Rising unemployment was deemed necessary to bring inflation down. For some reason, the nation’s unemployed people haven’t been getting thanked for their service. Until now.
As the Reserve Bank wrestled with whether to prolong our collective financial suffering, Stuff asked a question: “Is the economy sick enough for a rate cut?” It at least had blocked nasal passages and a weird rash. But was it vomiting and sharting involuntarily in the middle of the lounge? Reserve Bank governor Adrian Orr had to be able to answer in the affirmative before he’d consider administering the sweet medicine of a 25-basis-point cut to the official cash rate.
Thankfully he could. There are plenty of symptoms to point to: slowing GDP growth, along with flagging consumer demand and business confidence. But chief among them is the country’s large and growing unemployment rate. Around 196,000 New Zealanders are now on the Jobseeker benefit. They’re taking, in economics terms, “demand” out of the economy, by being, in human terms, so miserably poor they can barely afford decaf coffee and a packet of bikkies.
Not everyone has carried out that task willingly. They’ve been urged into their inflation-killing duties at the behest of economists and future prime ministers who spent years telling reporters our low unemployment numbers were unsustainable. Orr has owned up to engineering the recession that has put many of them out of work. The government has helped to swell their ranks, ordering ministries to lay off workers in back office roles like child welfare investigation, and removing a directive for the Reserve Bank to consider employment in its policy decisions.
But that doesn’t diminish the importance of their efforts. Without unemployed people tightrope walking the poverty line, homeowners wouldn’t be toasting to lower mortgage repayment rates. Thanks to the poo-laced baking powder of economic precarity, we may all have a chance to scoff the cake of low and stable inflation between the Reserve Bank’s 1% to 3% target band.
For some reason, not everyone seems grateful. After deliberately putting many of them out of work to save the economy, the government is now telling the unemployed they’d better get a job or face sanctions. When challenged on Q&A in June over a decision to reduce benefit increases over the next term, finance minister Nicola Willis helpfully advised jobless people they’d have more money if they had a job. In his media round early this week, prime minister Chris Luxon told Ingrid Hipkiss that beneficiaries need to meet “obligations” to receive an amount of money he couldn’t remember, but which turned out to be roughly $300 a week, from their fellow Kiwis.
Talk about mixed messages. First we tell people they need to stop working to bring down inflation, then once they do, we tell them they’d better start working or else. Perhaps the obligation and appreciation should be heading in the other direction. More money would be nice. But in lieu of payment, The Spinoff would like to say thank you on behalf of the Property Investors Federation and Business NZ to our interest rate-busting heroes on the dole for being the wind beneath the wings of increasing capital gains and brightening long-term profit outlooks.
Rescuing the economy from spiralling inflation at least deserves a better reward than having to sell your possessions to survive after missing an imaginary meeting with Work and Income. Our unemployed people have taken one for the team of five million. They could be forgiven for expecting survivable living standards, or even — and yes this is shocking — comfort in return. Instead this letter is probably all they’ll be getting by way of appreciation. In the short term, it looks like the only love they’ll be getting is the kind that’s tough, and doesn’t feel like love at all.
