Craig Renney, the economist for the Council of Trade Unions, looks at the latest employment stats and finds that for all we should be celebrating, there’s still work to be done.
Unemployment fell to a record low of 3.2% in the latest data from Stats NZ, which places New Zealand fifth in the OECD and well ahead of the UK and Australia. Clearly, this is good news. Fewer unemployed people mean more people in work, suggests that we have a healthy economy, and means more money in workers’ pockets, right?
However, if we look closely at the data, it’s clear there are still winners and losers in the labour market. It also suggests there’s still work to do to support a goal of full employment in New Zealand.
So, who’s winning? Well, we could start with the 48,000 fewer people unemployed than a year ago. Two years ago, when Covid-19 first struck, we thought that unemployment would be double the rate it is today. Compared to this time last year, there are an additional 101,000 people in employment – during which time the labour force grew by only 53,000. Job growth outstripped population growth.
Female workers are winning the employment race right now as well. There were 66,000 new female employees last year – nearly twice the 35,000 new male employees. The fact this went into reverse last quarter, with a small fall in female employment, does bring into question how long this improvement will last, however. Women are also getting better at gaining permanent employment. Over the last nine months an additional 52,000 female workers got permanent employment – against 26,000 men.
Perceived job security for workers also appears to have improved. About 46% of workers now say there is “almost no chance” of losing their jobs in the next 12 months. This is up from 35% in June 2020 and up 4% from a year ago. Job security continues to be an issue for temporary and casual workers, who are far less confident – only 29% of whom think there is “almost no chance” of losing their jobs in the next 12 months. Union members are far more confident than the general workforce in their continued employment, with 56% thinking that there is “almost no chance” of job loss.
Where we have not seen as much strength in the labour market is in what is called underemployment, when people want to work more hours but can’t get them. There were still more than 100,000 people in this situation in New Zealand. Adding together the number of people who are looking for work with the number wanting more work finds 256,000 New Zealanders who want work. That’s bigger than the population of Wellington, suggesting that we are not yet at full employment just yet.
That is also borne out in the employment data for young people. While the number of 15 to 24-year-olds not in education, training or employment fell by 12,000 over the year, progress in the last nine months has been painfully slow. Since June that number has actually increased. The unemployment rate for Māori and Pacific peoples is also still a matter of concern, running at 7% and 5.4% respectively. That’s better than in the recent past, but still shows huge untapped potential in these communities is being missed.
So, who else is losing in this data? Well, one obvious place to look would be in workers’ pockets. Despite strong economic growth and strong employment growth, we are not seeing strong wage growth. The labour cost index showed an increase of 2.6% in wages. Inflation is 5.9%. Private sector workers saw a slightly higher rise than public sector workers, at 2.8% and 2.3% respectively. Looking across the workforce, 38% of workers saw no pay rise at all this year. This is the same as in December 2019, just before Covid. At least 80% of workers saw a pay rise lower than the current inflation rate, and two-thirds of workers got less than 3%.
When we look at the situation using a different dataset also released last week, the quarterly employment survey, we can see that increases in wages came increasingly from overtime payments. Overtime payments increased 11.2% annually on one measure. That dataset also shows that the number of paid hours of work increased, rising 6.6% in a year. New Zealanders seem to be working longer and harder but are not yet seeing the results in their pay packet.
At this point, we should think about the recent data in its wider context. This is the lowest rate of recorded unemployment since the current records began in 1986. And yes, despite some recent press, you can broadly trust these numbers – they are not the result of some recent tricks or new sleight of hand. The data is well ahead of where we thought we would be just a year or two ago. More people are in work. People feel more secure in work. The number of people out of work for six months or more fell 25% last year. These things are good and should be celebrated.
But we shouldn’t get too excited just yet. Wages are not catching up with the increased demand for work. Work is unequally divided, with many wanting more work and many working overtime. Young people, Māori and Pacific peoples still face poorer labour market outcomes. People in non-traditional forms of work feel more insecure about their employment prospects. It’s why fair pay agreements are needed. It’s why employment insurance is needed. We have plenty of work to do to make sure that there is good work available for everyone who wants it.
