Observation (CEACR) - adopted 1991, published 78th ILC session (1991)

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

1. The Committee takes note of the information supplied by the Government in reply to its previous comments, and expresses appreciation of the detail and quality of the full report on the application of the Convention. The Committee also notes the observations of the New Zealand Employers' Federation and the New Zealand Council of Trade Unions (CTU) on the Government's report.

2. Article 1 of the Convention. The Government indicates that its overall strategy on employment policy for 1988-90 is essentially unchanged from that described in the previous report: balanced and sustained economic growth is the best means of generating productive employment. At the macro-economic level, the Government is pursuing firm fiscal and monetary policies with the goal of reducing inflation and the public debt. This strategy has been complemented by a series of structural reforms designed to facilitate the more efficient allocation of resources at a micro-economic level. The Government states that it has implemented an active employment market policy which forms parts of its economic and social programme. The Government recognises that, in the short term, this strategy will involve the unwelcome consequences of a drop in employment, particularly in sectors where regulatory or protective measures have been dismantled, and relatively high unemployment levels. The Government is not expecting any rapid improvement in the labour market situation, as labour markets are slow to adjust to change. However, the Committee notes that the Government refers in its report to the announcement by the Prime Minister of the Government's commitment to returning New Zealand to full employment by 1995.

3. In its observations, the New Zealand Council of Trade Unions comments that the Government did not go beyond general promise of full employment. The control of inflation has received higher priority than job creation. Monetary and exchange rate policies have had the effect of depressing activity and growth, leading to a high level of job losses. Deregulation has affected particularly certain sectors and regions. With regard to labour market policy and initiatives to assist young people in finding employment, the CTU states that these measures and programmes failed to address the causes of unemployment and so do not offer effective employment policies. The New Zealand Employers' Federation recognises the Government's efforts to improve employment levels but expresses the regret that labour market deregulation did not follow deregulation in other markets. In the view of the Federation, this essential contradiction in policies has had the effect of exerting strong economic pressure on employers and has resulted in an acceleration of unemployment.

4. With regard to the application of Article 2, the CTU states that the information supplied by the Government does not meet the requirements of this provision of the Convention under which Members must decide on and keep under review, within the framework of a co-ordinated economic and social policy, the measures to be adopted for attaining the objectives specified in Article 1. Furthermore, the CTU states that the consultations provided for in Article 3 have not been held, at least as regards consultations with workers' representatives.

5. With reference to its previous observation, the Committee notes, on the basis of the information supplied by the Government, the deteriorating trend in employment. During the period June 1988 to June 1990, the overall employment level dropped by 2 per cent in 1988-90, and the number of unemployed grew by 41.1 per cent. The overall unemployment rate increased from 5.3 per cent to 7.5 per cent of the active population over the same period, and the Government states that it is concerned at the high number of long-term unemployed (approximately one third of the unemployed remained without a job for 27 weeks or more) who are likely to have particular difficulty in finding remunerative employment.

6. The Committee trusts that the Government will continue to provide information on the measures that have been taken or are contemplated to guarantee, in accordance with Article 2, that the effects on employment of the implementation of economic policies receive due consideration and that the measures to be adopted for attaining the objectives of full employment specified in Article 1 are decided on and kept under periodical review. It would also be grateful if the Government would indicate the manner in which the representatives of workers' organisations, in particular, are consulted, as required by Article 3.