The Dim-Post

June 29, 2011

Step change watch

Filed under: economics — danylmc @ 2:23 pm

Via Stuff:

More than three hundred military personnel have been told this morning that they have lost their jobs.

They include 81 officers and 227 personnel from other ranks.

It expected that there would be 500 fewer military personnel by the end of the year with $40 million a year saved on payroll.

And:

Ovation New Zealand has today confirmed the closure of its Waipukurau boning facility and redundancy of 304 staff.

But not to worry – there’s HEAPS of jobs on TradeMe. All those rural meat-packers and junior officers can all just walk into roles as senior Java developers.

Clumsy sarcasm aside, Social Development Minister Paula Bennett is gonna have to throw a lot more people off the unemployment benefit to game the statistics for this quarter.

Update: The CTU claims that the government is sacking military staff and then re-hiring them as civilians on lower pay and worse conditions, which is normally illegal but isn’t in this case because defence personnel aren’t covered by employment law for constitutional reasons.

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29 Comments »

  1. All those rural meat-packers and junior officers can all just walk into roles as senior Java developers.

    Didn’t James explain to you that labour is completely fungible?

    Hmm…maybe benefits are too.

    Comment by Gregor W — June 29, 2011 @ 2:41 pm

  2. Didn’t the military get something like a 10% 9increase in its budget this year? Might have to go find that site with the graph which tells that sort of thing.

    Comment by Hobbes — June 29, 2011 @ 2:44 pm

  3. err, make that a 40% increase rather..

    Comment by Hobbes — June 29, 2011 @ 2:46 pm

  4. I heard that a majority of those that lose their military jobs will be rehired as civilians or contractors. However, they will have to re-apply for the work and will probably take a pay cut in the process. The source of this information gave the impression it was another book-cook.

    Also, I think I’m interested in working at a “boning facility” – where to apply?

    Comment by Chris S — June 29, 2011 @ 2:48 pm

  5. “I heard that a majority of those that lose their military jobs will be rehired as civilians or contractors.”

    Then that is absolutely cooking the books as they’re talking about a $40m payroll saving over 500 staff ($80k per head) – if they’re then going to add another $50m back through contracting of the same services they haven’t mentioned it…

    Comment by garethw — June 29, 2011 @ 2:59 pm

  6. “they will have to re-apply for the work and will probably take a pay cut in the process”

    National’s “high wage economy” strategy in action.

    Comment by The Fox — June 29, 2011 @ 3:12 pm

  7. Starting at the three minute mark, the hospital administrator explains that they lease the machine that goes ping! back from the company they sold it to so that it comes off the monthly current budget and not the capital account. Everyone applauds.

    Comment by Rhinocrates — June 29, 2011 @ 3:25 pm

  8. I think garethw, that the savings come from not having to pay the higher amount that `uniformed’ staff earn, and instead getting cheaper civilians to do it. That said, those uniforms must earn quite a bit to make up that $40 mill, unless there are some straight out layoffs.

    Comment by DT — June 29, 2011 @ 3:28 pm

  9. On the military redundancies. http://union.org.nz/news/2011/defence-%E2%80%98rebalancing%E2%80%99-unfair-dismissal

    Comment by Helen Kelly — June 29, 2011 @ 3:45 pm

  10. That $40m can’t be net savings though – it equates to an average of $80k per person. Which must be gross “payroll” benefits but ignores the cost (whether it be more or less than the $40m) of contracting/re-hiring/outsourcing/whatevering those tasks they did before.

    Comment by garethw — June 29, 2011 @ 3:47 pm

  11. “That $40m can’t be net savings though – it equates to an average of $80k per person.”

    No. So its probably salary plus the current Govt multiplier that every employee attracts, ie, admin, support, vehicles, office space etc.
    Presumably the services that these guys performed will be contracted out to the private sector which will have to lease back some military facilities to do the work.

    The process being undertaken is bog standard for the private sector and the public service as well.. restructure, reduce non core staff, contractualise, pay redundancy and invite to reapply for a privatised job. But its BS to say you’ll save $40 million.. what you save is the steady creep of of promotion of cooks to Majors and the multiplier/overheads associated with public service work.

    JC

    Comment by JC — June 29, 2011 @ 4:23 pm

  12. a small technical point – those who reapply and are accepted for their former military positions have their pay and conditions protected at current levels for two years. After that period is up they are open to review

    Comment by Felix Marwick — June 29, 2011 @ 4:25 pm

  13. …which is why they will ensure (within the bounds of the ERA of course) that no exec ranks (Major+) will be rehired.

    Comment by Gregor W — June 29, 2011 @ 4:36 pm

  14. On Helen Kelly’s interesting link in #9 above, the point that this would be unjustified dismissal in other workplaces seems true… can anyone point out to me the provision in legislation that must exempt the armed forces from normal employment law?

    Comment by DT — June 29, 2011 @ 5:13 pm

  15. “the point that this would be unjustified dismissal in other workplaces seems true…”

    Hundreds of PS have been sacked in the last couple of years.. so how was that unjustified dismissal? The format used for the military may have been different because of a different relationship with the Crown, but the Crown can certainly dismiss people when it wants/needs to, and within employment law.

    JC

    Comment by JC — June 29, 2011 @ 6:55 pm

  16. Hundreds of PS have been sacked in the last couple of years.. so how was that unjustified dismissal?

    Presumably those people weren’t immediately rehired to their former positions at lower pay.

    Comment by derp de derp — June 29, 2011 @ 7:40 pm

  17. @JC # 15: There are two main ways to get rid of a staff member. The first is to fire them. The second is to make them redundant because, basically there isn’t a job there any more. This isn’t the second, because the positions are still there. So they are basically being fired, but without any of the normal legal justifications.

    Comment by DT — June 29, 2011 @ 7:53 pm

  18. I take it we’ll have Blackwater goons hooning around Waioru then?

    Comment by millsy — June 29, 2011 @ 8:10 pm

  19. “Presumably those people weren’t immediately rehired to their former positions at lower pay.”

    Neither are these guys.. see comment at 12. And they are not being rehired by the military.. they are either contractualised or will be employees of a private company. The legality of that situation will depend on the process used.

    JC

    Comment by JC — June 29, 2011 @ 8:12 pm

  20. “So they are basically being fired, but without any of the normal legal justifications.”

    How do you know? I would have thought that a range of considerations apply, ie, is our military 100% supported only by other military.. or are the uniforms made by the private sector, the ships only built by uniformed Navy personnel, law applied only by Military Police, food supplied from military farms, transported by military vehicles and so on. The answer is.. of course not, its then a short jump to looking at jobs that are done by military but just as easily supplied and more logically by the private sector.

    Most large scale planned restructurings look at these sorts of things, and make decisions based on core functions versus peripheral support and legally make appropriate changes.

    Look at the occupational militaries still in Japan, Germany and Sth Korea.. these guys are on active duty yet are dependent for most non military support from the host countries.. those militaries contract with the local populations for most non military supplies, and there’s no logical reason to expect a change for a domestic non active duty military in NZ.

    JC

    Comment by JC — June 29, 2011 @ 8:38 pm

  21. Is this all ultimately down to Roderick Deane, aka The Telecom Kid?

    Comment by Old Scrumpy — June 29, 2011 @ 9:09 pm

  22. JC, just curious. Are you an employment lawyer, or are you just sharing with us your ideological views on what the law SHOULD be?

    Because from my understanding of the relevant law, Labour made it illegal some time back in the mid-late 2000s to contract out jobs then hire back on worse conditions (and a two year short-term contract as compared to a full-time position is certainly worse, regardless of whether pay is reduced). National never repealed that. However, military personnel are technically not employed but swear an oath of service, so that rule doesn’t apply. Put another way, I query whether you know what you’re talking about.

    Comment by Eddie C — June 30, 2011 @ 1:14 am

  23. I’d argue that all of the comments above are conjecture.

    I know some of the affected and they were notified by email, maybe all weren’t, of there redundancy which is poor form however there is acknowledgement from the affected that the defence forces are top heavy with too many shiny seats in WGN and as such the layoffs were expected.

    Comment by garygoodguy — June 30, 2011 @ 6:34 am

  24. I remember reading somewhere that a lot of these people were getting paid above market rates because, as military personnel, they could theoretically be shipped off to a war zone with no notice.

    Comment by helenalex — June 30, 2011 @ 10:23 am

  25. As this affects Devonport heavily, I’ve taken an active interest in this. So to answer some questions:

    Old Scrumpy – Yes it all is down to Roderick Deane, aka The Telecom Kid & his Defence White Paper.

    The ultimate aim is lose ~1000 military personnel (through natural attrition and in 2 or 3 tranches of redundancies, next one mid next year), and employ ~500 contractors to do their work. So the savings are mainly in having fewer people do more work, but they will also be at much worse conditions, and most likely worse pay as well (if they can get skilled people to work for less pay).
    The savings I heard bounded about were $23 million rather than the $40 million in the stuff article – but maybe that was just for this year with 500 fewer defence forces (308 thru redundancy) + up to 280 added civilians.

    Felix – Going by Wayne Mapp’s answers to written questions, their pay is protected for 2 years if they win back their old job (then could drop…). Their conditions aren’t – they’ll lose their considerable allowances (housing, medical/dental, uniforms etc) immediately (or rather in October when the changes announced today actually happen). Many will of course lose their houses as well (if they’re in military housing).

    I’m horrified to hear some were notified by email – they were all meant to be told in person. That’s terrible form.

    Comment by Ben Clark — June 30, 2011 @ 10:24 am

  26. I’m surprised at the email comment as well given that it was reported on RNZ yesterday (by the shadow defence minister I think) that this process had been ongoing for about a year and had been fairly heavily change managed.

    Comment by Gregor W — June 30, 2011 @ 10:50 am

  27. I suspect there was a lot of laughter and high-fiving when Deane and English figured out the defence staff weren’t protected by employment law.

    Comment by danylmc — June 30, 2011 @ 10:57 am

  28. Eddie, I’ve already said the military is in a separate catagory and the rules don’t apply. And I’ve also said “The legality of that situation will depend on the process used.”, ie, I don’t know enough of the detail to comment on whether the sackings are legal, but I suspect they are from reading stuff on the Dol site and speaking with one of their people.

    Basically there is no late 2000s law from Labour that prohibits an employer sacking staff and rehiring under different conditions. However, Dol says this should be discussed with potentially affected staff before the restructuring and then offer them the new contract position in due course. If the employer appoints new people and leaves the former staff out in the cold.. then there could be a case. DOL would then look at the old and new positions to see if there is such a significant change to justify bring in a new person.

    And no, I’m not a lawyer, but I’ve been an employer with a working knowledge of the rules.

    JC

    Comment by JC — June 30, 2011 @ 10:59 am

  29. In my contact with defence I’ve noticed a lot of people who seem to have been shoe-horned into roles thay are not suitable for. It makes sense that these roles are filled by people that are actually trained for them not just an empty uniform no longer suitable for active duty.

    Comment by Phil — June 30, 2011 @ 2:23 pm


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