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How have MĀori and Pacific people been affected by the recession?

There are several reasons why policy-makers and other interested parties need good information on the labour market outcomes of Māori and Pacific people.[1]

  • Māori and Pacific people make up a relatively young and fast-growing share of the New Zealand working-age population.
  • They have weaker labour market outcomes, on average, than the broader population.
  • They have a growing need for information about their own labour market as they look to make best use of their assets.

Māori and Pacific people have been particularly affected during previous recessions.  The Māori and Pacific populations are, on average, relatively young, have lower educational attainment, and are over represented in lower skilled industries and occupations.  For these reasons, they are often more vulnerable in weak economic conditions. 

In this note we look at how Māori and Pacific workers have fared during the most recent economic downturn.

Māori and Pacific workers have experienced disproportionate job losses

Māori and Pacific people have experienced disproportionate job losses over the last two years.  Between the June 2008 and June 2010 quarters, the number of Māori in employment declined by 7.2%, or 18,900 people while the number of Pacific people in employment declined by 8.7%, or 8,700 people.  Total employment for all ethnicities only fell by 0.9% over this period.

MĀori have performed worse across a number of industries

Figure 1 shows the percentage change in employment by industry for Māori and Pacific over the two years from June 2008 to June 2010.[2]
Māori employment fell at a faster rate than total employment in utilities & construction, wholesale & retail, hospitality, transport & storage, and health & community services.  These industries account for 42% of Māori employment.  By contrast Māori employment growth has been relatively strong in agriculture & mining, and in finance & insurance.  However, these industries only account for 11% of Māori employment.

Pacific employment fell at a faster rate than total employment in hospitality, transport & storage, and finance & insurance.  These industries account for 13% of Pacific employment.  Pacific employment growth has been stronger than overall growth in agriculture & mining, utilities & construction, communication services, and education.  These industries account for 22% of Pacific employment.

Figure 1 Percentage change in employment by ethnicity and industry, June 2008 to June 2010


Source: Household Labour Force Survey.
Note: This data has been averaged over a year to reduce sample error and seasonal variation.

Data table for Figure 1

The relatively large decline in Māori employment over the past two years is mostly due to Māori employment growth being weaker than overall employment growth within key industries (utilities & construction, wholesale & retail, health & community services).  The main issue is not that Māori are over represented in industries that have been hit hardest during the recession,[3] but that Māori workers have been more likely to be laid off compared with non-Māori workers within particular industries.

During a recession employers are more likely to lay off low skilled staff with the least experience. Māori workers are more vulnerable to losing their jobs because they are, on average, relatively young (lack experience) and have lower education attainment (low skilled), compared with non-Māori employees.

Pacific employment growth has mostly been similar or better than total employment growth in those industries where Pacific employment is concentrated.  Perhaps the main reason for the decline in Pacific employment is that a large share (20%) of this employment is in manufacturing.  Both Pacific employment and total employment in manufacturing have declined by 9% over the two years to June 2010.

Māori and Pacific unemployment has risen more quickly than for the wider population

The fall in employment of Māori and Pacific people has led to an increase in the unemployment rates for these ethnicities, as shown in Table 1.

Table 1 Unemployment rate by ethnicity, June 2008 and June 2010
Ethnicity June 2008 June 2010
Māori 7.3% 14.3%
Pacific 6.3% 15.5%
All Ethnicities 3.9% 6.7%

Source: Household Labour Force Survey.
Note: data are not seasonally adjusted.

The Pacific unemployment rate has more than doubled, rising from 6.3% to 15.5%, over the two years to June 2010.  The Māori unemployment rate has nearly doubled, increasing from 7.3% to 14.3% over the same period.

The unemployment rate for the total population has not increased so quickly, rising from 3.9% to 6.7%.  The Māori and Pacific unemployment rates are now more than double the unemployment rate for all ethnicities.  This has often been the case historically, but the gap had narrowed over the middle of the decade as the labour market performed strongly.  The recent economic downturn has caused it to widen again.

Māori and Pacific people have been more likely to disengage from the labour market

The labour force participation rate for Māori fell from 67.8% in June 2008 to 65.9% in June 2010, while the participation rate for Pacific people declined from 63.5% to 59.1% over the same period.  The participation rate for all ethnicities only declined slightly, from 68.2% to 67.8%.
The relatively young age-profile of the Māori and Pacific populations will have been a factor in their decline in participation and increase in unemployment, as young people are often the most vulnerable in a recession due to their relative lack of experience and skills.  The participation rates for Māori and European youth (aged 15 to 24 years) have each declined by around five percentage points over the past two years, while the participation rate for Pacific youth has declined by over six percentage points.

This decline in participation will have acted to dampen the increase in the Māori and Pacific unemployment rates, as only those people who remain in the labour force are counted as unemployed by the Household Labour Force Survey (HLFS).[4]

Employment of MĀori and Pacific youth has declined more quickly than for youth of other ethnic groups

Youth (those aged 15-24 years) have been particularly affected during the labour market downturn, and Māori and Pacific youth have been hit hardest.  Between June 2008 and June 2010, Māori and Pacific youth employment declined by 21.5% and 21.6% respectively.  These declines were more than twice the size of the 10.3% fall in employment for all youth over the same period. 

The Māori and Pacific youth unemployment rates have more than doubled in the two years to June 2010.  The Māori youth unemployment rate has increased from 15.1% to 30.3%, while the Pacific rate has increased from 14.2% to 30.6%.  The unemployment rate for all youth has not increased so quickly, rising from 10.7% to 18.2%.

The fastest growth in young claimants of Unemployment Benefit has been for Pacific youth

The number of youth (aged 18 to 24 years) receiving the Unemployment Benefit has increased sharply for all ethnicities over the last two years, but there has been a particular rise in Pacific youth (shown in Figure 2).  Total young claimants of Unemployment Benefit were up by 421%, while Pacific young claimants were up by 616%.  Young Māori claimants were up by 343%, but this is less than the figure for all ethnicities.  It appears that the growth in Māori youth unemployment has not led to the same rise in Unemployment Benefit claimants seen for other ethnicities.

Figure 2 Percentage growth in young recipients (aged 18 to 24 years) of Unemployment Benefit by ethnicity, June 2008 to June 2010


Source: Ministry of Social Development.

Data table for Figure 2

Increasing numbers of MĀori and Pacific youth are staying in education

Table 2 below shows that the proportion of Māori and Pacific youth (aged 15-24 years) who are not employed and are engaged in study has increased at a greater rate (up 56.9% and 32.2% respectively) than the rate for all youth (up 26.4%).  There have also been increases in the proportions of Māori and Pacific youth who are still at school.  This means the fall in the participation rates for Māori and Pacific youth over the past two years, noted above, is partly due to more of them staying in education.

Table 2 Proportion of youth (aged 15-24 years) not in employment but in study or still at school
  Māori Pacific All youth
  Jun-08 (%) Jun-10 (%) % Change Jun-08 (%) Jun-10 (%) % Change Jun-08 (%) Jun-10 (%) % change
Not employed: Student still at school

21.1

21.2

0.4

27.3

29.3

7.3

18.8

19.3

3.1

Not employed: In study

8.5

13.4

56.9

11.8

15.6

32.2

12.8

16.2

26.4

Source: Household Labour Force Survey
Note: This data has been averaged over a year to reduce sample error and seasonal variation. 

While the increase in the proportion of Māori and Pacific youth in study or school is encouraging, the NEET rate (not in employment, education or training) for Māori and Pacific has increased over the last two years (along with that for all youth).  

Pacific youth have a lower NEET rate than Māori youth, but a higher rate than all youth.  The NEET rate for Māori aged 15-24 years was 18.2% (or 22,100) for the June 2010 year, up from 12.1% two years ago.  The NEET rate for Pacific people aged 15-24 years was 14.5% (or 8,500) for the June 2010 year, up from 10.3% two years ago. 

Figure 3 shows that the NEET rate for Pacific youth was the first to start increasing, but has levelled off since December 2009 in line with the NEET rate for all youth.  The NEET rate for Māori youth was still rising in the June 2010 quarter.  Over the past two years the NEET rates for Māori youth and all youth have both increased by about 50%, while the NEET rate for Pacific youth is up by 40%.  Looking forward, we expect that these NEET rates will start to fall over the next year as the labour market improves.

Figure 3 Youth not in employment, education or training (NEET) by ethnicity


Source: Household Labour Force Survey.

Data table for Figure 3

Summary

This note has shown that, over the past two years, the economic downturn has had a larger than average impact on Māori and Pacific people.  They have experienced job losses at a greater rate, and their unemployment rates have increased more quickly.  This is partly due to their relatively young age-profile, as youth are often the most vulnerable in a recession due to their lack of experience.  

The relatively large decline in Māori employment over the past two years is due to Māori employment growth being weaker than overall employment growth within key industries (utilities & construction, wholesale & retail, health & community services).  The fall in Pacific employment may be mostly due to the concentration of employment in manufacturing, where both total employment and Pacific employment have fallen by 9%.

The unemployment rates for Māori and Pacific youth have both increased more than the unemployment rate for all youth.  This has led to a sharp increase in Pacific youth claiming the Unemployment Benefit.  There has been an increase in Māori youth claiming Unemployment Benefit, but it has been a smaller increase than that seen for all youth.  This may indicate that young unemployed Māori are less likely than other ethnicities to be claiming the Unemployment Benefit.

There has been an increase in the proportion of Māori and Pacific youth in education over the last two years.  However, the NEET rates for Māori and Pacific are above the NEET rate for all youth. 

Looking forward, we expect to see a gradual recovery in the labour market consistent with the slow and bumpy recovery we have seen in the New Zealand economy.  Labour market conditions for Māori and Pacific people will remain challenging in the short-term but should improve over the coming year.

[1] In this note, all Maori and Pacific data uses the total response output method.�This means that it counts all people who stated Maori and Pacific, irrespective of whether they also stated another ethnic group.�

[2] Employment by industry has been measured using annual averages.

[3] Maori are only marginally more concentrated in these industries, which include manufacturing; utilities and construction; wholesale and retail trade; and accommodation, cafes and restaurants

[4] A person must be available for work and actively seeking work to count as unemployed in the HLFS.