Business Environment Profiles - New Zealand
Published: 12 June 2024
National unemployment rate
5 Percentage
0.2 %
This report analyses trends in the national unemployment rate. The national unemployment rate measures the proportion of people in the labour force who are unemployed. The labour force includes all people who are employed and unemployed. Unemployment is defined as all people in the working-age population who were without a paid job, available for work and had either actively sought work in the past four weeks ending or had a new job to start within the next four weeks. The data for this report is sourced from Statistics New Zealand (Tatauranga Aotearoa) and is measured in percentage points for year end March.
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IBISWorld forecasts the national unemployment rate to climb by 1.09 percentage points in 2024-25, to 5.04%. This surge is linked to subdued economic activity in response to the elevated interest rate environment and inflationary pressures. Additionally, negative business confidence and higher interest rates are expected to weigh on consumer spending, placing upward pressure on the unemployment rate. This trend, coupled with the high net migration level, has contributed to the unemployment rate rising over the year. However, a continued rebound in demand for services severely affected by the pandemic, such as hospitality and tourism, is supporting employment opportunities and helping to limit further increases in the unemployment rate.
The unemployment rate grew strongly over 2020-21, because of the COVID-19 pandemic and associated lockdown measures. For example, the New Zealand Government (Te Kawanatanga o Aotearoa) implemented restrictions on travel and non-essential activities, forcing several businesses across the economy to cease trading. However, the overall rise in unemployment resulting from these restrictions was limited by the government's stimulus packages to support companies and individuals, like the Wage Subsidy Scheme. Challenging business conditions have encouraged many individuals to exit the workforce as they're not actively looking for employment. As such, the decline in the participation rate has slightly understated the unemployment rate over the two years through 2021-22.
Prior to the pandemic the national unemployment rate largely trended downwards, mostly due to greater participation in the labour force by specific demographics and economic growth. Two demographics that have driven unemployment declines over the period are women aged between 24 and 55 years old, and individuals aged 55 years or above. For females, an increase in participation reflects ongoing changes in social norms and attitudes towards working mothers. For older individuals, this growth in participation reflects better health among older workers, improving longevity and technological change reducing the manual intensity of some work. The continuing casualisation of the New Zealand workforce, which has boosted the size of the overall labour force, also contributed to declining unemployment before the pandemic. Despite these long-term trends, trading restrictions during the pandemic, followed by multiple interest rate rises in recent years and slowing economic growth, have placed upwards pressure on the unemployment rate. Overall, IBISWorld forecasts the national unemployment rate to rise at an average annual rate of 0.18 percentage points over the five years through 2024-25.
IBISWorld forecasts the national unemployment rate to average 5.41% over 2025-26, a rise of 0.37 ...
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