Monday, August 19, 2013

June jobs data: no improvements for those with the least

We finally got to look at June Household Labour Force Survey this morning, having only perused the headlines briefly last week. The headlines themselves were interesting:  Statistics New Zealand asserted Labour market continues to improve, and odd statement given that the content of the press release went on to say that unemployment was "up slightly since the start of the year". As we showed here unemployment is still well above what it was in the mid-2000s, and has stayed high for longer than any period since the late 1990s.
  
More thoughtful was Economists play down joblessness rise by the Herald's Brian Fellow. He gently chided the (mostly Australian-owned) bank economists for ignoring the not-so-great news contained in the June HLFS. And in Spider's and my view, he was right to do so. The economy is not creating a bunch of full-time jobs ready to mop up all those beneficiaries Paula Bennett and her department are sloughing off the welfare rolls: on the contrary the figures suggest that the groups most in need of work are increasingly unlikely to find it.

The standout figure is the increase in unemployment among women. While the government boasts that it is getting thousands of Domestic Purposes beneficiaries (most of whom are women) off benefits, where they are going is somewhat of a mystery since the overall unemployment rate for women remains high. The unemployment rate for women in the June quarter stood at 7.1% down a smidge from 7.2% a year before. The problem is that while the number women employed increased by 3,000 the overall labour force participation rate fell from 62.9% to 62.5% bolstered by an increase of 13,000 in the number of working-age women not in the labour force (664,000 to 677,000). Can Paula Bennett unequivocally tell us that sole mothers with children are not coming off a benefit just to join New Zealand's growing reserve army of labour?

Another standout statistic is that of Pacific unemployment. European unemployment has fallen since June 2012, Maori unemployment is static (still an unacceptably high 12.8%) but Pacific unemployment now stands at a whopping 16.3%, up from 14.9% a year ago. Now I'm not a political strategist but it seems Labour should stop secretly siding with National and taking cheap shots at roof-painting Sickness beneficiaries and start asking WTF National intends to do to start bringing down the disproportionately high rates of unemployment among Maori and Pacific people. They are, after all, a key part of Labour's core constituency. 

The last statistic that appears to have fallen under everyone's radar is that for 25-29 year olds. While the NEET (not in employment, education or training) rate for 15-24 year olds has fallen due to a rise in the number of young people avoiding the labour market studying (or moving into subsidised jobs), the unemployment rate for their older graduate siblings (25-29 years) has increased, from 7.0% in June 2012 to 8.3% a year later.

As the Brian Fellow article points out, the new jobs are being created in Canterbury and many are part-time. Many thousands of part-time workers want more work but the total number of hours worked continues to fall so it is unlikely they'll all find it. The number of manufacturing jobs (142,000) is up off its low of 140,000 in December 2012 but remains below what it was in 2011 and even the first half of 2012. Whatever the spin, this is not a dynamic economy - this is an economy in the doldrums, bouyed along only by the Christchurch rebuilding effort. No wonder social agencies, increasingly filling in for the former welfare state, are reporting record numbers of financially distressed clients.



What to do? Hard to say: most other developed economies are in the same boat and our traditional employment safety valve (Australia) is rapidly coming unglued. Maybe we need to step back and think about engineering an economy that's good for people, not fund managers. And in the meantime, the evidence is absolutely clear: the best way to get people off welfare is to ensure there's jobs for them to go to. Anything else is socially divisive and self-defeating.