Employment and Skills

Plunging unemployment rate – who has benefitted?

Sunday November 11, 2018 Mark Cox

The latest results from the Household Labour Force Survey (HLFS) indicate that the total number of people employed in New Zealand increased by 74,000, or 2.8%, between September 2017 and September 2018.  This looks a very good result, although the increase should be compared to an increase of 102,000 in the year to September 2017, and an increase of 143,000 in the year to September 2016.

 

However, the more attention-catching finding was that the unemployment rate fell to 3.9% in September 2018, compared to 4.7% a year earlier.  This article examines which groups in the population have experienced the greatest falls in their unemployment rate. 

 

Looking first at the unemployment rate by sex, the table below shows that the unemployment rate fell much more amongst females, although it was considerably higher than the male unemployment rate in September 2017, and remained fractionally higher in September 2018.

 

Unemployment rate, by sexSeptember 2017September 2018Percentage points change
 Males 4.1% 3.9% -0.2
 Females 5.4% 4.0% -1.4
 Total 4.7% 3.9% -0.8

 

Looking at the rate by age group, it is evident that the unemployment rate fell most amongst the two youngest age groups, although it was originally much higher for both these groups than for other groups.  The unemployment rate amongst 15-19 year olds remains very high, and the unemployment rate amongst 20-24 year olds also remains well above the average for all ages.  It is also notable that the unemployment rate for all groups aged 30 years and over is significantly below the average for all ages.  The unemployment rate in several of the older age groups increased between September 2017 and September 2018, but the increases were not great.

 

Unemployment rate, by age groupSeptember 2017September 2018Percentage points change
 15-19 years 19.8% 15.2% -4.2
 20-24 years 8.9% 6.3% -2.6
 25-29 years 4.1% 4.5% 0.4
 30-34 years 4.0% 2.8% -1.2
 35-39 years 3.4% 3.3% -0.1
 40-44 years 2.5% 2.6% 0.1
 45-49 years 3.1% 2.6% -0.5
 50-54 years 2.9% 3.1% 0.2
 55-59 years 2.7% 2.0% -0.7
 60-64 years 3.1% 2.2% -0.9
 65 years and over 1.1% 1.7% 0.6
 Total 4.7% 3.9% -0.8

 

The unemployment rate fell amongst every ethnic group, although it is clear that considerable ethnic inequalities remain.  The unemployment rate amongst Māori fell by more than the rate for the total population, but it remains more than twice the total rate.  Pacific peoples experienced the largest decline in their unemployment rate, although they, too, suffer a higher rate than for the total population. 

 

Unemployment rate, by ethnic groupSeptember 2017September 2018Percentage points change
 European 3.5% 3.0% -0.5
 Māori 9.9% 8.5% -1.4
 Pacific peoples 9.4% 6.2% -3.1
 Asian 4.7% 3.9% -0.8
 MELAA* 8.9% 3.7% -5.2
 Other ethnicity 4.5% 3.9% -0.6
 Total 4.7% 3.9% -0.8

*Middle Eastern/Latin American/African

 

The unemployment rate fell in every region, apart from Tasman/ Nelson/ Marlborough/ West Coast.  It is also notable from the table that unemployment rates vary less by region than they do by age group and ethnic group. 

 

Unemployment rate, regionSeptember 2017September 2018Percentage points change
 Northland 6.6% 6.2% -0.4
 Auckland 4.6% 3.7% -0.9
 Waikato 3.7% 3.4% -0.3
 Bay of Plenty 4.7% 3.5% -1.2
 Gisborne/Hawke's Bay 8.8% 4.1% -4.7
 Taranaki 4.9% 4.0% -0.9
 Manawatu-Wanganui 5.5% 3.6% -1.9
 Wellington 4.6% 4.5% -0.1
 Tasman/ Nelson/ Marlborough/ West Coast 2.2% 3.9% 1.7
 Canterbury 3.6% 3.5% -0.1
 Otago 3.9% 3.8% -0.1
 Southland 5.2% 4.3% -0.9
 Total 4.7% 3.9% -0.8

 

The unemployment rate has fallen amongst most groups in the population that are covered by the HLFS.  However, it might be difficult to reduce the total unemployment rate much further.  The growth rate in employment has more-or-less kept pace with the growth rate in GDP, which implies that there has been very slow growth in labour productivity.  Faced with slow growth in productivity, employers will be reluctant to take on new staff, or replace staff who leave, especially if wage pressures increase.