NZ Labour market called one of world's strongest

By NZPA

Wednesday 12th February 2003

New Zealand's labour market has been called one of the world's strongest, with the Government accepting much of the credit.

New Zealand's unemployment rate fell to a 15-year low of 4.9 percent in the December quarter according to the official measure of employment, the Household Labour Force Survey released yesterday.

There are 98,000 people officially unemployed -- meaning they are without a job but are either looking for work or currently unable to work.

New Zealand's unemployment rate was last below 5 percent in March 1988, before the full impact of the Rogernomics structural reforms hit the economy and the job market.

Social Services and Employment Minister Steve Maharey said the low unemployment figure was a vindication of the Government's employment policies.

"If you move away from (focusing on jobs) to things like work for the dole programmes, and argue again whether you should introduce things like time-limited benefits, you can spend an awful lot of time on things which make no real lasting difference.

"The real aim has to be keeping staff focused on jobs, keeping the whole policy framework focused on jobs," Mr Maharey told Radio New Zealand.

However, while the number of people in employment rose 2.3 percent in the year to December, people who have been unemployed for more than six months also increased.

The long-term unemployed made up 30.1 percent of the unemployed, up slightly from 29.6 percent in the December 2001 quarter.

National Party finance spokesman Don Brash has criticised the numbers of people receiving the unemployment benefit despite a shortage of workers in many parts of the country.

"Employers up and down the country are screaming out for staff, in many cases quite unskilled staff, and can't get them. Despite that fact we have hundreds of thousands of people on the benefit," he said today.

Mr Maharey said the Government would begin turning its attention to the long-term unemployed.

"It requires more resources, more staff time, and is never easy to resolve in many cases but we're hoping in this climate to see those figures improve."

Corroborating the employment figures was today's ANZ Job Ads survey today showing newspaper job advertising rose by 0.6 percent in January.

The series is now 7.5 percent above levels seen this time last year.

ANZ chief economist David Drage said the figures showed New Zealand's labour market was one of the strongest in the world.

"With job advertising levels continuing to run at above 30,000 per month, coupled with the New Zealand Institute of Economic Research's December quarter business opinion survey recording relatively strong hiring intentions, further employment gains are likely over the months ahead," Mr Drage said.

"This looks set to maintain the unemployment rate at around the historic lows seen in late 2002."

Mr Drage said the strong Auckland labour market was still being driven by migration-driven population growth, but the provincial job market had plateaued due to the effects of a difficult international environment and a higher dollar on the rural community.

"The contrasting regional developments suggest that employment growth over the year ahead will be increasingly driven by Auckland," Mr Drage said.

Auckland's unemployment rate in the December quarter fell from 5.0 percent to 4.0 percent.

Unemployment has been on the way down since the welfare reforms in the early 1990s, when it peaked around 11 percent. New Zealand's rate is well under the average of 7.1 percent and is 10th best across the OECD club of 26 rich nations.

Infometrics senior economist Tony Booth said unemployment could drop further, possibly to as low as 4.5 percent by the start of next year, if current conditions prevail.

Wages were generally expected to start rising if unemployment remains below 5 percent, although wages grew just 2.1 percent last year compared with inflation of 2.6 percent.

Theoretically, many people without jobs when unemployment fell below 5.5 percent lacked the skills to exist in a modern economy.

However, Mr Booth said if many of the unemployed were skilled migrants, the economy was still able to grow and an unemployment rate below 5 percent was sustainable.

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