Unemployment rises to 5.7% but the problem isn’t just how many, but how long

New Zealand's unemployment rate has risen to 5.7%, the highest in 11 years, with 174,000 people out of work. But economists say the more troubling figure is duration: nearly half of the jobless have been looking for more than six months, and more than a fifth for over a year, Henry Oliver writes in today’s excerpt from The Bulletin.

Stats NZ figures for the September quarter put unemployment at 5.7%, the highest since September 2015, the Herald’s Tom Raynel reported yesterday. Economists had expected a fall but the seasonally adjusted number of unemployed rose to 174,000 from 171,000 – equivalent to the population of Hamilton.

The male rate was unchanged at 5.6%, while the female rate rose from 5.5% to 5.7%. Underutilisation (a broader measure including the potential labour force and the underemployed) was unchanged at 13.8% – its highest since December 2013. The proportion of 15- to 24-year-olds not in employment, education or training rose to 14.1% from 13.8%.

Northland had the highest regional rate at 8.3%, down from 8.7%, with Auckland, Waikato and Manawatū-Whanganui at 6.3%. Canterbury recorded the largest quarterly lift, up 1.1 percentage points to 4.7%. Otago was lowest at 3.3%.

Not just how many but how long

BusinessDesk’s Rebecca Howard reported that the number of people out of work for more than a year hit its highest level in more than 30 years. On a non-seasonally adjusted basis, 21.5% of unemployed people fell into that category, RNZ reports – a level last seen in June 1995, when it was 24.3%. A further 26% had been looking for six months to a year, the highest since the series began in 1986.

“The bigger concern is duration,” Moody’s Analytics economist Sunny Nguyen told BusinessDesk, warning that “long spells erode skills and risk leaving a lasting scar, with Pacific peoples, Māori and young people hit hardest.”

Simplicity’s Shamubeel Eaqub described the dynamic as labour scarring: “the longer you've been out of work, the harder it is to get back in because some of the skills atrophy, you lose contact, you lose confidence.”

Infometrics’ Brad Olsen noted the figures capture only people actively seeking work. “At what point, when you've got such a high proportion of people who have been unemployed for such a long period of time, do they become disenfranchised?” He said Seek data suggests around three times as many people apply for each advertised job as in 2019.

Hours worked fell 1.6% from the June quarter. “As many Kiwi business owners look to cut costs, they first start by cutting hours,” the Kiwibank economists said.

The youth of today

Unemployment among 15- to 19-year-olds was 25.2%, barely moved from 25.3%; for 20- to 24-year-olds it fell from 12% to 11.3%. RNZ’s Checkpoint spoke to graduates and school leavers who rejected the idea their generation is lazy. Fatima Alsaeed, who graduated in May, said she had lost count of applications: “As young people, we're being told that we’re lazy... but it’s really, truly a struggle.” 

The timing is poor. From this week, 18- and 19-year-olds are cut off from Jobseeker support if their parents earn $67,225 combined. Mā Te Huruhuru’s Te Kou o Rehua Panapa warned the changes risk pushing vulnerable rangatahi onto the streets: “For an 18- to 19-year-old who has nowhere to sleep... placing additional eligibility hurdles in front of them can make a difficult situation even worse.”

Social development minister Louise Upston said the threshold would be adjusted annually, and that where parental support isn’t available young people would still be eligible. University of Auckland professor Terryann Clark called the means test “incredibly unfair and punitive”: “At 18, you can vote. At 18, you can go to war. But somehow, we're still means tested against our parents’ income.”