How COVID-19 changed NZ’s labour force (Part 1)

The latest release of data, for the first quarter of 2022, enables interesting comparisons to be made between the state of the labour market in New Zealand immediately before COVID-19 took hold, and now. All the tables that follow are based on HLFS data.

Table 1 provides a high level view of what has happened during the last two years. It shows that the number of people in employment has increased by about the same amount as the growth in the population of working age. It also shows that the number of people who indicated that they were unemployed (i.e. available and looking for work) fell significantly, although the number of people not in the labour force increased by almost the same number. This suggests that people who were previously unemployed have not necessarily moved into employment, but rather that they are no longer looking for work.

Table 1: Labour force status ('000s)

Other data from the HLFS indicates that a large majority of the extra jobs in the economy (i.e. 89 percent) have been in full-time roles. This could reflect the fact that many employers have been desperate to find additional labour.

Table 2 reveals that female employment has grown slightly faster than male employment, both in absolute and percentage terms. However, there are still more males employed than females.

Table 2: Number employed, by sex ('000s)

The comparatively rapid growth in female employment does not have a simple explanation. On one hand, females tend to outnumber males in some of the public sector industries where employment has grown significantly (see Table 6) but, on the other hand, they also tend to outnumber males in several occupational groups where employment has fallen (Table 7).

Table 3 shows that more than half of the absolute growth in employment (i.e. 54 percent) was amongst people of European origin. However, in terms of percentage growth, the most rapid increases were amongst Māori and people of Asian origin.

Table 3: Number employed, by ethnic group ('000s)

The relatively rapid growth in employment of Māori and people of Asian origin might be thought to reflect the fact that these two population groups are comparatively young and, hence, most active in the labour force. However, Table 4 reveals that the most rapid increases in employment have been in the older age groups in the population, especially among people aged 65 years or older.

Table 4: Number employed, by age group ('000s)

In absolute terms, almost half of the employment growth (45 percent) has been among people aged 55 years or older, and more than one-fifth has been among people of superannuation age. However, increased employment of superannuitants is not a new phenomenon. Employment of people aged 65 years and over has been increasing for several decades.

Table 5 shows that the greatest increases in employment numbers have happened in Auckland, Wellington, and Canterbury. However, this is unsurprising, given that these places are where most of the population live. More interesting is the fact that employment has grown considerably, in both absolute and percentage terms, in the Manawatū-Whanganui region. Employment has also grown at a rapid pace in the Northland region. 

Table 5: Number employed, by region ('000s)

By contrast, employment in Manawatū-Whanganui’s neighbouring region, Taranaki, has fallen, but the reasons why this has happened are not obvious. The other region where employment has fallen is Otago, for the obvious reason that this region is home to the Queenstown lakes area, which has been starved of international visitors who previously kept the local economy buoyant.

Reflecting the lack of international visitors to New Zealand in the age of COVID-19, Table 6 shows that the number of people employed has fallen most in the Retail Trade and Accommodation Industry, which includes food and drink service businesses, as well as hotels and motels. The industries that have grown most in numerical terms have been Agriculture, Forestry and Fishing (which was largely unrestricted by lockdowns and has benefitted from strong overseas demand); Construction (which has seen a boom in residential building activity); and the various public services (where a lot of the employment growth has been a direct effect of the government’s COVID-19 response measures).

Table 6: Number employed, by industry ('000s)

Table 7 indicates that there has been considerable restructuring of employment when broken down by occupational group. In truth, however, much of the occupational change the table reveals reflects long-term changes. During the past few decades, there has been significant growth in the highly skilled occupations (Managerial, Professional, and Technical) and occupations that involve personal services. At the same time, there has been a reduction in employment in intermediate occupations. Employment of Clerical and Administrative workers has fallen because of increased use of IT. Sales employment has fallen for similar reasons, although COVID-19 is also likely to have been a factor.

Table 7: Number employed, by occupation ('000s)

Lastly, Table 8 largely reflects what the previous table revealed about changes in employment broken down by occupation. A great deal of the growth in employment has been amongst people who have the certificates, diplomas or degrees that are required for managerial, professional, and technical employment. 

More remarkable is the fact that there has been strong growth in employment amongst people with no qualifications. The reasons for this are not immediately apparent. It is possible that there has been an increase in the number of New Zealanders working as fruit pickers and pack house workers, in the absence of Recognised Seasonal Employer (RSE) workers. However, fruit pickers and pack house workers would be classified as labourers, employment of whom has grown very little according to Table 7.

Table 8: Number employed, by highest qualification ('000s)

More detailed analysis would be needed to fully understand some of the changes shown in the eight tables above, but, allowing for the long-established trends noted, it is clear that there has been a great deal of resilience and stability in New Zealand’s labour force. Undoubtedly, a lot of this has been the result of the monetary and fiscal measures that were put in place as part of the government’s COVID-19 response. However, there will certainly be challenges to the resilience and stability of the labour force in the next few years. Monetary stimulus is already being removed, and it is debatable how long fiscal stimulus can be sustained. A global slow down, or recession, is also a distinct possibility.

In Part 2 we will delve beneath the headline numbers to examine what has happened to aspects of unemployment in the time of COVID-19.