The first quarter labour market statistics of 2021 paint an interesting picture of New Zealand.
A number of positive changes continue to happen, but we can’t hide behind all the positives and just ignore the negatives.
The newly released labour market statistics for the March 2021 quarter have brought a collection of interesting results. There were positive changes mostly across the board, but they aren’t completely picture perfect. New Zealand has been slowly recovering from the heavy blow that COVID dealt us, and doing better than other nations. We still suffered across the entire economy, but now a year on, we can dive into the labour market statistics for the start of the first year after COVID.
Employment not nearly as bad as predicted…
Many predicted our unemployment rate would skyrocket after COVID, but it didn’t reach the expectations at all. Then again, people predicted we would see a delayed effect to unemployment, yet our unemployment rate has been steadily decreasing since the peak reached during COVID, and is now at 4.7 percent.
The decrease in the unemployment rate came off the back of female unemployment falling, while male unemployment slightly rose. This is simply put down to unemployed males increasing by 2,000. With unemployed females falling by 8,000, we see both males and females meet equally with a shared unemployment rate of 4.7 percent each.
… But, underutilisation has increased to 12.2 percent.
Underutilisation captures unused working capacity in the labour market, which has increased once again after a single quarterly decrease following the 12.7 percent peak after COVID. A worrying sign pushing this increase was the large increase in the number of people in available potential jobseekers, up 14.7 percent from the previous quarter.
The number of employed people has increased by 15,000, which is partly fuelled by the decrease in the number of unemployed people. But, these employed people seem to be more focused in part-time work as opposed to full-time work. As there has been an increase in the number of people feeling underemployed, which is part-time workers ready and available to work more hours.
Across the reference week in the household labour force survey there were multiple findings which may explain this, these being:
- 13.4 percent quarterly decrease in people working more hours than usual
- 11.1 percent quarterly decrease in people working the same hours as usual
- 23.2 percent quarterly increase in people working less hours than usual
- 112.8 percent increase in people employed, but working no hours.
Decreases in people working the same or more hours, and a large increase in people working less or no hours at all. Why are people working less than usual? Is this driving underutilisation?
There was also a noticeably large increase in people stating COVID was the reason why they worked fewer hours than usual. However, this will be a result of Auckland switching between alert levels early in 2021. Which will also explain the recent increases in Auckland’s underutilisation rate.
However, it seems the most prevalent reason for decreased hours is simply Kiwis treating themselves to a domestic holiday. With domestic travel increasing substantially in the latter half of 2020, a large proportion of people pinned the fact they were working less hours on holidays. A personal reward for making it through the hectic start of 2020 it sounds like.
The increase in the number of underemployed could be linked to temporary employment increasing, while permanent employment decreased. There was an increase in the labour force, but a big chunk of this increase is not permanent employees. It might be past permanent employees possibly now settling for a part-time/temporary job with less hours than they desire. This would explain the reflected results in underutilisation.
But, no matter what the case, underutilisation increasing is never a positive sign for the labour market. The impacts of unemployment from COVID could possibly be catching up with us, but not directly through unemployment itself. With people picking up short-term and temporary work our unemployment rate can decrease, but it’s not necessarily what people want.
Optimism about job security is now returning.
One defining element that COVID brought was the lack of job security for many. The future wasn’t clear for the majority of people. We saw extremely large increases in people believing they had a high or a medium chance of losing their job in the next 12 months.
The recent quarterly results show an overall 10.5 percent decrease in people believing they had a high or medium chance of losing their job. To go along side this, there were also increases in people believing they had a low chance or almost no chance of losing their job.
Should we start being more optimistic?
After an extremely interesting and new year for New Zealand, and the world, we started to see our economy shape up alright. Across the majority of labour market measures, people were stunned by just how well the New Zealand economy had recovered from the shock, but there was still a lack of optimism.
Now a year on from when COVID sent us into lockdown, our labour market consists of a combination of mostly positives, but a few negatives too. Decreases in the unemployment rate, and increases in labour force participation, employment, and job security paint the positive side. While increases in underutilisation, specifically available potential job seekers and underemployed, and increases in youth not in education, employment or training paint the negative side.
The positives might just outweigh the negatives in this quarter’s statistics, but there are some underlying negatives to keep an eye on as we continue to move forward.