this post was submitted on 20 May 2024
40 points (100.0% liked)

NZ Politics

560 readers
2 users here now

Kia ora and welcome to the NZ Politics community!

This is a place for respectful discussions about everything that's political and kiwi

This is an inclusive space where diverse opinions are valued, but please don't be a dick

Other kiwi communities here

 

Banner image by Tom Ackroyd, CC-BY-SA

founded 1 year ago
MODERATORS
[email protected]
[email protected]
40
Another 26,000 'will be unemployed' before peak reached (www.rnz.co.nz)
submitted 5 months ago by [email protected] to c/[email protected]
18 comments fedilink hide all child comments
 

Surely all these people losing decent paying jobs will have no impact on the economy right? Definitely not a recession right?

top 18 comments
sorted by: hot top controversial new old
[–] [email protected] 4 points 5 months ago (2 children)

March quarter data from Stats NZ showed an increase in the unemployment rate, from 4 percent in December to 4.3 percent. It said 134,000 people were now unemployed.

If 134k is 4.3% then 4% is about 125k people. So 9k people lost their jobs since December and another 26k to go?

Is this the difference in roles or the total redundancies (a certain percentage of people made redundant will go into a new role, some of which would not have had someone in it before)?

Maybe they expect a peak of about 150k people unemployed?

Sounds like they expect it to peak at about 4.8% if my maths is right? Historically, that's still pretty low.

He said the number of people on the JobSeeker benefit had been trending higher since the start of 2023. In March there were 187,986 people receiving this benefit, up from 131,721 in March 2019 and 168,498 last year.

I get lost with the new benefits. Are the 187k people on Jobseeker not all considered "unemployed"? Is this a case of some people with part time work (underemployed) being counted in one but not the other?

[–] [email protected] 4 points 5 months ago (1 children)

I get lost with the new benefits. Are the 187k people on Jobseeker not all considered "unemployed"? Is this a case of some people with part time work (underemployed) being counted in one but not the other?

Yeah the unemployment rate and benefit rates don't match up for a whole bunch of reasons.

  • you're only counted as unemployed if you're actively looking for work. Otherwise you're not part of the labour force

  • Not all unemployed people will be on jobseeker. If you have a working partner/spouse you're not usually eligible, for example.

  • 'Jobseeker' rolled up all the old benefits into one, so there are people with disabilities who can't work at all counted in those figures.

  • You can work a limited number of hours while on jobseeker before it starts to abate.

The underutilisation rate is arguably a better measure, as it includes unemployed but also people who want more work but can't find it. It's potentially a 'truer' measure to compare to when, as you say, 4.8% unemployment is relatively low compared to other times in the past. You can work a couple of hours a week and you don't show up in the unemployment stats, but it hasn't always been counted that way.

[–] [email protected] 1 points 5 months ago (1 children)

‘Jobseeker’ rolled up all the old benefits into one, so there are people with disabilities who can’t work at all counted in those figures.

Yeah this is the benefit confusion I alluded to, and I was wondering if this was the case. I think things like what I think was called the Sickness Benefit is now part of the Jobseeker support benefit, despite having no requirement to look for work.

The underutilisation rate is arguably a better measure, as it includes unemployed but also people who want more work but can’t find it.

Digging into this, the unemployment rate went from 3.4% to 4.3% between March 2023 and March 2024.

The underutilisation rate went from 9.1% to 11.2% in the same time period.

I haven't managed to find data from before 2010 for underutilisation so it's hard to see the historically normal level.

[–] [email protected] 2 points 5 months ago (1 children)

2010 was when underutilisation started being collected.

What I was getting at though was that a historically normal level of unemployment is tricky to work out as the measure itself has changed over time, in part because the labour market has changed.

There are far more part time, casual, flexible roles today so even when the labour market gets worse, people may still be working some hours so they don't show up in unemployment stats, but they do in underutilisation. Employment has only been counted like this since (I think) the late 90s so it's not directly comparable to before then.

[–] [email protected] 2 points 5 months ago

That makes sense. It's tricky with any survey data really. Over time the helpful question to be asking changes, so you can't really compare points that are far apart in time.

[–] [email protected] 2 points 5 months ago (1 children)

The article says "will be unemployed" meaning they are going to get fired or laid off or whatever the term they are using these days.

Sounds like they expect it to peak at about 4.8% if my maths is right? Historically, that’s still pretty low.

I don't know. Usually mass layoffs have carry over to the rest of the economy. All the businesses serving those government employees are probably also going to downsize somewhat. Some may even go out of business who knows.

I get lost with the new benefits. Are the 187k people on Jobseeker not all considered “unemployed”?

Most likely not everybody who is unemployed is getting a benefit so the number unemployed should be higher than those seeking jobseeker benefits.

[–] [email protected] 2 points 5 months ago (1 children)

I don’t know. Usually mass layoffs have carry over to the rest of the economy. All the businesses serving those government employees are probably also going to downsize somewhat. Some may even go out of business who knows.

But if these are in addition to the 26k, then the 26k wouldn't be the peak?

Most likely not everybody who is unemployed is getting a benefit so the number unemployed should be higher than those seeking jobseeker benefits.

The article says in March 134k people are unemployed and 187k people are on the Jobseeker benefit.

Note that "unemployed" isn't everyone who doesn't have a job, you have to be looking for work to be considered. So for example, you generally don't count a stay-at-home Dad whose partner works to support the family.

[–] [email protected] 2 points 5 months ago (1 children)

Yeah if 26k are dropped from the public service then there will definitely be businesses that supply the public sector that will also downsize as a result. Then there's the indirect impact - particularly in Wellington - of fewer public services spending money with local businesses that will then also cause a contraction in their profits.

[–] [email protected] 1 points 5 months ago (1 children)

But the article doesn't say 26k public service workers, it says 26k people total. So the 26k forecast must surely include flow on impacts of the 4k+ public service jobs lost?

[–] [email protected] 2 points 5 months ago

Oh right, sorry I didn't catch that part.

I guess its hard to know - because 26k probably includes people made redundant as part of the general downturn triggered by the reserve bank.

[–] [email protected] 3 points 5 months ago* (last edited 5 months ago) (1 children)

I can't remember where I read it but from what I understood of the article a common outcome from central banks ramping up interest to dampen the economy is that they inevitably overshoot and make things much worse than they needed to. This can then result in such a bad down turn that in the long run doing nothing & letting inflation play itself out may have been better than intervening.

Its not yet apparent in the headline numbers so much; but you don't need to see too many more reports of major companies reducing earnings outlooks and anecdotal words of caution from friends & family before it starts to look like we're beyond technical and into an actual recession.

[–] [email protected] 3 points 5 months ago (2 children)

What's the difference between a technical recession or an actual recession. Words are supposed to have meanings and recession is a well defined term with globally accepted measurement metrics.

If we are technically in a recession it means we are in a recession.

[–] [email protected] 3 points 5 months ago (1 children)

A recession is two consecutive periods of negative growth. So usually a "technical recession" means "we meet the criteria for a recession but we're not experiencing the bad effects you'd expect (yet)"

[–] [email protected] 4 points 5 months ago (1 children)

The point is that the word recession has a meaning, the meaning is accepted worldwide, and we are in one. I would also dispute that we are not experiencing the bad effects. The polls seem to indicate the public is feeling quite a bit of pain.

[–] [email protected] -1 points 5 months ago (2 children)

Well 'we' aren't actually in a recession. Economic growth in the US has been positive the last several quarters.

[–] [email protected] 1 points 5 months ago

Who is the "we" you are talking about?

[–] [email protected] 1 points 5 months ago

Possibly in NZ Politics the "we" context would be obvious?

[–] [email protected] 1 points 5 months ago

The difference is the duration; and I would guess its done due to the vagaries of measurement as much as anything because its common for the initial numbers to end up being revised later. So 2 consecutive quarters of negative GDP growth is a technical recession, and beyond that you're in a real recession.

But the cynic in me will always suggest that while economists sometimes seem to think what they're doing is a hard science, a lot of it seems to be more about the feels and what is expedient to their political view point.

Then on top of that, over the years i've read various arguments that GDP is kinda a piss poor measure of the economy anyway, and there's more holistic ways of measuring how things are going. This article sums up a bunch of the opinions about it, of whose Craig Renney's is the one I probably put more stock in - along with those suggesting using the Sahm Rule given it looks at employment which is probably a better measure for how actual people are getting along.

https://www.interest.co.nz/economy/124432/we-asked-twenty-economists-how-they-would-define-recession-new-zealand