Unemployed face the toughest job market in 30 years, Reserve Bank says
Thursday, 27 November 2025
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Reserve Bank Te Pūtea Matua figures show that people who lost their job in the past year have faced the hardest time in three decades for finding a new one, worse than the aftermath of the Global Financial Crisis.
On Wednesday the central bank announced a 25 basis point cut in the official cash rate to 2.25% at its last monetary policy meeting of the year, and spoke with cautious optimism of a gradual improvement in the economy in the coming year, and a further expected fall in inflation.
But though unemployment remained relatively low for a period of such economic weakness, the central bank’s Monetary Policy Statement acknowledged the trials unemployed people have faced.
“Although the share of workers moving into unemployment is not high by historical standards, the share of workers moving from unemployment to employment is very low,” it said.
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It calls this the “job-finding” rate, and it was “at its lowest rate in 30 years”, though the central bank did not provide a breakdown by region, gender or ethnicity.
That went back to just before the 1997 Asian financial crisis struck, when unemployment was over 6%, but was lower than its nearly 11% peak in the early 1990s.
It was also higher than the immediate aftermath of the Global Financial Crisis in 2008 and 2009.
Acting Reserve Bank Governor Christian Hawkesby, who steps aside on Monday to make way for Swede Anna Breman, acknowledged how hard the struggle to get a job has been.
“Often the unemployment rate is used as a summary measure for the labour market,” he said.
“We’ve looked much beyond the unemployment rate to get a gauge of the labour market. A number of the indicators, including the job-finding rate show, we have gone through a tough period economically,” he said.
“The job loss rate and the job-finding rate are at historic lows. It’s been an environment where … businesses have been very hesitant to let staff go because they have experienced difficulties finding skilled and unskilled staff,” Hawkesby said.
“But when you don’t have a job, it’s also been harder to find a job.
“It’s often the labour market that recovers the last in the cycle,” Hawkesby said.
But, he offered hope to the jobless, saying: “Some of those labour market indicators are starting to pick up the turn in the economy that we are looking forward to in 2026.”
There had been an increase in jobs advertised, and an increase in hours worked, he said.
Paul Conway, the Reserve Bank’s director of economics and chief economist, said: “We think of it as a low-hire, low-fire labour market, so for unemployed people, it is a challenging time to get re-employed unfortunately.”
High numbers of young New Zealanders headed overseas in 2025 in search of work, and the Reserve Bank said the tough time finding jobs had contributed to that.
But, Conway said: “It will improve, and it will become easier. I think we are at the low point in the labour market now.”
The Reserve Bank expected a gradual reduction in the difficulty of finding work next year though it was uncertain about the strength of the expected 2026 recovery partly because the country needed to see household confidence improve.
The past year had been characterised by falling interest rates on home loans encouraging household spending.
However, households also faced higher insurance, council rates and energy costs, and global uncertainty fuelled by the behaviours of the US, Russian and Chinese superpower states had dragged on confidence.
“Greater uncertainty likely led to increased precautionary behaviour by households and businesses, dampening consumption and investment,” the Reserve Bank’s Monetary Policy Statement said.
The Reserve Bank’s decision to decrease the OCR was not unanimous, with one member of the six-strong Reserve Bank Monetary Policy Committee voting to hold.
“Some members highlighted the risk that continued caution on the part of households and businesses could further slow the recovery in domestic demand, which could see inflation fall below the target midpoint,” it said.
“Conversely, other members highlighted the possibility of a faster recovery if house prices and household spending increase more quickly than assumed given lower mortgage rates, leading to more persistence in medium-term inflation pressures.”