Balancing the Three E's: Equality, Efficiency and Employment

Charles Waldegrave

The economic, social and demographic changes during the last two decades in OECD countries have led to two distinct rallying cries: (1) reduce social policy commitment and enhance employment and efficiency - the neo-liberal approach); and (2) sacrifice efficiency to enhance equality - the social democratic approach.

From 1985 New Zealand has taken a neo-liberal approach, and the critical social policy issue now is whether we should continue to sacrifice equality for efficiency and employment. All measures of poverty since the 1991 reforms show high and accelerating levels of poverty, with those on the lowest incomes bearing the brunt of the reforms.

New Zealand is now in the situation of having an economy that is consistently producing fiscal surpluses. To continue to jettison equality once the economy has strengthened suggests that policy makers have little interest in balancing the three E’s. The solution lies in “real” employment in the modern, value-added technological marketplace.

This paper presents lists of “work-enabling” policies and “employment-creating” policies, an active mix of which would address the fundamental issues of genuine employment creation and benefit reduction in a non-punitive manner. Equality does not need to be sacrificed in order to achieve economic and efficiency gains.