OECD Report: Back to Work NZ - MBIE's Response and Next Steps

1. OECD report “Back to Work: New Zealand”MBIE’s response to the findings and recommendations - and what happens next 8 May 2017 Hannah Malloch, Senior Advisor Employment Relations Policy

2. Overview • How the paper came about • Who was involved • Roles of OECD and others • Key findings and our thoughts • Recommendations and responses • Next steps • Questions

3. Background • 2011 - OECD commenced Displaced Workers research programme and sought participant countries • DoL interested to better understand the labour market impacts of the GFC • Delayed until 2015 • 8 other OECD countries have participated • Comparator report coming

4. Role of NZ Government and stakeholders OECD Stakeholders Contribute information – eg statistics and context Comment on drafts and ensure that other interested stakeholders have an opportunity to contribute Keep interested Ministers informed and engaged Participate in public discourse • Methodology and research programme development • Research tour - visit NZ to meet with stakeholders • Analysis and report drafting • Consultation on draft • Incorporation of feedback • Media engagement • Publication

5. Key findings • About 1.1 per cent (approx. 29,000 workers) reported being laid off; dismissed or made redundant. • The unemployment rate has been slow to improve since the GFC and unemployment is lasting longer. • 84 per cent of displaced workers find new jobs within two years. • Wage losses in the first year since displacement are partially offset by redundancy payments. • In the second and third year since displacement the wage loss is about 20 per cent. • NZ has very flexible labour market settings.

6. Our thoughts on the findings • Some validation for the flexibility for current labour market policy settings – link to productivity lifting efforts. • Shows the range of factors that can make someone more vulnerable to redundancy (demographic, skills, region, sector, etc.). This is going to be looked into further. • There is a disconnect between the findings and the recommendations – the findings praise the regulatory flexibility, but then recommend more rigidity. • Findings are being used as an input to the policy work to understand the changing nature of business and employment.

7. Recommendations and responses • Strengthen employer responsibilities by requiring a longer minimum notice period and a mandatory notification of each redundancy to trade unions (if any) and the relevant authorities. Response: • The principle of good faith means employers must give reasonable notice rather than a minimum notice period. There is also a continuity provision. • We understand that many businesses already notify unions and MSD when restructuring or liquidating. • Any mandatory notifications to authorities would need a constructive purpose.

8. Recommendations and responses • Explore ways to reach out to all displaced workers in need of support, by 1) contacting displaced workers early on; 2) expanding employment services for skilled workers; and 3) providing incentives to public employment services to assist people who are currently not eligible for income support. Response: • People more likely to seek and receive employment service support are those who are eligible for income support. MSD services will not likely meet everyone’s needs. • Agree that we need to think wider. Role for other providers? Who pays? Customer-centric view needed of what services would be in demand and what influences supply/take up.

9. Recommendations and responses • Consider replacing the voluntary redundancy payments with a mandatory active redundancy insurance system. By combining financial support with pro-active employment support upon redundancy the focus would lie on reintegration and fast job-to-job transitions. The insurance scheme would cover all workers irrespective of their individual working arrangement and can be financed by a payroll-based levy. Response: • An interesting recommendation; though it seems disconnected to the research findings. • No current work will look to progress this significant and structural change – the only work will be to seek understand this option better.

10. Recommendations and responses • Strengthen training guidance and counselling for adults as well as the framework for recognition of skills acquired on the job. Response: • Several government agencies are working in this space – notably TEC, Careers NZ, and MSD. MBIE has a link to this work though its Skills and Employment Policy Team.

11. Recommendations and responses • Ensure and sustain the adequacy of welfare payments and take-up of benefits among those who are eligible to avoid that displaced people fall into poverty. Response: • MSD has formula and frameworks that aim to ensure that welfare payments are adequate and those who are eligible do not face barriers. • MSD is currently considering the OECD report and they are engaging with their Minister on the report.

12. Next steps • Work ongoing to: • Understand the changing nature of business and employment • Assess redundancy policy settings and to consider what more can be done to assist displaced workers to transition to suitable jobs. • This work will consider: • The OECD recommendations • Further research by MOTU on displacement of workers • Predictions about the changing nature of business and employment • Insights into the worker experience • The potential for regulatory and/or non-regulatory responses

13. Questions? I welcome any questions you have.