Total labour force

IBISWorld forecasts the total labour force to increase by 0.7% in 2024-25, to reach 3.08 million people. This represents a significant slowing compared to strong growth in the total labour force witnessed in 2023-24. Net migration has trended downwards across Q1 and Q2 2024-25, with this trend anticipated to continue into the second half of the year. This follows tightened regulations to the Accredited Employer Work Visa (AEWV) that were introduced in June 2024, rectifying leniency in the legislation stemming from pandemic workforce shortages. New Zealand's population has grown but growth rates have slowed, which has also kept growth rates in the labour force contained.

The size of the New Zealand labour force has grown consistently over the past five years. Generally, labour force growth is closely correlated with population growth. Trends in net migration of working-age individuals strongly affect the size of the national workforce. Net migration dramatically dropped into negative figures during the pandemic years, which limited the growth of the labour force. However, growth in the construction sector drew local residents into the workforce, helping to offset the sharp decrease in migrant workers. A return to positive net migration in 2022-23 coincided with an increase in the growth rate of the total labour force after growth had been relatively stagnant between 2019-20 and 2021-22.

Rising participation rates among individuals aged 55 years or above have helped boost labour force participation over the past five years. With life expectancies increasing, people need to work and save more to maintain the same desired standard of living over the course of their lives, driving the trend. Better health among older workers, technological change reducing the manual intensity of some work and improving longevity have supported the rising participation of these older individuals.

New Zealand's total labour force witnessed a strong increase of 3.4% in 2023-24, driven by record levels of net migration, which peaked at a 12-month moving average of 136,000 in October 2023. Many of these migrant workers leveraged the leniency in the AEWV to obtain working rights in New Zealand. The labour force participation rate also reached an all-time high of 72.4% in June 2023, a result of strong net migration and high cost-of-living pressures forcing New Zealand citizens to participate at a greater frequency. Overall, IBISWorld forecasts the size of the total labour force to increase at a compound annual rate of 1.7% over the five years through 2024-25.