Total employees in the labour force

IBISWorld forecasts the number of people working to decrease by 0.3% in 2024-25, to 2.93 million employees. The unemployment rate has been increasing over 2024-25, sitting at 4.8% as of Q3 2024-25. This is the highest unemployment has been since pandemic-driven levels reached in December 2020. The growth rate of New Zealand's labour force has also slowed in 2024-25, as migrant visa requirements have been tightened, reducing net migration over the year. This lower-than-normal growth in the labour force combined with a growing unemployment rate is set to influence a slight decline in total employment in 2024-25.

In general, growth in the number of total employees is closely correlated with overall population growth. In particular, positive net migration supports employment, as new residents tend to boost consumer demand for products and services in the economy, subsequently helping to create labour demand. Net migration was negative across 2020-21, causing employment growth to slow dramatically. However, net migration returned to positive territory in the second half of 2022-23 and reached record levels during 2023-24, aligning with strong growth in total employment across this period.

Real GDP growth rates were high across 2021-22 and 2022-23, contributing to job creation. Low interest rates in 2021-22 allowed businesses to capitalise on cheaper credit. This, in turn, boosted spending and supported the creation of jobs. However, interest rates have been elevated over the three years through 2024-25, as the Reserve Bank of New Zealand sought to contain high inflation, which has placed downwards pressure on employment.

Volatile business confidence has also limited the increase in the total number of employees over the past five years. When business confidence is negative, expansionary business strategies tend to be limited. This was the case between 2019-20 and 2022-23, which kept total employment growth contained in these years.

New Zealand experienced high labour shortages in 2022-23, with the job vacancy index peaking in Q2 2022-23. However, the vacancy filling rate increased across 2023-24, supported by strong migration levels. This caused a strong jump in the number of employed people in New Zealand across the year. Overall, IBISWorld forecasts the total number of employees in the labour force to increase at a compound annual rate of 1.6% over the five years through 2024-25.