Venkat Raman
Auckland, November 3, 2021
Unemployment rate in New Zealand dropped to 3.4% in the September quarter, the lowest in fourteen years, Statistics New Zealand figures show.
Finance Minister Grant Robertson attributed to the status to the ‘government’s actions to support the economy during the pandemic, resulting in higher wages, encouraging more people to take up jobs.’
He said that the unemployment level of 3.4% was last seen in December 2007 during the Labour government under Helen Clark.
More women in employment
According to Statistics New Zealand, the number of people listed as unemployed was 98,000 at the end of September 30, 2021, representing a drop by 18,000 compared to the June quarter and 100,000 as of the end of September 30, 2008.
Mr Robertson said that employment rose by 54,000 during the September 2021 quarter, of which 39,000 were women. The employment rate for women was 64.6%, the highest rate ever recorded for women. The total number of people in work is now 115,000 above the level recorded in December 2019, the quarter before the occurrence of Covid-19, he said.
According to Mr Robertson, New Zealand’s employment rate is now the third highest in the OECD and that the average hourly wage rose 3.5% to $35.25 an hour.
Positive achievement despite Covid
“This is a very positive result given the impacts of higher alert level restrictions and shows the Government’s approach since the start of the pandemic to protect lives and livelihoods continues to be the right one. The number of people reporting that they were employed but working zero hours is 15% lower in the September quarter compared to the first lockdown in the June 2020 quarter. This shows how businesses and workers have adapted during the pandemic and firms are hiring,” he said.
Mr Robertson said that the New Zealand economy remains robust despite the public health restrictions resulting from the pandemic.
“The ongoing impact of the pandemic is likely to see unemployment move around a bit. Nevertheless, our balanced approach has put us in a strong position as we move to the new Covid-19 Protection Framework. The results also show New Zealand has performed favourably against the countries we measure ourselves against,” he said.
On comparable measures, the unemployment rate of 3.4% stands against 4.6% in Australia, 4.5% in the United Kingdom, 5.1% in the United States and 7.2% in Canada. The OECD average is 6.0%,” Grant Robertson said.
Maori and Pacifica population
Social Development and Employment Minister Carmel Sepuloni said that the unemployment rate among Maori and Pacific Islanders has also declined and that the government’s focus on these groups is working.
She said that her government has invested in programmes such as Flexiwage, Apprenticeship Boost, Maori Trades Training, Mana in Mahi and He Poutama Rangatahi, which are designed to empower Maori and Pacific people in the labour market and provide them with the skills to thrive. MSD are seeing record numbers of people moving into work and today’s results reflect that,” she said.
Mr Robertson said that prior to the Delta outbreak, some sectors were facing labour shortages.
“The government is committed to addressing this through tweaks to immigration settings such as the rollover of working holiday visas and other short term visas. The one-off residence pathway also provides certainty for up to 165,000 to migrants and business,” he said.
Westpac Acting Chief Economist Michael Gordon said that the New Zealand labour market remains very tight, with high wage growth, although not up to expectations.
“The New Zealand labour market has continued to tighten rapidly. The unemployment rate fell from 4.0% to 3.4% in the September quarter, equalling the record low set in 2007, just before the Global Financial Crisis. This was a sharper fall than we and the market expected.
Covid restrictions during the quarter biased the unemployment rate down a little, as some people were not able to actively look for work. Stats NZ estimates that this reduced the headline unemployment rate by 0.2 percentage points, a smaller impact than we saw in last year’s lockdown,” he said.
Strengthening demand for workers
According to Mr Gordon, the demand for workers has strengthened considerably over this year. Employment surged by 2% in the quarter and was up 4.2% a year ago. This was higher than our forecast, although the risks were certainly in this direction given the recent strength of other measures such as the Monthly Employment Indicator.
“This demand was met by a sharp rise in labour force participation to 71.2%, equalling the all-time high reached in 2017. The jump in participation was much greater for women than for men and appears to have been spread across age groups,” he said.
The Labour Cost Index rose 0.8% for the quarter. Wage inflation has picked up as the labour market has tightened, but not by as much as we forecast (and surprisingly with bigger gains in the public sector, despite the partial wage freeze). We expect that wage growth will accelerate in the coming quarters, in response to both the demand for labour and the increasing cost of living.
