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Strong headline employment data hides weak spots in labour market

The Council of Trade Unions is pleased that employment numbers out today show that the recovery from COVID-19 is continuing.

“The number unemployed fell by 10,000 in the December 2020 quarter. Despite this welcome change, the number of people unemployed is still 25,000 (or 21.9%) higher than it was a year ago. The government still has work to do if it wishes to bring down unemployment to levels seen before COVID-19,” CTU Economist and Director of Policy Craig Renney said

“We welcome the programmes that the government has undertaken to support employment during COVID-19. But the data today continues to show areas of concern. Female unemployment continues to be much higher than male unemployment at 5.4% against 4.5%. The number of Maori and Pacific Peoples unemployed increased this quarter. The rate of unemployment for young people (15- 29 year olds) rose from 8.4% to 10.1%. The government should target its expenditure through COVID-19 in ways that seek to redress that imbalance”.

“The situation for wages also shows a strong headline number with weakness underneath. Average ordinary-time hourly earnings increased 4.2% in the year to December 2020. But according to Statistics New Zealand this change was driven by changes in the jobs market with falls in the number of filled jobs and hours in lower-paid industries like administration and support services, while jobs and hours in higher-paid industries remained stable. Overall, the number of employees with no increase to their wages was at its highest since March 2010. Annual wage increases in local government (0.9%) were below inflation (CPI Inflation is 1.4%), and increases in the private sector barely kept up with inflation (1.5%)”.

“The data shows that there is an emerging challenge in the labour market post COVID. Whilst some groups are doing well and returning to pre-COVID-19 normal, others are still doing it tough. Those groups who traditionally faced challenges in the labour market are still struggling and more government support will be necessary. While we see GDP growth returning, wages for many are not growing at all. Genuinely ‘Building back better’ for New Zealand will mean addressing both these issues,” Renney said.