Watch out Wellington

In New Zealand, there is a train of thought that the Wellington regional economy is relatively “recession proof” given the high number of public servants.

However, according to EconLog this isn’t necessarily the case in capital territories.

The money quote has to be:

It turns out that outlandish pay increases for public sector unions are what is recession-proof. The local communities are not.

Now I’m not a public servant and I’m not in a profession that’s on the “recession proof” job list (ht Frog Blog) and now it turns out that living in Wellington doesn’t protect me. Dang.

  • If only we could find a way to make everyone a member of the public service, then everything would be…oh, wait.

  • “If only we could find a way to make everyone a member of the public service, then everything would be…oh, wait.”

    Well it would increase job security 🙂

  • Steve

    what about if we get a national government? with promises to cut the bureacracy etc, there could be a considerable number of public servants/policy advisors in the Wellington region who become redundant. Wellington could be headed for a big recession early next year.

    Given your assumption that pay increases for public sector unions are protected from recession, some wellington, non-public servant jobs, are almost recession proof. b/c public servants are sheltered from the recession, the businesses that depend upon revenue from the spending of those public servants are also sheltered to an extent which is not so in the rest of the country. Therefore the communities in capital territories are still relatively sheltered from the recession.

  • “what about if we get a national government? with promises to cut the bureacracy etc, there could be a considerable number of public servants/policy advisors in the Wellington region who become redundant”

    I thought they promised to stop hiring – not to sack anyone. However, your point is definitely relevant for the Wellington economic outlook.

    “Therefore the communities in capital territories are still relatively sheltered from the recession.”

    Indeed – that is the thinking. As long as civil servants can still spend up large in retail stores, retailers in the area should be protected.

    However, the Econlog article says that even taking this into consideration – the local communities do not seem to benefit as substantially from the job security that the civil service has.

    Fundamentally, the magnitude of the transfer of resources from the rest of the country to Wellington may be exaggerated – implying that Wellington as a whole is not as safe from a recession as some may feel.