Thursday, January 27, 2005

A labour market policy, not a welfare policy

Something else that strikes me about Don Brash's speech: he's presenting a labour market policy, not a welfare policy. The goal is to reduce wage pressure on employers by forcing those on the DPB and sickness benefits into the labour force - the same policy he pushed the then-National government to implement in the mid-90's when he was Governor of the Reserve Bank and unemployment of only 7% threatened to allow workers to ask for higher pay. It's the three-month "trial period" that really gives it away, though - while being sold as a way of encouraging beneficaries to risk work, it doesn't actually address that problem, as the chief barrier is the perverse incentive structure set by WINZ's standdown periods. It will, however, reduce new workers to casualised peons, and allow employers to fight wage demands with the threat of instant "penalty-free" (for them) dismissal.