Business Environment Profiles - New Zealand
Published: 11 March 2025
Secondary school retention rate
84 Percentage
0.3 %
This report analyses the apparent retention rate of full-time secondary school students, measured as the percentage of New Zealanders remaining in school until their 17th birthday. The apparent retention rate differs from the actual retention rate due to students completing levels at faster or slower rates, migration and changes to education policy. The data for this report is sourced from the Ministry of Education (Te Tahuhu o te Matauranga) and is measured in percentage points per calendar year.
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IBISWorld forecasts the apparent retention rate of secondary school students to reach 83.7% in 2026, representing an increase of 1.1 percentage points over the previous year. The education sector has largely recovered and trended upwards since strong declines in the secondary school retention rate over the three years through 2023. This slump can be attributed to the COVID-19 pandemic, with remote learning requirements and increased financial pressures making school retention challenging for some New Zealanders. While restrictions on educational institutes have since eased, cost of living pressures and a relatively strong labour market contributed to the secondary school retention rate being at its lowest rate for over a decade in 2023. Since then, a surging unemployment rate coupled with relatively high levels of public funding in primary, secondary and tertiary education has supported a rise in the secondary school retention rate over the three years through 2026. The Annual Maximum Fee Movement (AMFM) imposed by the Central Government has been set at an above-inflation rate of 6.0% in 2025. This higher AMFM rate is expected to intensify increases in the cost of tertiary education. This is likely to disincentive students to complete the NCEA for admission and therefore weigh on the secondary school retention rate in the current year. Yet, worsening labour market conditions in 2025-26 are expected to encourage students to complete their secondary school education rather than drop out to enter the workforce.
The apparent retention rate of secondary school students has inched upwards over the past five years, with the gradual recovery from the fallout from the COVID-19 pandemic a significant contributing factor. The disruption to education caused by pandemic lockdowns and other restrictions saw some children fall behind and ultimately drop out of school over the two years through 2022. In other scenarios, students left school to support their family, that is either working or acting as a caregiver. Yet, rising retention rates throughout the past three years coincide with long-term upward trends. The expanded employment and further education opportunities stemming from completing secondary school have maintained upward pressure on the number of students remaining in formal education.
From January 2018, domestic school leavers and adults who have previously studied for less than a full year qualify for one year of tertiary education free from tuition and other fees. This has supported demand for universities, institutes of technology or polytechnics and Wananga institutions, and has been a key driver in the number of secondary students completing the NCEA to be eligible for admission. However, recent hikes to the AMFM—from 2.75% in 2023 and 2.8% in 2024, rising sharply to 6.0% in 2025—respond to concerns that tertiary institutions need greater flexibility to manage rising cost pressures. These fee hikes could weaken affordability and temporarily reduce the incentive for some students to remain at secondary school. Nevertheless, recovering retention rates following pandemic disruptions and weakening employment prospects in the labour market are likely to outweigh the negative affordability effects of higher tertiary fees. Overall, IBISWorld forecasts the secondary school retention rate to climb at an average annual rate of 0.32 percentage points over the five years through 2026.
IBISWorld forecasts the secondary school retention rate to fall by 1.0 percentage points in 2027,...
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