Purpose

The labour market scorecard is a quarterly update of key labour market statistics and indicators, which provides an overall view of the state of the labour market

Key Points

The HLFS results for the March 2011 quarter do not capture the impact of the 22 February 2011 Canterbury earthquake on the labour market. Statistics New Zealand suspended interviews after the February earthquake.

The March 2011 update of the scorecard results show that:

• employment increased by 1.4 percent, reflecting the recovery in the economy and the labour market that was underway prior to the February earthquake, and
• the unemployment rate fell slightly to 6.6 percent, mainly because there was a large increase in the labour force participation rate from 67.9 percent to 68.7 percent.

What each scorecard dial shows

Labour demand dial: employment rose

Employment rose, mainly driven by a rise in the number of people who were self-employed. Employment growth occurred in Education and Training, Transport, Post, Warehouse and Electricity, Gas, Water and Waste.

Actual hours worked fell by 0.9 percent, although when Canterbury is excluded, they rose by 1.4 percent. This reflects the negative impact of the September 2010 earthquake on the national figures.

Labour market matching dial: unemployment fell to 6.6 percent

The unemployment rate fell from 6.8 percent to 6.6 percent because of the large rise in employment. Unemployment rates for Māori, Pacific and Asian ethnic groups have remained high. The number of long-term unemployed fell by 4,200 nationally.

Youth (15 to 24-year-olds) unemployment increased from 16.8 percent to 18.8 percent over the March 2011 quarter. The NEET rate (the proportion of 15 to 24- year-olds not in employment, education or training) was 9.9 percent (62,000 people) for the year to March 2011, down from 10.8 percent a year ago. The fall in the NEET rate indicates that many youth continue to stay in education for longer, or enter education, as labour market conditions remain challenging. 

Labour supply dial: participation increased to 68.7 percent

Labour force participation increased in the March 2011 quarter, although it declined by 0.9 percentage points for Māori. Participation for both men and women increased.

Net migration has eased over the past few months. The number of Christchurch residents who left permanently for overseas increased to 1,100 in March 2011 from 500 in February 2011. Net migration is expected to continue easing over the coming months, with increased departures to Australia and a slowdown in arrivals.

Labour quality dial: are the right skills available to support high value jobs?

The number of people working in skilled occupations has steadily increased over recent years, along with the qualification levels and skills of the New Zealand workforce.  The number of university graduates in the workforce has increased dramatically over the past ten years.

High levels of participation in workplace-based training and other parts of the tertiary education sector are also increasing workforce skills. However, there are signs of a tightening labour market, as firms are starting to report difficulty in finding skilled labour. As the economy recovers, skills shortages seen prior to the recession are likely to resurface.

Workplace performance dial: high quality jobs that add value and boost earnings

Annual wage growth rose slightly to 1.9 percent in the March 2011 quarter, up from the nine-year low of 1.5 percent in the year to March 2010. Wage growth usually lags employment growth, and the wage inflation therefore reflects an improving labour market following the 2008/09 recession.

Capital investment dial: firms’ investment in plant, machinery, equipment and other assets (excluding investment in residential housing) will support employment growth over the next two years

Capital investment increased by 8.3 percent in the March 2011 quarter, driven by investment in non-residential buildings, transport equipment and other construction. A strong recovery of capital investment is forecast in the following two years. A continued improvement in capital investment will help New Zealand businesses take full advantage of the economic recovery.

Short-term outlook

The statistics in the scorecard paint a positive picture about the state of the labour market for the March 2011 quarter, prior to the February earthquake. The Department of Labour expects the unemployment rate to remain elevated in the remaining three quarters of 2011. As economic activity gradually gathers momentum over 2012, employment growth is expected to rise strongly, bringing down the unemployment rate in 2012 and 2013.