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Official jobless rate overstates labour market woes

New Zealand's unemployment rate of 7.3% overstates the weakness of the country's labour market, which has been tapering off through the latter half of this year, the Reserve Bank says.

The bank's latest forecast is more downbeat about the level of unemployment over the next two years, but is not convinced joblessness is at a 13-year high, as shown in Statistics New Zealand's household labour force survey – the official barometer.

The HLFS figures were in contrast to those in the Quarterly Employment Survey, falling numbers of unemployment beneficiaries, rising wage inflation and reports that employers are still finding it hard to attract staff.

"Looking at a broad range of measures, momentum in the labour market has weakened somewhat over the end of 2012," the bank says in commentary included in today's three-monthly Monetary Policy Statement. "We believe this deterioration is less severe than the HLFS would suggest."

The central bank expects unemployment of 7.1% in the March 2013 year, falling to 5.9% in 2014 and 4.9% in 2015, according to forecasts in the MPS. That is more pessimistic than the 6.4%, 5.3% and 4.9% forecasts in September.

A rising unemployment rate has surprised economists in the past three quarters, with the spike in September attracting scepticism while also pointing to a lull in what seemed a more strongly recovering economy.

Jobs growth in recent years has largely been underpinned by increasing numbers of part-time staff at the expense of full-timers, though the Canterbury rebuild is seen as a likely candidate to mop up spare capacity in the labour market.

"The continued high unemployment rate of the past three years highlights the risk that significant spare capacity remains in the wider economy," the bank says.

"Even if the unemployment rate dropped back below 7% in the December quarter, the HLFS would still suggest much more economic slack than other capacity indicators."


Comments and questions

Presumably this strategy has been unsuccessful then:

Only a handful of people have received funding to begin a job they'd already obtained by their own efforts. Ms. Ardern is making a storm in a teacup over it. Would she really prefer these people to be here on the DPB or Unemployment Benefits? Ms. Bennett wont have to troll through weeks of documents either, because each of the cases had Branch sign offs on them. It wasn't decided at a low level.She's just delaying having to admit it.

But how come talented graduates can't get employment?

Also when a Countdown opened, the staffing was to be 160, but there were 2500 applicants.

The migration loss to OZ is largely exporting our unemployed.

Exporting our unemployed - ahhhh no! Exporting the workers and the middle class. Look around - the unemployed can't go anywhere, they don't have any money!

We may be exporting 'unemployed' but we are also importing 'employed'. They are mirror images. If Kiwis weren't leaving, there wouldn't be gaps in the labour market that need filling from o'seas.

Talented graduates can't get employment for the same reason as anybody else can't - they are unable to produce the output the employer needs to justify their employment, or which others with greater qualifications or experience are available for at the same wage rate.

Getting 2500 applications for 160 minimum wage jobs is largely a sign that the minimum wage is too high and is keeping low-skilled, low-experience workers out of the labour market - oh wait, unemployment among adults is about 4%, and for under 24s, about 20%...

And yet it's the same unemployed who complain about every practical solution the government is attempting to solve this issue - 90-day trials, introductory wage rates, optional Kiwisaver...

How on earth do you know it's the same unemployed who complain about these things? Unless you've surveyed a large sample of these complainers, around 1000 or so, you must be guessing.
I suspect most genuinely unemployed welcome such schemes. It's simply disgruntled opponents of the govt, who don't need jobs, doing the whinging.

What sort of degrees are you talking about?

Talented graduates can't get employment because New Zealand is no longer a "talent" economy.

The unemployed graduates hold unemployable social degrees and most of these are issued for 'good attendance'.
Traditional sciences and engineering disciplines are what this country requires, not the 'feel-good' degrees awarded by so many of our institutions: 5700 engineering degrees, 62,000 social degrees. Duh!!!!

Exactly RJR!

Case in point is the woman with a PhD in some kind of social degree who TV3 paraded around as a weapon to bash the government with had her complaining that WiNZ advised her to apply to McDonald's for a job because she couldn't find appropriate employment in her field.

(McD's wouldn't have wanted her in the first place - she's too over qualified and would be too much of a flight risk at the first sign of a "social" interview, anyway)

The poor wee thing, probably started her university time around the same time Auntie and comrades were handing out $500K to artists to send porta-loos to Europe that bleated like sheep when opening the door. No wonder she thought she was onto a winner undertaking a PhD...

About time these highly-intelligent, but thick as two short planks, career students woke up, smelled the coffee and educated themselves for employment in the productive sector.

Or instead of blaming everyone else for them not being employed, maybe they could start their own businesses. See solved that for you...

Exactly - does a country prosper by teaching students how to do a haka or how to program in objective c / java / python etc ?

It's okay because with the big bank profits everybody will get a job working for the banks.

And anybody can get a loan from the bank and work for hem like that also ....

The banks will save us, just trust them to know what to do what is best for us.

Employers are still struggling to attract good or great staff, which is a different issue - rising unemployment does not equate to more suitable people being available for hire. Businesses look for skill, job and an organisation fit, and unemployment numbers do not guarantee any of these attributes.

So is this simply the case that the gap between the figures from Statistics and QES is of those not able to claim benefit any longer because of new MSD initiatives and they are still unemployed, just not registered for benefit.

On a larger scale with increased levels of people gaining terry educations, job expectations are increased without the matching level of high-level jobs being created so they go offshore.

The evidence I see in Auckland is the employment rate is even worse than the figures suggest due to the number of 55 to 65 year olds at home pretending to be consultants when really they are unemployed.

Having interviewed hundreds of graduates, I can tell you quite simply why they cannot get jobs. The majority have Weetbix packets degrees the market does not and never will need. If it is medicine, IT or law then they get multiple offers if they have good marks and can communicate. If you have spend four years 'largering it up' and complete a BA in alchohol consumption, do not be offended when people cast you aside.

I studied the opposite sex at Canterbury University.

I studied a broad

Absolutely agree. We've got to do a better job of matching students to employers' needs. Not a huge need for comms/media/arts degrees, etc.

So these grads come out of varsity, can't find work, go on dole then leave to go overseas if they can with huge student loan. Better that they didn't bother to go to varsity, went straight to some kind of on-the-job training on youth rates, learnt real skills and then progress upwards. Back to the future.

Behind the curve again.

The RBA is progressive, dynamic and effective in its monetary policy settings.

In contrast, the RBNZ is reactive, backward and ineffective.

Wait for the recession to hit and then he will cut.

NZ is indeed cursed with mediocrity.

You are talking about a different RBA than the one in Aussie, which just cut their OCR and got a hike in their dollar in return! I would hardly call wildly opposite outcomes "dynamic and effective".

Build a $53 million white-water centre in Manakau. That'll fix the problem, surely.

Given that it is still (ostensibly) the Government's stated objective to bring our economy into line with Australia's, I can only assume this government has some covert plan to destroy the Australian economy as well as New Zealand's.

Key and English are sure fiddling while New Zealand burns.

Does this fellow Wheeler understand what's actually happening here? The high exchange rate is decimating exporters - result: shut down or move offshore. The capacity (plant and infrastructure) of that enterprise usually goes to scrap. IT IS NOT THERE ANY MORE - the productive enterprise has gone, hence no employment for graduates, skilled craftsmen or genuine hard-working blue collar production staff. And get with it ,Mr Wheeler. Those jobs are not ever coming back . NZ economic policy has destroyed the employers who offered that employment collateral damage from a free-market economy and an RB that is only concerned with price stability for the Auckland housing market.

Wheeler is of the same mold as Don Brash.

Remember Don holding up interest rates during the Asian financial crisis? Inflation risk, see?

Then interest rates had to be halved when NZ fell into a deep recession.

What is frightening is that Wheeler has not learnt from Don's huge mistake.

The ever-increasing downward spiral into Second World status. It strikes me as the dying throes of our current economy. Thank goodness we are so 'aligned' to the Aussie banking system or we would have been toast by now. I wonder if we will ever look back on NZ as being an interesting social experiment that lasted for 200 years or so.

Does this 7% unemployment figure include the underemployed, those who have stopped looking and not receiving a benefit and all the many thousands who have moved to Australia?

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