Friday 14 February 2003 Issue 66

Friday 14 February 2003 Issue 66

Power fears for business 2003 is shaping up to be a rocky road for energy prices, with power consumption higher than last year and increasing uncertainty about future energy supplies. The Maui field’s running down, and power stations seeking consents for development are still hopelessly bogged down in the RMA process - not just for hydro but geothermal power too e.g. Waikato has most of NZ’s geothermal resource, but Environment Waikato’s regional plan has tied up large amounts of it. This week’s huge power price spike could happen again. Contact pwhitehouse@businessnz.org.nz

GM in HSNO The Government has announced changes that it wants to make to the Hazardous Substances and New Organisms Act (HSNO) re genetic modification (GM). This is a further step in implementing the recommendations of the Royal Commission on Genetic Modification. The changes include a new category of conditional release, streamlining the importation and development of low-risk GM organisms in secure laboratory situations and rapid approval for products required to deal with a human or animal health emergency or a serious biosecurity situation. Stricter enforcement and liability regimes will also be introduced. Government's aim is to have the changes passed into law by October to time with the lifting of ERMA's 2-year moratorium on considering applications to release GM organisms. Contact pwhitehouse@businessnz.org.nz

Government ‘caving in’ to Greens

The Land Transport Management Bill would harm growth. It would: get rid of the requirement for 'economic efficiency' let politicians interfere in infrastructure decision-making require over-the-top expensive consultation, causing major delays put roadblocks in the way of tolling and private-public partnerships The Government is caving into the Greens, and Business NZ is urging changes to the Bill to make it consistent with the Government’s own goals for economic growth. If you’re concerned, let your MP know! Contact nclark@businessnz.org.nz

Metal ‘award’ negotiated A multi-employer collective agreement (meca) has just been negotiated for metals and manufacturing industries. An important agreement for the union movement, it’s the largest meca in the private sector, covering 2000 workers in 215 companies. The engineers’ union EPMU intends to use it to persuade other companies to sign up to the meca conditions.

Minister smiles on mecas Last week Labour Minister Margaret Wilson signalled mecas would figure prominently in the forthcoming review of the Employment Relations Act. In a speech to the PSA, she said the review would consider more support for mecas, “…particularly where the size of employer units in particular sectors makes enterprise bargaining inefficient and ineffective.” Given that the vast majority of NZ businesses are small (fewer than 10 employees), it seems a fair bet that the review will come out strongly for more favourable treatment of mecas.

Employers beware Those employers who weren’t around before the Employment Contracts Act may not be familiar with the problems that mecas bring. By tying multiple employers into one contract, they take away the ability to tailor solutions to individual company needs. They can ratchet up pay rates beyond the means of smaller companies involved, and also raise the risk of getting caught up in industrial disputes generated by other parties to the agreement. The union movement stands to gain much more from mecas than employers do.

Bargaining agent fees not lawful The recent Employment Court ruling that it’s unlawful to make workers pay bargaining agent fees was a good win for employers. NZ Dairy Workers’ Union v NZ Milk Products Ltd was a test case for the union movement’s bid to claw back income from ‘free-loaders’ – but requiring non-union workers to pay the union for its bargaining activities has now been ruled unlawful. Employers can now enter into bargaining knowing that they will not have extra ‘bargaining agent’ costs imposed against their will. Contact bburton@businessnz.org.nz

Growth stats

ANZ job ads After a 6.5% rise in Dec, the ANZ job ads series consolidated its move upwards with a modest increase of 0.6% for January. While the job ads series was 7.5% above the level prevailing in Jan 2002, it is still 6.6% below its July 2001 peak. The increase was driven by Auckland (up 7.2%) and Christchurch (up 1.1%). All other regions recorded a decline (Waikato down 3.7%, Hawkes Bay down 23.9%, Wellington down 26.1%, and Otago down 5.4%). Job ads over the internet fell for the fourth consecutive month, down 13.6% in January, but were still 5.3% up on the same time a year ago.

Household labour force survey Given that job ads were trending upwards and NZIER's Dec quarter business opinion survey recorded relatively strong hiring intentions, a decrease was expected in the official unemployment rate for the Dec quarter. Indeed, the Household Labour Force Survey’s seasonally adjusted unemployment rate fell to 4.9%, down from 5.4% in the Sept quarter. This fall was more than most commentators’ expectations; many had predicted a 5.2%-5.3% unemployment rate. The Dec quarter unemployment rate was the lowest since the March 1988 quarter, when it stood at 4.8%, and places further pressures on businesses trying to obtain suitable job applicants. The changes in employment and unemployment were equal in absolute terms, meaning that those unemployed fell by 8,000, while those employed increased by the same amount. Those not in the labour force increased by 14,000, which meant the labour force participation rate fell 0.3 percentage points to 66.3%. The quarterly boost in the "not in the labour force" category contributed to the working age population growing by 59,100 (2%) over the year. This increase can partly be attributed to a net gain in permanent and long-term migration of 30,500. Numbers employed in the manufacturing industry were typically up for the Dec quarter, rising 5,600 (2%) from the Sept 2002 quarter, but down 3,500 (-1.2%) over the year, although the quarterly employment survey showed a stronger quarterly increase in manufacturing of 11,000 (4.7%), and employment in manufacturing over the year up by 4,000 (1.7%).

Labour cost index Salary and wage rates (including overtime) rose 0.5% over the Dec quarter and on an annual basis were 2.1% higher. Public sector salary and ordinary time wage rates rose 0.8% for the second successive

quarter, while the private sector recorded an increase of 0.5%. By industry, the largest rise in all salary and wage rates for the quarter and year was the education sector (up 1% and 2.5% respectively). For the manufacturing sector, overall salary and wage rates were up 0.6% for the quarter and 1.7% for the year.

Quarterly employment survey The QES, which provides a more robust measure of wage rate changes than the LCI, showed that average total hourly earnings for all workers increased 0.7% during the Nov quarter. Over the Nov year average total hourly earnings grew 3.6%, which follows similar annual movements in recent quarters. Over the year, public and private sector earnings grew 3.3% and 3.8% respectively. The number of full-time equivalent (FTE) employees grew 2.4% in the Nov quarter, largely because of a seasonal increase in employment in the manufacturing industry (up 5.1%). Annually the number of FTEs grew 3.6%, compared with increases of 3.9% and 3.1% in the Aug 2002 and Nov 2001 years. Total number of filled jobs also increased over the Nov quarter by 2.4%. Annually the number increased by 3.0%, with strong contributions from accommodation, cafes & restaurants (up 9,800), property & business services (up 7,000) and education (up 6,500).

Commodities During January a continuing strong NZ$ eroded commodity prices for exporters. While the ANZ world commodity price index rose by 1.3% during Jan (4.6% higher than the start of 2002), the appreciating NZ$ meant prices tumbled when converted to NZ$, resulting in the NZ dollar index falling by 3.6% (15.2% below the level prevailing in Jan 2002). Given the impact of the currency change, all 13 commodities in the index fell when expressed in NZ dollars. Before adjusting for the NZ dollar, the world prices of 6 commodities increased, 4 recorded no change and 3 declined. Dairy prices recorded their sixth consecutive rise, while lamb, wool and more recently beef have shown upwards movement.

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