EMPLOYMENT OPPORTUNITIES IN CANTERBURY
EXECUTIVE SUMMARY
The earthquakes' full economic impact is still emerging, with some industries badly affected, while others have proved resilient.
The Christchurch and Canterbury economies are currently recovering from two major events: the economic recession and the Canterbury earthquakes. The full economic impacts are still emerging, and estimates vary substantially between economists. A conservative estimate puts the fall in annual gross domestic product (GDP) in the region at around 1.3%, and by 1.8% in Christchurch, in the year to June 2011[1].
The earthquake on 22 February 2011 had a greater economic effect on Christchurch than the 4 September 2010 earthquake, but many businesses responded quickly, relocating and recommencing trading in a short period of time. Some sectors, such as hospitality and tourism, have seen a downturn in activity following the earthquakes, with a significant decrease in the number of employees in retail and accommodation. However, the key information and communications technology (ICT) and manufacturing sectors have been more resilient.
Population flows out of Canterbury have resulted.
The Canterbury working age population[2] fell by 13,500, or 2.7%, in the year to September 2011. There was a decline in the number of people of prime working age (25-54 years) of 17,700 or 6.8%, but an increase in those aged 55 years and over[3]. Those aged 15-24 years left the region at a noticeably high rate. This loss of people of working age could exacerbate skills shortages in the medium-term when workers in some sectors, particularly construction, will be in high demand.
The Canterbury labour market has felt the impact, with fewer people working and increased unemployment.
Nationally, employment increased by 1.1% during the year to September 2011, while employment in the Canterbury region decreased by 26,800 or 8.0%. There were particularly large falls in Canterbury employment in accommodation (down 8,300 workers) and retail trade (down 4,300). However, the construction industry, which is gearing up for the rebuild, has shown the most growth in the year, up 4,500 workers.
The number of unemployed people in Canterbury grew by 900 or 5.3% over the last year, compared to the 4.7% growth in unemployment seen nationally. The Canterbury unemployment rate increased from 4.8% to 5.5%. A smaller working age population and falls in participation have resulted in a rise in unemployment that is much less than the drop in employment.
Fewer people are participating in the labour market...
The labour force participation rate is another way of assessing the health of a labour market. It indicates how many people are working or actively looking for work. The Canterbury labour force participation rate fell sharply from 70.0% in September 2010 to 66.7% in September 2011, compared with a modest increase in participation nationally (to 68.4%).
...with young people and women particularly affected.
In the year to September 2011, employment fell sharpest for young people (22.0%), in part due to the large numbers employed in the accommodation and retail industry and their vulnerability in times of labour market downturn. In contrast, employment in the 55 years and over age group grew by 4.8%. Participation rates fell most for those aged 15-24 years.
Female employment in Canterbury fell by 12.2%, compared with a 4.3% fall for male employment. This was largely because the traditionally female-dominated retail and hospitality sectors have seen big employment falls, reflecting the extensive damage to the Christchurch central business district (CBD). Over the year, the female unemployment rate in Canterbury increased from 5.5% to 6.7%, while male unemployment increased from 4.2% to 4.5%. The female labour force participation rate fell from 64.5% to 59.2% in Canterbury, compared with a modest increase for women nationally (to 62.4%).
Fewer people have moved on to unemployment benefits than were anticipated...
Since the 22 February 2011 earthquake, the number of unemployment beneficiaries rose from 5,500 on 18 February[4] to a peak of 6,300 in late April. The number of beneficiaries was 5,300 as at the end of October 2011. Significantly, the number of unemployment beneficiaries has been in decline since early July and below the expected increase. Young people accounted for a disproportionately high share of new registrations.
Since 18 February 2011, the number of sickness, domestic purposes, and invalids beneficiaries has declined in the region. While some of these people will have left Canterbury, some will have entered or re-entered the workforce.
...and there is strong demand for workers in some industries.
In spite of delays to the rebuild, jobs have already been created. A lot of these are associated with assessing Earthquake Commission (EQC) claims and demolition of buildings in Christchurch's CBD. A further 600 workers are repairing roads, a ten-fold increase on the level prior to the earthquakes.
Indirectly, a number of business professionals are seeing increased demand for their services, including law and accountancy firms. The New Zealand Institute of Chartered Accountants indicated that many of its Christchurch members had hired additional staff or were considering doing so. This increase in work is related to catching up on work delayed by the earthquakes and assisting clients with insurance claims.
Canterbury online vacancies have slowed after strong growth.
Within Canterbury, only the healthcare and medical industry experienced a growth in online advertised skilled vacancies between July and October 2011, according to the Department of Labour's (the Department) Jobs Online index[5]. Notably, Auckland and Wellington recorded larger total falls in advertisements over this time.
However, when October 2011 figures are compared with October 2010, Canterbury had an increase of 46.7% in advertised vacancies, higher than the rate for any other region. Over the last year, construction and engineering online vacancies increased by 68.5%, the second highest growth rate by industry. This suggests forward-planning in preparation for the rebuild.
Following the earthquakes, there are signs that the Canterbury labour market is having trouble re-adjusting, with vacancy and unemployment rates both higher than seen in recent years.
Demand for construction-related workers will be particularly strong.
The labour demand model developed by the Canterbury Development Corporation (CDC) and Market Economics, in conjunction with the Department, means the labour needs for the Canterbury rebuild can be modelled in detail to reflect different timing and damage scenarios. Depending on the pace of the recovery, and the emergence of damage information as claims are assessed, the estimated demand for workers can vary significantly.
The modelling of the Canterbury labour market is very sensitive to the assumptions used about the pace and scale of the rebuild. Based on a rebuild scenario that some industry leaders suggest is the most likely, around 24,000 additional construction-related workers will be required at the peak of the rebuild. Alternative scenarios project a range from between 13,000[6] and 48,000[7] additional construction-related workers being required for the rebuild at its peak. In all scenarios, demand is greatest for carpenters and joiners, painting trade workers, concreters, and plasterers. General labourers will also be in high demand, and this may provide opportunities, after training, for some beneficiaries or those who have not previously worked in the construction industry.
There will also be an increased demand for workers in occupations that directly support the construction work (such as clerks in administrative positions and business services staff), as well as across other sectors as economic activity picks up more broadly (such as sales workers).
Job opportunities exist throughout the region, not just in Christchurch.
Much of Canterbury was only lightly impacted by the recession, with Selwyn District rated as New Zealand's best performing territorial authority in 2010 against a range of social and economic indicators, and with Ashburton, Waimakariri, and Hurunui ranked in the top ten. Some districts were not directly affected by the earthquakes.
The influx of people from Christchurch following the earthquakes has stimulated businesses elsewhere in Canterbury. It is estimated that the population of Canterbury, excluding Christchurch, grew by 3,900 in the year to June 2011[8]. There may be long-term gains for some of these areas as people migrate from the city into rural areas and outlying towns, stimulating employment growth that was previously in decline. However, once the Christchurch rebuild gains momentum, the flow of workers into the city may hinder regional economic development outside of Christchurch and constrain growth in agriculture.
Agriculture is central to the Canterbury economy, creating seasonal work opportunities throughout the region, with some farms or vineyards desperate for low-skilled workers. Major irrigation developments will further expand agricultural output and employment opportunities across the region.
The rebuild will challenge the Canterbury labour market.
The rebuild will put pressure on regional economic development outside of Christchurch. However, the large number of general labouring positions is positive for young people in particular, who are over-represented in unemployment statistics. Construction is predominantly male-oriented, so increasing female participation is an important challenge.
The Canterbury Labour Market Strategy is being led by the Canterbury Employment and Skills Board (CESB), and will support the region's Economic Development Strategy and the Canterbury Earthquake Recovery Authority's (CERA) Economic Recovery Plan.
The forecasts in this report are designed to estimate the employment requirements of the Canterbury rebuild. For forecasts in the national context, see Short-Term Employment Prospects: 2012-14.
[1] Infometrics’ estimates. There are no official statistics on regional GDP produced by Statistics New Zealand.
[2] People aged 15 years and over.
[3] Household Labour Force Survey (HLFS), September 2011 quarter, Statistics New Zealand.
[4] This is the closest date prior to the 22 February earthquake for which unemployment benefit registration data in Canterbury is available.
[5] The Department’s Jobs Online indicator tracks the number of vacancies advertised online by industry, occupation, and region. It is updated monthly and can be found at the following address: http://www.dol.govt.nz/publications/jol/report
[6] This figure assumes a slow reconstruction and a low end estimate of damage.
[7] This figure assumes a fast reconstruction and a high end estimate of damage.
[8] Statistics New Zealand subnational population estimates for the year to June 2011.
