Employment and Skills

How did we come to have 170,000 people unemployed in September quarter 2012?

Friday November 09, 2012 Kel Sanderson

The simple answer is that in September quarter there was an increase in the unemployed on the number in June quarter 2012 because the economy created too few jobs.

In September quarter, on the measurements by the Household Labour Force Survey (HLFS) the number employed were 12,000 less than in June quarter, the number of people in the labour force had increased by 1,000 people, and so the number unemployed increased by 13,000 from 157,000 in June quarter to 170,000 in September quarter.

Was this failure to create enough jobs unexpected? The answer is a very strong “No!”

After the rapid increase during the GFC from 100,000 unemployed in March 2008, to about 150,000 unemployed in March 2010, the economy had been creating about 35,000 to 40,000 jobs a year from 2010 through till about June 2011. This was about the same as the number of additional people in the labour force, and so the number unemployed stayed relatively steady between 150,000 and 170,000.




There are seasonal influences, so the picture is clearer looking at the annual change from September quarter last year to September this year. Since June 2011, the number of jobs created by the economy has declined rapidly to being just a net 1,800 jobs in the year ending September 2012. The net number of additional people in the labour force also dropped, mainly due to emigration. However that number still increased by 20,000, which is much greater than the anaemic 1,800 jobs created by the economy, and the number of unemployed increased.

What can we expect from now on?

If you continue doing what you’re doing now, you going to continue getting what you’ve got now. We are doing nothing to change the performance of the economy except hoping that sometime Christchurch will start the re-build. So we can only expect more of the increase in unemployment we have got now.

Even if we do arrest the rapid decline in job growth we have suffered in the last 18 months, the economy does not have the capacity to bounce back to sufficient job creation, even with the re- build. The next two years in our forecasts therefore look bleak.




Even with job growth climbing back up to 20,000 jobs a year by early 2014, the unemployment looks likely to hit 190,000 people in March 2013 and again in March 2014, before the number starts to slowly track down again. These numbers assume a net outward migrant flow, and would be higher if that outflow declines.