Youth and young adults: Where unemployment hits hardest

Statistics New Zealand’s (Stats NZ) latest labour market data releases confirmed a worrying trend; unemployment has increased. Total unemployment increased by 0.3 percent, from 4.8 percent in quarter three 2024 to 5.1 percent in quarter four 2024. Not all demographics are affected by tight economic conditions equally, and when it comes to unemployment, it appears that youth and young adults, once again, are the most impacted. 

Those aged 15-19 years old (youth) have seen the largest increase in unemployment out of any age group, rising from 20.4 percent in September 2024 to 23.8 percent in December 2024. This age group includes those recently in, or currently in, secondary education. What may be occurring, other than the overall decrease in available jobs, is increased competition for jobs that typically employ secondary students as the overall job market tightens.  

The next age group up, 20-24 years old (young adults), have also seen a higher increase in unemployment than the general population. Unemployment for this age group rose by 0.7 percentage points between September 2024 (8.4 percent) and December 2024 (9.1 percent). In fact, youths and young adults were the only age groups where unemployment had increased beyond the 0.3 percentage point increase in the total unemployment rate. We know that often younger workers get outcompeted in the job market by more experienced workers. 

The short answer is yes, youth and young adults’ (15-24 years old) labour force participation rate increased from 63.8 percent in September 2024 to 66.4 percent in December 2024. They are eager to work.  However, it is still low compared to a year ago (69.2 percent). While there is a slight downward trend here, it could mean that youth and young adults are exploring other avenues of occupation, such as tertiary education, including vocational education.  

However, of the flip side, the rate for those not in education, employment, or training (NEET) has increased for both youth and young adults. From December 2023 to December 2024, the youth NEET rate increased by 0.8 percentage points, to 11 percent, and the young adult NEET rate increased by 1.7 percentage points to 16.4 percent. This NEET rate represents challenges in the labour market, both in motivating youth and young adults to engage in education, employment, and training, but also may have some underlying reasons such as disillusionment with current economic conditions.   

Looking at Stat NZ’s migration data, the answer appears to be complicated. Since December 2019, New Zealand has had a net gain of 15,356 individuals aged between 18 and 24 years old. However, in December 2024, there was a net loss of 480 individuals. There appears to be a trend of decreasing net migration occurring from a peak in 2023. It will be interesting to see how this develops in the near future, especially with brighter prospects across the ditch.  

Looking across the ditch to Australia, where 598,000 New Zealanders already reside, the labour market is stronger. Australian unemployment tells us two important things: firstly, that the overall unemployment rate is one percent lower than New Zealand at four percent, and more importantly, that youth and young adults have significantly lower unemployment rates.  

In Australia, the current youth unemployment rate sits at 13.6 percent, a full 10.2 percentage points lower than New Zealand. The young adult unemployment rate is six percent, 3.1 percent lower than the New Zealand unemployment rate. What this means is that, if weakness in our labour market continues for an extended period, those young adults who may have just finished tertiary education in New Zealand and may be struggling to find reasonable employment opportunities, could move to Australia to take advantage of the stronger job market. Brain drain could become a brain flood.  

The prospects in the economy, once again, look challenging for youth and young adults. Targeted action needs to be taken to provide employment, training, and upskilling opportunities to this key demographic to prevent our young population from being left behind.