UNEMPLOYMENT

The unemployment rate is the proportion of the labour force that is not in work, but is actively seeking and available to start work. The unemployment rate can tell us about two aspects of the job market. It can inform us about the prevalence of work (a rising unemployment rate means less work is available and/or less people are successful in finding work) but also the availability of workers (a rising unemployment rate can indicate that the pool of labour from which new jobs can be filled is getting larger).

The annual average unemployment rate in New Zealand fell from 4.3% in September 2004 to a 22-year low of 3.7% in September 2007. However, it has since risen to an 8-year high of 5.5% in the year to September 2009. Table 6 shows regional unemployment rates for the years to September 2004 and 2009 and the percentage point change in the unemployment rate over the past five years and the past year.

The unemployment rates in all South Island regions were lower than the national annual average unemployment rate of 5.5% in September 2009. Indeed, four out of the six lowest unemployment rates were in the South Island. Southland had the lowest rate (3.1%), followed by Tasman/Nelson/Marlborough/West Coast (3.4%), Taranaki (3.5%) and Otago (4.6%). Manawatu-Wanganui and Canterbury (both 4.7%) also recorded low rates. The unemployment rates in Southland and Tasman/Nelson/Marlborough/West Coast have consistently been amongst the lowest in New Zealand over the past five years.

Table 6: Unemployment rate and changes, years to September 2004-2009

	Unemployment rate		% point change (2004-09)	% point change (2008-09)
	2004	2009
Northland	5.5%	8.3%	2.9	3.6
Auckland	4.0%	6.2%	2.2	2.0
Waikato	3.7%	5.8%	2.2	1.8
Bay of Plenty	5.5%	6.1%	0.6	1.8
Gisborne/Hawke's Bay	5.4%	7.8%	2.4	2.3
Taranaki	4.5%	3.5%	-1.0	0.4
Manawatu-Wanganui	4.2%	4.7%	0.4	0.0
Wellington	4.8%	5.1%	0.3	1.5
T/N/M/WC	2.9%	3.4%	0.5	0.3
Canterbury	3.9%	4.7%	0.8	1.8
Otago	4.4%	4.6%	0.2	1.4
Southland	3.9%	3.1%	-0.8	0.6
New Zealand	4.3%	5.5%	1.3	1.6

Source: Household Labour Force Survey, Statistics New Zealand. Note some data may not sum due to rounding. All data are averaged over a year to reduce sample error and seasonal variations.

Northland (8.3%) and Gisborne/Hawke's Bay (7.8%) had the highest unemployment rates in the year to September 2009 while Auckland (6.2%) was also above the national average. All regions in the top half of the North Island have above average unemployment rates. The unemployment rates in Gisborne/Hawke's Bay and Northland have consistently been higher than the national average over the past five years.

Due to rapidly rising unemployment over the past eighteen months, the unemployment rate fell in only two of the twelve regions between 2004 and 2009. They were Taranaki (down 1.0 percentage point) and Southland (down 0.8 percentage points). A further six regions recorded a rise of less than 1 percentage point. The largest increases occurred in Northland (up 2.9 percentage points) and Gisborne/Hawke's Bay (up 2.4 percentage points). This was due to these two regions experiencing a strong rise in the unemployment rate over the past year as labour market conditions eased.

Over the past year, as the labour market has softened, the annual average unemployment rate has risen by 1.6 percentage points from 3.9% in September 2008 to 5.5% in September 2009. Northland has been particularly affected with the unemployment rate rising from 4.7% to 8.3%. Gisborne/Hawke's Bay (5.5% to 7.8%) and Auckland (4.3% to 6.2%) have also recorded large rises in the unemployment rate. The unemployment rate is expected to continue rising over the short-term, peaking at around 7% in mid-2010.

Regional variances

The large rise in the unemployment rate for Northern regions over the past eighteen months means regional variances in the unemployment rate have increased compared to five years ago. In the year ended September 2004, the difference between the highest and the lowest unemployment rate was 2.6 percentage points. This fell to 2.3 percentage points in September 2007 before rising to 5.3 percentage points in September 2009.

Regions to the left of New Zealand in Figure 3 had lower unemployment rates than the national average in the year to September 2009 while regions below New Zealand had a greater percentage point fall in the unemployment rate than the national average between 2004 and 2009. Regions in the lower left quadrant should therefore be considered strong performers. These "strong performers" include regions such as Taranaki and Southland. Gisborne/Hawke's Bay and Northland should be considered poor performers. It is interesting to note that Otago is a poorer performer for the employment rate and the labour force participation rate but a strong performer for the unemployment rate. This indicates that while people in Otago are less likely to participate in the labour force than other regions (which may be due to the high proportion of students in the region who are classified as not in the labour force) they are more likely to find a job if they do look for work.

Figure 3: Unemployment rate (2009) and change in the unemployment rate (2004-2009)

Data Table for Figure 3

Source: Household Labour Force Survey, Statistics New Zealand.

Note all data are averaged over a year to reduce sample error and seasonal variations.

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