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Unemployment Artificially High?

Fuseworks Media
Fuseworks Media
Peter Conway
Peter Conway

The CTU hit out today at the BNZ for saying that sub-4 percent unemployment in 2008 was 'artificially low'. The comment was made in the bank's latest Markets Report.

CTU Secretary Peter Conway said: "Why not say that unemployment today is artificially high?"

"And if having 90,000 people unemployed (which is what unemployment of 4% meant in 2008) is too low, then is having 159,000 today alright then?"

"I know many of these bank economists and they are good, sincere, professional people. I know they care about the unemployed. However, they are making it sound as though jobs are not as important as inflation, share prices or the exchange rate. We know all these factors interact - and people are affected by all of them. But to say sub-4% unemployment is artificially low begs the question - what does real low look like? Or is the point not to get actually low unemployment?"

"Morning, noon and night we hear figures like this from economists. We need to hear more about the real people behind the statistics."

"Hopefully Thursday's unemployment numbers will provide some good news, but for the BNZ to imply that unemployment at 4 percent or less is somehow not natural, achievable or sustainable is a real worry."

"The comments of the BNZ today remind me of a Westpac Economic Review a decade ago1 which described unemployment of 6.3 percent as 'worryingly low'. Should full employment not be a goal of the economy, rather than some kind of freakish accident not to be believed or even encouraged?"

I think what the BNZ was trying to say is that low unemployment based on debt, rising inflation and a lift in wages is undesirable, or unsustainable. But if we should not have tried to lift real wages in those times of 2008 and we can't lift real wages in these times of 2010, when can we ever?"

"The effects of unemployment on real people are certainly not 'artificial'. Unemployment means children growing up in poverty, in poor housing and deprived of opportunity. It means workers missing out on skills and training, loss of confidence and dignity, vulnerability to crime and loan sharks, and a vicious spiral of dependency. It also means a knock-on loss of custom for other businesses and less tax entering the public purse. It is a lose-lose situation."

"What we need is a framework that puts jobs first and works out how monetary policy operates in that context, rather than the other way round."

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