of societies.
 
Hard to find the equivalent excitability in the yoof of other genders.

Certainly agree that a society should try to avoid lumbering itself with unemployed, alienated, economically worthless young males. But you've yet to show why being taught at school mainly by women is more likely to lead boys to that outcome.

Stop chasing m and let m catch up on a breath please.
 
I love my female teachers in primary/secondary school, got beaten up by male teachers once or twice though.

I would imagine you deserved it .

Oh yeah.
 
I told the truth that the male teacher was too good for the female teacher.

Whoa!  I'm the one that is demonstrating gender prejudice?

Xing, please contain your enthusiasm for my future political career.  (I do appreciate the spirit, though!)
 
As you will have observed, politics is constrained by two electoral cliques:  those directly dependent  on Gumnut for their income:  pensioners, beneficiaries, civil servants, and the very occasional bought-and-paid-for contractor), and those who actually generate wealth to feed Clique #1.  Tax Consumers and Tax Producers is the usual nomenclature.
 
Consumers, electorally greatly outnumber Producers.  So they tend to get the boondoggles and tend to vote for any 'Give them More Flat Screens' Party du jour.
 
But, as there is a dim recognition that killing the goose that lays the golden eggs is, shall we say, counterproductive, Producers do in fact tend to constrain the wilder excesses of the pollies who get voted in by the Consumers.
 
But only at the margins.
 
Thus political life is a sorry, sorry place to be in and I would not wish it upon anyone. 
 
Unless they don't currently own a Flat Screen....

Here's something to ponder. Have had a business hower sold it early last year. We used to employ 10 staff custom manufacturing and importing our own products / components from around the world and using some locally sourced items. Through out the GFC several suppliers closed citing reduced market and reduced profits and rising costs as the cause. We then had to cashflow & import that particular component direct otherwise we were stuffed. We also struggled to find staff (even took staff through WINZ too) as the prices to live in Auckland climbed and the skilled ones left here or the industry all together.
 
 
The final straw before I sold was that a Chinese Company bought a competitor who was approximately the same size staff wise as us. After 3-4months our customers firstly those who were Chinese converted to the competitor and then more converted one even showing me the prices 28% below what we could supply it for. As the old staff of the competitor came knocking looking for work explaining that they had been replaced by chinese workers I started to figure what was happening. Where there was 8 staff in the start and they suddenly grew to 15. On some research and sound insde information from the accounts payroll clerk who chose to retire.... the company was bought by an Uncle of the director. The key staff were the Uncles wife (whilst their son went to Auckland Grammar) and Daughter with four of her freinds. The balance of the employees were casual. As it turns out the casuals worked about 3-4 months before moving on. Yeah I bet ... moving on they were ....back to China or ??. With an average of 70 RMB (NZD$13.52) per day in a chinese factory NZ makes a very solid "unofficial" job holiday it appears that this character was putting them up in a local house paying, air fares and basic expenses all the while paying in RMB back in China. The only staff on the payroll were the Daughter / Wife & 4 friends and the chinese parent company.
 
 
I guess thats what we have to compete with now.

I strongly recommend you to divde your humongous paragraph into several small ones with a logic order please.
 
Thanks very much.

Seems perfectly logical to me.  Fraudsters and criminals immigrating to NZ and causing havoc...

I hope you or others could report this company because of its violation of several Acts in serveral occasions in NZ. 
 
I hope your company will thrive again.

Labour Dep would be good place to start.
 

same problem is running hot in australia right now .. government is fed up with companies exploiting the system, bringing in temporary workers, cheap labour, pay no allowances, no holiday loading etc etc, while skilled locals cant get a look in
http://www.workpermit.com/news/2013-03-04/australian-immigration-minister-cracks-down-on-457-temporary-work-visa-abuse

 Good Link Iconoclast.
I suspect that the issue is fairly wide spread in NZ as well, it is just very under-reported. Personally I have no time for any Government bureaucracy as they just can't do the jobs required of them. Why aren't those people who are issuing the work visas doing proper checks and where is their follow up? I thought lying to immigration would be an offence? As yet  I haven't found any records of employers being taken to Court for lying to immigration.
The Labour Dept could be quite easily ensuring that employers are compliant. If the Labour Dept can drive around doing spot checks on e.g. building sites for OSH then they can do the same checks on those employers who are importing Labour.
 
There are enormous numbers of immigrant Labour involved in picking and processing fruits, vegie, wine etc.  Often they are in contract work gangs etc.
Around Christchurch there are increasing numbers working on building sites etc.  Most of these workers send home as much money as possible to their families off-shorewhich is more money leaving NZ and not being invested back here.
 
NZ cannot justify the cost of the Dept of Labour if they are unable to do their job.  As far as I am concerned the Government need to get its Agencies in order or get rid of them. We can't have people sitting on their proverbials pushing paper around and writing reports as that is not being proactive.
 
People seem to insist upon protection at all costs but forget about who ends up paying for the cost of that protection and who is affected when those protection mechanisms fail.
If protection measures fail then good NZ business's fail at the expense of the rogue operators who are rorting the system. More people end up on unemployment benefits etc. Many of the immigrant labour force are working in jobs that do not require skills but require high work output.  Are NZ'ers becoming soft and lazy? What is the ratio of desk workers to physical workers?
 
 
 
 

I guess thats what we have to compete with now.
 
Yes and neither our Department of Labour (now part of MOBIE) nor our Inland Revenue Department want to know.  Too hard to police.  Just how 'big' this illegal labour market is could be well beyond comprehension.  Just like the mess the Companies Register has become... so much non-compliance and so many registered entities they have just given up any monitoring/compliance - it took interest.co.nz folks to do a bit of searching and embarass them into shutting down what isn't even a chip off the iceberg.

Unemployment is a direct result Matt of a 'consumer driven' culture. Most jobs are retail and most of it selling s**t from imports,  not export.  
Might have an effect you reckon? particularly when the world 'credit' bandwagon goes dry like it did in ohhhhh............2008
Upskilling won't help you when you become surplus to ACTUAL world requirements. 

So many civilized but diversed conversation were generated from an economists article.
 
But the common thing from all comments is that we all want NZ to have a super bright future.
 
Keep it up everyone regardless of your color, race or creed.