Executive summary

This report, the first in the new National Monitoring Series of labour market reports, provides a detailed examination of youth labour market performance over the last five years. It presents a broad range of indicators and provides data from as recently as December 2008 in order to capture the impact of the current economic downturn on the youth labour market.

Youth occupy a distinct place within the New Zealand labour market. They have a lower labour force participation rate than for the general population, as many youth are still in school or tertiary study. Those who work are over-represented in certain industries. There are also clear differences between youth aged 15–19 years and those aged 20–24 years. Presenting study trends and employment patterns as well as examining unemployment and disengagement is the central focus of this report.

The youth population

At the time of the 2006 Census, there were 571,176 youth living in New Zealand, up from 505,065 in 2001. Youth comprised 14% of the population. By 2026, the youth population is expected to grow by 11% but its composition will change. The Pacific and Maori youth population is predicted to increase by 59% and 25%, respectively, while the European youth population will only marginally increase.

Youth are highly migratory, often moving region for tertiary study. This can be detrimental for the labour supply in smaller, rural centres and benefit the major cities. The international migration of youth is also having a significant impact on the labour market. Permanent and long-term migration figures reveal that 22,117 youth left New Zealand in the year to December 2008, compared with 23,686 who arrived, meaning net youth migration of 1,569.

Youth in education

There is clear evidence that youth are performing better at school overall. The number of school leavers achieving the highest level of schooling, NCEA level 3, increased from 29.6% to 35.3% over the last three years. Significantly, the numbers of pupils who left school with little or no formal attainment dropped from 12.9% to 4.9%. Despite these gains, Maori and Pacific youth were over-represented among those without qualifications and under-represented among those with NCEA level3. A noticeable gap between males and females was also evident.

At the tertiary level, almost one-half of 18–19 year olds and one-third of 20–24 year olds were participating in tertiary education. Although participation has remained stable, there was evidence of greater tertiary education completion rates in recent years. Between 2000 and 2007, 25% more youth under the age of 18 years completed qualifications. Completions for 18–19 year old youth increased by 11% over the period, while completions for those aged 20–24 years, who make up the large majority of students, increased by 15%.

Within the workplace, 11% of workers receiving industry training were aged 15 to 19 years. A total of 10,850 youth were in a Modern Apprenticeship in 2007, an increase of 15% on the year prior. The most common types of Modern Apprenticeships were building and construction, engineering and motor engineering.

Youth employment

The youth workforce is distinct. Working youth were clearly over-represented in the predominantly low-skilled service and sales worker occupation group, and the retail trade and accommodation, cafés and restaurants industries. Working youth were also under-represented in the education, health and community services industries, which reflects the fact that qualifications are often needed for entry to these industries, which youth may have not completed.

The number of youth working in the retail trade and accommodation, cafés and restaurants is well ahead of the proportion of the total population in these industries. The major youth employment industries are low-skilled and have a higher rate of part-time workers, which are two features likely to attract new entrants to the labour force and people engaged in study or other activities. This cluster of workers in several industries was less apparent for workers aged 20–24 years, because as youth grow older and complete their studies, their employment patterns become more representative of the total workforce.

One clear feature of youth employment is the extent to which many are employed on a part-time basis, considerably more so than older age groups. This characteristic is also one that changes markedly between 15–19 year olds and 20–24 year olds, as many 15–19 year olds still live at home and work to supplement their study or other activities. In the 15–19 year age group, part-time employment was particularly high in the retail trade and accommodation, cafés and restaurants industries, with 72% and 70% respectively of youth workers employed in these industries part-time in 2006.

Unemployed youth

Youth aged 15–19 years have an unemployment rate over three times that of the entire working-age population. Young workers are more vulnerable to downturns in labour market conditions due to their lower skill levels and lesser work experience. The latest official figures show that 17.2% of youth aged 15 to 19 and 8.4% of those aged 20 to 24 years were unemployed, which represents a deterioration of the trends found in the report. Maori and Pacific youth had significantly higher unemployment rates.

NEET youth

Youth disengagement remains a problem, as an analysis of youth who are not engaged in education, employment or training (NEET) highlights. NEET youth are considered to be missing the opportunity to develop their potential at an age that heavily influences future outcomes. NEET serves as a good alternative to the traditional labour force participation rate, which is less relevant for youth given the high numbers of youth out of the labour force because they are at school or in tertiary study.

The latest official figures show that 7.3% of youth aged 15 to 19 and 8.7% of those aged 20 to 24 years were NEET. Among 15–19 year olds, there has been a strong upward trend in the male NEET rate in recent years, while the female rate has dropped, although there is evidence that it is starting to rise. A similar trend is also evident among youth aged 20 to 24 years. The reasons why this is so are not clear, although higher female school attainment levels are likely to be a key factor. By ethnicity, Maori and Pacific youth had the highest NEET rates. Youth aged  18–19 years were most likely to be disengaged.

Challenges ahead

The recent economic downturn is likely to have a more profound impact on youth than any other age group. Youth are often the most at risk group during a recession. This can be attributed to youth having low levels of experience, the vulnerability of the industries in which most youth work and also because those aged 15–24 years old are two to three times more likely to be unemployed in general. In the early 1990s recession, the unemployment rate for 15–24 year olds reached almost 20% in early 1992. While the current youth unemployment rate is lower than it was in 1990, similar growth in unemployment is possible. The number of youth in employment also fell by 12,800 or 3.5% over the last year.

The effects of the economic downturn are not restricted to youth who are working. It is likely that fewer job opportunities will exist for graduates, given the weaker labour market. This may have an unexpected positive benefit: more youth returning to study or studying longer and accumulating more skills and qualifications. With more youth entering or returning to the workforce with more qualifications, the workforce of the future may be better served than expected.

Summary labour force statistics

The following table summarises the key labour force indicators from the Household Labour Force Survey, December 2008 quarter that are discussed in more detail elsewhere in this report. It highlights the differences in labour force outcomes of youth based on gender, age group and ethnicity. It shows that youth aged 15-19 years had lower labour force participation and employment rates than those aged 20-24 years and higher unemployment rates. Poorer outcomes for Maori and Pacific youth were also evident, particularly in terms of unemployment and NEET rates.

Source: Household Labour Force Survey, Statistics New Zealand.

Diagram 1 depicts the labour force status of youth aged 15-19 years. In December 2008, there were 317,000 people in this age group. Of these, 145,400 youth were not in the labour force (45.9%) while 171,600 were in the labour force (54.1%). The latter group was made up of 144,600 youth who were employed and 27,000 who were unemployed. Most of those not in the labour force were studying.

Diagram 1: Labour force status, December 2008 (youth aged 15-19 years)

Long description for Diagram 1

Diagram 2 shows the labour force status of youth aged 20-24 years, which differs considerably from the status of those aged 15 to 19 years. There were 293,900 people in this age group, of whom 77,600 youth were not in the labour force (26.4%) while 216,300 were in the labour force (73.6%). The latter group was made up of 200,400 youth who were employed and 15,900 who were unemployed.

Diagram 2: Labour force status, December 2008 (youth aged 20-24 years)

Long description of Diagram 2