When Will 33,000 People Who've Lost Their Jobs Get Them Back?
New Zealand's unemployment rate may have plateaued but the downturn has left more than 30,000 fewer people in work.
Data on Wednesday showed the unemployment rate unchanged at 5.1 percent in the March quarter, or 156,000 people unemployed.
Economist Shamubeel Eaqub said the drop in employment had been less sharp than in the last major downturn, in the Global Financial Crisis.
From the peak to the trough of the GFC, 59,000 New Zealand jobs were lost. So far this time, that number is 33,000.
But the impact has not been felt evenly. People aged between 15 and 29 have been particularly affected.
In contrast, there have been significantly more people employed, by number, in the 29 to 35 age bracket, and 65-plus.
Those with no qualifications or lower secondary have also lost most of the jobs. The number of people with NCEA qualifications and degrees working has increased from December 2023 until now.
Auckland has suffered the most job losses, followed by Gisborne-Hawkes Bay and Wellington. Otago has gained jobs over the same period.
Eaqub said the GFC was a deep fall and it took five-and-a-quarter years for the labour market to recover.
'That was quite brutal in that recovery. This time around we seem to be seeing we have found a floor, even though it is a very tentative one.'
He said there was still weakness in the detail – the job growth in the March quarter was almost all in part-time workers.
The fact that some regions were better off than others, such as Otago benefiting from tourism and Manawatu-Whanganui being boosted by its local industry, showed the New Zealand economy had some helpful diversification, he said.
People leaving the country were included in the data.
'The outflow of people hasn't offset the job losses. Employment rates have fallen across every age group. The reason why job losses have taken place for young people is not because they have left, but because they have left and they've lost jobs. Both of those things are true.'
He said people without qualifications were always hit the hardest. 'We are seeing older people working a lot more. The employment rate among older people has been increasing substantially over the course of the last 15 years. Older people are hanging on to jobs longer.'
Eaqub said the most recent downturn had only lasted a year, although it might feel longer to people because of the impact of the pandemic. 'We had the recession of the pandemic, then a strong recovery then another recession in quick succession. That's why it feels like it's been relentless.'
He would feel confident that the worst was over when businesses started advertising jobs again. Job ads are still way down.
'Until that picks up, I don't have confidence that the current perking up of optimism is enough.'
Infometrics economist Matthew Allman said he expected it would be later this year or early next before the 33,000 jobs lost were recovered.
'Although, uncertainties around global growth due to the US tariffs pose some downside risks to investment and employment which may delay the recovery of the lost jobs.'
He said the 21,000 jobs lost in the year to March could be regained by the second half of this year.
Mike Jones, chief economist at BNZ, said the unemployment rate could have further to climb.
'Our forecasts build in a peak of around 5.5 percent. And some of the broader indicators of the labour market – things like departures of NZ citizens offshore and falling labour market participation – perhaps point to labour market conditions a little softer than what headline unemployment rate would suggest.
'We don't expect things to turn around quickly. The labour market is a classic lagging indicator and we're still in a 'slow n' low' growth environment. We've also got to factor in the additional uncertainty from offshore and what that might mean for firms' hiring intentions. But assuming the nascent recovery slowly builds in momentum we'd expect to see firms start to hire again with a little more vigour and the unemployment rate start to fall around the end of the year. A return to outright strong conditions looks a way off though, perhaps a story for late 2026.'
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