The numbers of jobless in the dole queues has climbed to around 1100 a week in the past two months as unemployment surges. But the Job Summit has and will create thousands of jobs, or so the PM insisted when challenged this week about the employment generated by ideas such as the $2bn credit fund and nationwide cycleway. Labour’s Phil Goff has highlighted data showing 4,000 Kiwis have joined the dole queue since the Budget and 16,000 since the Job Summit.

No Certain Figure. Key rejoined his Govt had rolled out a credit upgrade for NZ; $500m for infrastructure brought forward; $500m for small to medium sized enterprises; millions of dollars for the Export Credit Office; a nine day working fortnight; a cycleway; a home insulation package. He referred to a study showing about 250,000 jobs created and about 200,000 jobs lost each year between 2002 and 2007, but said the Govt does not routinely collect this information. Hence he can’t say how many jobs have been lost since 27 February. Even if the figure was available, it would be almost impossible to sort out the number of jobs saved by the Job Summit.

Jobless Total Will Rise. Regardless of the summit’s employment outcomes, unemployment numbers are bound to grow. The World Bank has cut its 2009 forecast from 1.7% shrinkage in global growth to a 2.9% contraction. It expects global trade to plummet 9.7% this year, although growth (2%) is expected to return next year. But Nouriel Roubini, the New York University economics professor who predicted the financial crisis, warns of another slump due to higher oil prices and widening budget deficits.

Growth Forecasts Down. The NZIER June Consensus Forecasts meanwhile show a deterioration in economic growth expectations for NZ in 2009/10 (-1.6% from -0.6% in March), bouncing back to 2.8% growth in 2010/11. Even so, these forecasts suggest around 60,000 job losses over the next year (and “subdued wage inflation” over the next two years). This is what happens in recessions. Businesses can’t hack it and go bust, or reduce staff numbers to survive. The Govt can only help cushion the blow and the Key Govt has rationed its stimulatory medicine, lest it exacerbate the rising public debt and invite a damaging downgrade in NZ’s credit rating. Some businesses will bounce back when the recession is over and labour will shift to these. But it’s disconcerting to see no clear pointers to new industries which (hopefully) will flourish during the rejuvenation.

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