Source: Radio New Zealand
Unemployment is at its highest in more than a decade, but an economist says that could actually be an early sign of economic strength, as more people return to the workforce. RNZ
New Zealand’s unemployment rate is the highest in a decade, but a leading economist is cautiously optimistic about the country’s economic outlook
There was a feeling of “cautious optimism” at a business breakfast in Auckland this week, after warning signs began flashing in the jobs market.
The latest figures, from Stats NZ, have revealed unemployment has risen to its highest level in more than a decade – 5.4 percent – with more people chasing work than jobs being created.
A total of 165,000 people are now unemployed – that’s a rise of 4000 on the previous quarter and 10,000 on a year ago.
When looking to the country’s future economic and employment outlook, Westpac chief economist Kelly Eckhold, the guest speaker at the breakfast, tells The Detail that he’s “cautiously optimistic” – a phrase he had on repeat.
“You know, in the last couple of years it’s been tough, hasn’t it?” he says. “We had a couple of years where things looked quite good as we went through the summer period in the early part of the year, only to find the economy sag in the middle of the year.
“And even though we have good reasons to be optimistic about this year, you have to be conscious that that could happen again, particularly given it’s an election year.”
He says the recent spike to 5.4 percent in unemployment is a complicated number. Yes, it’s higher than expected, but he says there’s also been a bump in the number of people wanting jobs.
“They survey New Zealanders to try to ascertain how many of us are actually looking for work, because not all of us are for various reasons. And the surprise last time was that jobs grew, but actually the number of New Zealanders thinking they wanted to be in the workforce grew as well.”
He believes this could be “early evidence of economic strength”.
“Often this relationship works in reverse – when the economy is weak, then people drop out of the labour force, they go ‘well, there’s not very many opportunities anyway, or the pay’s not going to be any good’, so they think about other alternatives, study or training for example.
“And when the economy picks up, people think ‘there are options out there now, I can actually go out there and get an interesting opportunity, I can get more income,’ and you tend to see people attracted into the workforce during these periods.”
He says hiring remains strong in government-related sectors, such as health and police, but construction is hurting.
“But we are starting to see some better signs … as lower interest rates filter through, although it is early days.”
Peak point
He believes the unemployment rate has peaked – “it should fall next quarter, modestly” – which is a sentiment echoed by Shay Peters, CEO of the Australia and New Zealand umbrella of Robert Walters, a recruitment firm. He hosted the business breakfast.
“I think what we will be seeing and what everyone will be forecasting over the next 12 months is for that unemployment rate to drop,” Peters tells The Detail.
He points to the 76 percent of businesses surveyed for the company’s latest Salary Guide who say they are planning to hire this year, up from 66 percent last year.
“Our labour market is showing a renewed sense of optimism, but caution remains.”
He says, “unfortunately”, New Zealand continues to be a victim of the brain drain to Australia.
“That is probably my biggest concern, around the level of individual that’s gone to Australia … they are the productive ones. They are there, they are productive, they are doing the job.
“They are the ones who we see leave New Zealand with their families and buy houses in Australia.
“Will these people come back? It’s highly unlikely. Will we be able to import talent from other offshore resources? I don’t know, it’s a tough one.”
When asked about the role of AI in New Zealand’s job market, he says, “I think there is a nervousness about AI taking people’s jobs, but we aren’t seeing it play out en masse yet”.
But, he says, AI is working overtime for those chasing a job.
“A great example is one of our clients, who said to us [that] when AI was just starting to be implemented by job seekers … they received 12 cover letters that were exactly the same from 12 different people. Clearly, they put it into the same bot, they put in the same job description in and it spat out the same cover letter.
He says “authenticity” is what sets candidates apart. And in a tough market, anything and everything helps.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand