May 17, 2024

Young adults bear the brunt of increasing unemployment

If younger people are not entering the workforce, what are they doing?

Unemployment statistic releases are rarely positive, and the latest data confirms an unsettling situation for youth and young adults. 

The latest labour market data released by Statistics New Zealand shows that the unemployment rate rose in the March 2024 quarter to 4.3 percent, a 0.3 percent increase from December 2023 (4 percent). The ongoing tightening of economic conditions is putting pressure on the job market, leading to increased unemployment. Unsurprisingly, the biggest jump in unemployment has been experienced by youth (15-19 years old), and young adults (20-24 years old).  

Youth and young adults bear the brunt of rising unemployment

The 15-19 year-old age group experienced a 6.2 percent increase in unemployment, from 16.9 percent in March 2023 to 23.1 percent in March 2024. Some of this jump might be a hangover from COVID-19, and the subsequent period of high wages and an abundance of available jobs.

The strong labour market in 2023 would have been likely to influence some students to prioritise work instead of study. This, combined with the rising cost of living, may have forced some students to enter the workforce to support their families and whānau

Young adults (20-24 years old) have also experienced a markedly rising unemployment rate, from six percent in March 2023 to 9.8 percent in March 2024. While not as drastic as the increase experienced by their younger peers, it is still a larger percentage point increase than for any older age group. This makes sense in some respects. In a tight job market, younger workers are competing against more experienced workers

If younger people are not entering the workforce, what are they doing?

The question becomes: What are the youth and young adults doing if they are not employed in the workforce? Have they moved onto the Ministry of Social Development (MSD) Jobseekers Support? The latest MSD data released shows that there has been a decrease in the number of 18-24 year-olds receiving jobseeker support. In the December 2023 quarter, 63,369 youth and young adults received jobseeker support. This number decreased by 6.6 percent to 59,229 in the March 2024 quarter. 

Have they moved back into tertiary education? It is too early to say definitively, but this is unlikely, as the total number of domestic full-time students decreased by 2.6 percent from 2022 to 2023. This is continuing a trend of decreasing tertiary education participation rates for New Zealanders

Young adults are leaving the country in droves

Young adults are leaving the country. From the first quarter of 2023 to the fourth quarter of 2024, there was a 20 percent increase in the number of young adults departing New Zealand and staying out of the country for 12 out of 16 months. The reasons young adults are leaving are numerous and hard to determine. The hangover from COVID-19, with young people postponing their travel until this year, has definitely played a part. 

Also, the grass may be greener on the other side. Young adults are leaving, driven by higher wages, lower costs of living, more opportunities, and an increasingly interconnected world. These are all incentives for young adults to explore opportunities overseas. A brief spell of unemployment before leaving long-term is not unexpected. 

Source: BERL analysis

While the reasons for the rising unemployment rate of our young people are complex, they are likely to include a combination of factors such as decisions to prioritise work over study, rising cost-of-living, a tightening job market, and the allure of moving overseas. It appears a growing number of young New Zealanders are choosing to leave the country long-term. This exodus of young talent will negatively impact our future workforce and deserves close monitoring.