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Has Unemployment Really Fallen That Much?

Some of our most important labour statistics such as on unemployment are measured by Statistics New Zealand in a three-monthly survey of 16,000 households, the Household Labour Force Survey (HLFS).

A review of the HLFS took effect from June. Among other things the changes lowered the measured unemployment rate from 5.7 percent to 5.2 percent in the March quarter, found many more self-employed, included the defence forces in the employment count for the first time, and introduced new information on union membership, types of employment agreements, nature of employment relationships and job tenure.

The apparent fall in unemployment is due to a change in definition. In one way it is sensible – it tries to put looking at internet job advertisements on an equal basis to reading ones in newspapers. They are not counted as “actively seeking work” and the person is not counted as officially unemployed if that is the only way they are looking for work. But we are concerned the change might have missed a lot things that can be done on internet job sites that would mean people are actually actively seeking work. The change needs to be monitored.

While it is tougher to be classified as “unemployed”, there is a new measure called “underutilisation” which includes people looking for work but not officially unemployed, plus people in part time work who want more hours. Only about a third of the 342,000 people classed as “underutilised” are officially unemployed, and without them the underutilisation rate has barely changed since 2010.

Employment appeared to rise steeply (by 58,000) in June compared to March. But a lot of this is due to changes in the way it is measured. It now includes 7,000 to 10,000 Defence Force personnel for example, and is counting more people as self-employed. It is not valid to compare June employment figures with previous months.

There are new survey questions on membership of unions and collective employment agreements, on employment relationships (permanent, casual, fixed term, temp agency or seasonal) and job tenure (which suggests tenure is reducing). All will give new information on aspects of working life that have not been readily available.

Download the full bulletin: CTU Economic Bulletin 182 – September 2016