Mismatch between benefits and job market
Unemployment may be near a record low but the number of people receiving a Work and Income benefit is still higher than before the pandemic.
Data out this week showed the unemployment rate had edged up, but only slightly, to 3.3% from 3.2% in the previous quarter.
But as of July 22 this year, there were 345,807 people on the main benefits, including 171,195 on Jobseeker Support, according to Infometrics analysis. Of those, more than 100,000 people were classified as ‘‘work ready’’.
Infometrics economist Brad Olsen said that number was still 23,000, or 30%, higher than at the same time in 2019.
But in June 2019, the unemployment rate was 4%.
‘‘As a proportion of the working age population, the Ministry of Social Development reports that currently 5.4% of the working age population is on a Jobseeker Support benefit, around the same level as early April 2020, when New Zealand was in level 4 lockdown.
‘‘Jobseeker Support (Work Ready) figures have continued to decline over most of 2022, and are sitting just under 9000 fewer than at the same point in 2021, which shows that benefit levels have been improving. However, the pace of change does look to have slowed in 2022, with Jobseeker Support (Work Ready) levels remaining stubbornly higher than pre-pandemic, and without as strong a decline any more.’’
Olsen said there was an overlap of about a third between the unemployed figure and the number of people on a benefit.
People who were only working a couple of hours a week would not count as unemployed but could still be receiving a benefit.
Those who were temporarily unwell or in training and not looking for a job would also not qualify. People had to be actively looking for work to be counted.
On the other hand, someone could be unemployed and looking for work but not receiving a benefit because their household income was too high.
But he said the fact that benefit numbers had not dropped as much as unemployment showed there was capacity in the economy that was not being made available to employers.
‘‘Often that suggests we need to do more around training or pastoral care.’’
ANZ chief economist Sharon Zollner said people who were working but not as much as they wanted to would be counted as underemployed – in the latest data that was 9.2%. But, she said, it was clear many businesses were struggling to find staff.
The data suggested a matching problem. ‘‘For whatever reason there is a mismatch between the people looking for work and the people looking for workers.’’
She said employers were still competing hard for people, which was driving wages up.
The labour cost index for all salary and wage rates (including overtime) increased 3.4% in the year ended June, up from 3% in the year to March.