Which jobs would be first to go if unemployment rose?

Unemployment is at record lows but there are warnings that could change quickly, as rising interest rates and global pressures squeeze the economy.

Economists say the rate is likely to need to rise to at least 4.5% to bring inflation under control. That could mean 50,000 people losing their jobs.

But which sectors are likely to see job losses first? The experts say there are some likely targets.

Construction

Construction job numbers have boomed in recent years, buoyed by a strong property market.

Building consent numbers have been running at record highs.

In September, there were 7000 more construction jobs than the equivalent time a year earlier. But ANZ economist Finn Robinson said it could be the first to feel a downturn.

‘‘Taking history as a guide, which has been unreliable at best during the pandemic, interest-rate sensitive sectors are where we could see job losses, and an obvious example here is construction,’’ he said.

The sector had boomed since the 2020 lockdown. But higher interest rates were clearly dampening demand.

Construction, generally speaking, was a much more cyclical industry than the broader economy.

Hospitality

Hospitality businesses have had some of the most high-profile struggles to find staff.

But Murat Ungor, senior lecturer in the University of Otago’s Department of Economics, said it was likely that hospitality jobs could also be among the first to go in a downturn. He said that was foreshadowed by the Covid19 lockdown experience.

This work could not be done remotely, and jobs that depended heavily on consumer spending would be among those to go.

‘‘So cafes, restaurants, bars, pubs, real estate are the businesses we can see job losses.’’

Last one in, first one out?

You might have heard ‘‘last one in, first one out’’, meaning that the people most recently hired are most vulnerable to being laid off.

Shannon Barlow, managing director of Frog Recruitment, said there was some truth to it. Businesses were often driven by loyalty, she said.

The other factor was the ‘‘unknown’’.

‘‘The shorter time someone has been with the business, the bigger the risk factor. You have less certainty regarding their future performance, culture fit, response under pressure etc, compared with someone you have experience with and know what to expect. An exception to this, is using the market conditions as an opportunity to exit underperforming employees.’’

Robinson said it was still highly uncertain how things would play out over the next few years. He said it was often younger people, Māori, and Pasifika who bore the brunt of a slowdown.

The chance of the Reserve Bank being able to negotiate enough of a slowdown to sort inflation without causing serious unemployment pain was becoming more remote, he said.