Unemployment rate climbs to 4% in December

New Zealand's unemployment rate went up to four per cent in the December quarter, according to the latest data from Stats NZ.

This is a slight uptick from the 3.9% in the previous quarter, and 0.6 percentage points higher than the 3.4% recorded in the December 2022 quarter.

"Unemployment rates have returned to 2019 levels, following recent historic lows," said Becky Collett, work and wellbeing statistics senior manager, in a statement. "Low unemployment formed part of the unique economic period from 2021 to 2022, as restricted borders limited increases to labour supply and labour demand remained high."

Other employment data

Employment rate also went up 0.4% over the quarter and 2.4% over the year, according to Stats NZ.

"While the employment rate remained historically high in the December 2023 quarter, it has dropped back from the recent June 2023 quarter peak of 69.8% to 69%," Collett said.

According to Collett, the decrease in employment rate came as the working-age population in New Zealand expanded faster than employment, bringing down the proportion of people who were employed.

Underemployment also went up to 10.7% in the December 2023 quarter, up from the 10.4% a quarter prior and higher than the 9.3% in the December 2022 quarter.

Unemployment 'likely' higher

The Employers and Manufacturers Association (EMA) said the data was better than expected, but they believe the situation is likely worse.

"These numbers are from the last three months of 2023. We know anecdotally that the economic situation has further deteriorated, and the real unemployment rate today is likely to be higher. The numbers released today don't feel right," EMA Head of Advocacy Alan McDonald said in a statement.

McDonald pointed out that the number of requests they've been getting for restructuring and redundancy support went up by nearly 90% compared with this time last year.

"Our team were dealing with more than two calls a day in January from businesses who were considering redundancy and restructuring, which is deeply concerning given the start of the year tends to be one of the quieter months," McDonald said.

"It is important to remember that rising unemployment reflects business owners who are struggling and are having to let people go or to close."

He urged the government to focus on the economy, as well as policies that will bring down inflation faster and rebuild business confidence.

"After all, when business is doing well, the economy does well and that means more tax revenue for government to fund critical social services," he said.

'Plenty of work' for government

Meanwhile, Social Development and Employment Minister Louise Upton said the latest labour market statistics show that there is "plenty of work ahead" for the government.

She cited the 3,000 more youth members who are not in employment, education, or training in the December quarter.

"The rate for young women also increased to 14%, up from 12.5%. Young people are disproportionately impacted by tightening economic conditions," Upton said in a statement.

The minister also said it was "worrying" that 40,000 people under the age of 25 are under the Jobseeker benefit, which is New Zealand's weekly payment scheme for individuals until they get employed.

"We will intervene early and prioritise people who need the most support to help them find work. We are committed to using an evidence-based approach to understand what works, and for whom," Upton said.

Improving employment outcomes

Part of this intervention is refocusing the government's welfare system to incentivise people to work, according to the minister.

"To realign the welfare system towards employment, we will introduce a new traffic light system for sanctions that will provide clarity on what jobseekers need to do to prepare for or find work, and increase consequences to ensure people do their bit," Upton said.

She added that the government would also offer jobseekers resources, such as job coaches and other tools, to improve their employment outcomes.

"This government understands that for those who are able to work, employment is the best way out of hardship. It provides individuals and families with greater independence, choice, and opportunity," the minister said.