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Unemployment

Definition

The unemployment rate is the number of people aged 15 years and over who are not employed and who are actively seeking and available for paid work, expressed as a percentage of the total labour force, as measured by the Household Labour Force Survey.

The labour force is defined as the population aged 15 years and over who are either employed or unemployed.

Relevance

This is a key indicator of labour market outcomes and the lack of access to employment. The unemployment rate is an important reflection of overall economic conditions and it gives some sense of the ease with which people are able to move into employment.

Current level and trends

In the year ended December 2009, 6.1 percent of the labour force (or 141,500 people) were unemployed and actively seeking work, an increase from 4.2 percent (or 95,000 people) in the year ended December 2008. This reflects the lagged impact of the economic recession in New Zealand between March 2008 and March 2009.

The unemployment rate reached a peak of 10.6 percent in 1991 and 1992 (180,400 people unemployed in 1992), fell to 6.3 percent in 1996, rose to 7.7 percent in 1998, then declined steadily between 1999 and 2007. The 2009 unemployment rate was higher than the rate of 4.2 percent (70,500 people) in 1986, when the survey began.

In 2009, 23 percent of the surveyed unemployed who specified their duration of unemployment had been unemployed for a continuous period of six months or more, an increase from the record low of 15 percent in 2008. The 2009 level of long-term unemployment was the same as that recorded in 1986 (23 percent) and substantially lower than the peak of 54 percent in 1992.

Figure PW1.1 Unemployment rate, 1986–2009

Figure PW1.1 Unemployment rate, 1986–2009

Source: Statistics New Zealand, Household Labour Force Survey
Note: Average for December years.

Age and sex differences

Unemployment rates for different age groups have followed similar trends, but are consistently higher among youth. Between 2007 and 2009, the unemployment rate for 15–24 year olds in the labour force was four times higher than the rate for 25–64 year olds, an increase from two-to-three times higher over the previous 20 years. The youth (15–24 years) unemployment rate was higher in 2009 (16.6 percent) than it was in 1998 (15.1 percent).

Unemployment rates were similar for males and females in 2009, after being higher for females than for males between 2002 and 2007 and higher for males than for females in the peak years of unemployment in the early 1990s. There was little sex difference in the unemployment rate for youth aged 15–24 years in 2009 (16.0 percent for males and 17.2 percent for females).

Table PW1.1 Unemployment rate (%), by age group and sex, selected years, 1986–2009

Year 15–24 years 25–44 years 45–54 years 55–64 years Males 15+ Females 15+ Total 15+
1986 8.0 3.2 2.1 1.2 3.7 4.9 4.2
1991 19.3 9.1 6.5 5.5 11.2 9.8 10.6
1992 19.1 9.3 6.5 5.9 11.4 9.7 10.6
1996 12.2 5.4 4.2 3.7 6.3 6.3 6.3
2001 12.1 4.6 3.4 3.6 5.5 5.4 5.4
2006 10.0 3.0 2.2 2.0 3.6 4.2 3.8
2007 10.0 2.8 2.1 1.5 3.4 4.0 3.7
2008 11.4 3.3 2.3 2.0 4.1 4.2 4.2
2009 16.6 4.8 3.6 3.2 6.1 6.2 6.1

Source: Statistics New Zealand, Household Labour Force Survey
Note: Average for December years.

Ethnic differences

The Māori unemployment rate peaked at 25.6 percent in the year to December 1992. It fell to a record low of 7.9 percent in 2007, increased slightly to 8.2 percent in the year to December 2008, then rose to 12.7 percent in the year to December 2009. The unemployment rate for Pacific peoples was 26.1 percent in 1992, the highest rate for any ethnic group. After falling to 6.4 percent in 2005, the Pacific peoples’ unemployment rate increased slightly over the following three years, then rose sharply from 7.4 percent in the year to December 2008 to 13.4 percent in the year to December 2009.

The European unemployment rate fell to a record low of 2.7 percent in 2007, then increased to 3.3 percent in 2008 and to 4.8 percent in 2009. The rate for the combined Asian, Middle Eastern/ Latin American/African (MELAA) or Other ethnic group category fell to 5.5 percent in 2007, then increased to 5.7 percent in 2008 and to 7.8 percent in 2009.

In 2009, among youth aged 15–24 years, Pacific youth had the highest unemployment rate (27.8 percent), followed by Māori youth (25.7 percent). Rates were considerably lower for European youth (14.1 percent), and youth in the combined ethnic group category, Asian/MELAA/Other (17 percent).

Figure PW1.2 Unemployment rate, by ethnic group, 1992–2009

Figure PW1.2 Unemployment rate, by ethnic group, 1992–2009

Source: Statistics New Zealand, Household Labour Force Survey
Notes: (1) Average for December years. (2) Based on the labour force aged 15 years and over. (3) People who reported more than one ethnic group are counted once in each group reported. (4) MELAA stands for Middle Eastern, Latin American, African. (5) From the December 2007 quarter, people responding “New Zealander” are included in the Other ethnic group. Before that quarter, they were included in European.

Regional differences

Northland and Gisborne/Hawke’s Bay had the highest unemployment rates in the year to December 2009 (8.9 percent and 8.3 percent, respectively). Southland had the lowest rate (3.5 percent).

International comparison

In the year ended December 2009, New Zealand’s harmonised (seasonally-adjusted) unemployment rate of 6.1 percent was the 11th lowest out of 30 OECD countries and lower than the OECD median of 7.7 percent. New Zealand’s rate was well below those of Ireland (11.9 percent), the United States (9.3 percent), Canada (8.3 percent) and the United Kingdom (7.6 percent), but above that of Australia (5.6 percent). Since the mid-1980s, New Zealand’s unemployment rate relative to other OECD countries has ranged from one of the lowest (fifth out of 19 countries in 1986 with a rate of 4.2 percent) to one of the highest (21st out of 25 countries in 1992 with a rate of 10.6 percent).59

In 2009, New Zealand had the fourth lowest proportion of people unemployed who had been unemployed for six months or longer.60

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