Unemployment rate rises to 4.6%, young Kiwis make up almost half annual increase

Wednesday, 7 August 2024

The official unemployment rate is based on a survey by Stats NZ. To count, people must have actively looked for work in the previous four weeks.

The unemployment rate has risen to 4.6%, up from 4.4% in the previous quarter, and compared to 3.6% this time last year.

Stats NZ's labour market update on Wednesday showed young New Zealanders accounted for almost half the increase in unemployment, with 14,400 more jobless 15 to 24-year-olds compared to a year ago.

Overall, there were 143,000 unemployed Kiwis, an increase of 33,000 compared to the same time last year. There were 83,200 potentially available jobseekers, and 23,000 unavailable jobseekers.

The data showed workers were being offered fewer hours by their employers. Annually, the number of employed people who were working fewer hours than they would have wanted increased by 18.5%, up 326,000.

Stats NZ's labour market manager Deb Brunning said unemployment had been increasing since 2022, and that the latest unemployment rate was the highest since March 2021, during the Covid-19 pandemic.

'Recent rises in unemployment align with other economic indicators, including an increasing number of benefit recipients, a decreasing number of job vacancies, and declining GDP (gross domestic product) per capita,' Brunning said.

Money’s been getting tight for many New Zealanders with relatively high interest rates.

Despite the rise in unemployment and job losses across the public sector, Stats NZ's data showed public sector average weekly earnings increased by 7.5%, to $1934. Stats NZ analysis suggested it was because of the settlement of collective agreements in healthcare and education.

'The effect of pay increases for some health workers, along with school therapists and early childhood education staff, have all come through in public sector wage growth, in addition to other settlements seen over the year,' Brunning said.

Private sector average weekly earnings also increased 4.4%, to $1528.

Overall, wage cost inflation was 4.3% in the June 2024 quarter, while average ordinary hourly earnings increased 5% annually to $41.52.

Employers and Manufacturers Association (EMA) head of advocacy Alan McDonald said the increasing unemployment rate was revealing the true picture of the economy, and the financial stresses facing Kiwi businesses.

'Despite inflation falling and a growing expectation of an economic recovery, with lower interest rates, these changes will take a long time to filter though the economy,' McDonald said.

'The signs of an economic recovery are a decrease in unemployment, an increase in consumer spending, rising incomes, an increase in the GDP, and improved business activity. We have yet to see any of these indicators.

'There are also several international headwinds that may further delay this expected recovery, including the upcoming US election and the threat of tariffs, which will have a huge effect on our exporters.

'At the EMA, we’ve seen the evidence of the struggles facing Kiwi businesses, with the number of requests for help from our members in the areas of restructuring and redundancy skyrocketing this year.“

McDonald said while inflation was starting to fall, business conditions were likely to be difficult for some time given interest rates were picked to remain elevated into 2025.

'The numbers of youth (15-24) not in employment, education or training (NEET) is at 12.8%. This is an alarming statistic and suggests that job creation must be a priority for the Government in the coming months, particularly among our young people.'