4% jobless isn’t the full picture

UPDATE: On 17 August polling day was moved to 17 October 2020.

When MBIE’s Labour Force Market fact sheet was released on 6 August 2020 the Labour government was cock-a-hoop as it showed the country had only 4% unemployment. That was great news as it headed into the September General Election.

It’s an amazing result because prior to Covid-19 arriving on our shores and the obvious impact on businesses as the country went into Level 4 lockdown, the unemployment rate was 4.2%.

The Labour Force market report draws on data for the quarter ending June and says: “The effects of Covid-19 and Alert Level economic restrictions continue to affect New Zealand’s labour market, although traditional indicators paint an inconsistent picture.

“Both the unemployment and employment rates fell in the June 2020 quarter, as the number of people not in the labour force increased by 37,000 over the quarter.”

The report says that during April, the number of people receiving Jobseeker Support Work Ready benefits increased “markedly and filled jobs fell by 35,300 – a record 1.6% decrease”.

“Throughout May and June, the number of filled jobs has rebounded and the number of benefit recipients has stabilised,” says the report. “The number of advertised job vacancies continues to fall, but the reduction in June was far lower than in April and May.”

The report says it is likely the Covid-19 Wage Subsidy has affected employment levels. The wage subsidy has now covered more than 1.7 million jobs since the scheme was introduced (almost 1.5 million employee jobs and 240 thousand sole traders), which were protected while employers received the subsidy.

“The number of jobs protected at any one time peaked in June at around 1.5 million and stood at around 500,000 at the end of July as support expired.”

As for benefit recipients, the report says the number is increasing.

MeasureDec 2019June 2020 Change
Unemployed112,000111,000 Down 1,000
Under-employed90,000125,000 Up 35,000
Potential job seekers84,400110,400Up 30,000
Youth not in employment,
education or training
76,00081,000 Up 5,000
Source: MBIE Labour Force Market report July 2020.

On 24 July 2020, there were 355,640 people receiving a main benefit, an increase of 61,400 since the same week last year and an increase of 2,200 on June 2020. And according to MBIE, average hours worked is down from 38.66 in December 2019 to 37.44 in June.

The next quarterly Labour Force market report will be released on 10 September 2020.