All bets off as jobless hit six-year high

Employers are turning to easier-to-fire part-time and casual staff for a more flexible workforce to help them through the economic downturn.

Figures made public yesterday by Statistics New Zealand show unemployment hit a six-year high of 4.6 per cent in the December quarter. This was up from 4.2 per cent in September a rise of 10.8 per cent in three months.

There are now 105,000 jobless nationwide.

Most economists expect unemployment to reach 7 per cent this year, putting pressure on the Reserve Bank to further cut the official cash rate from 3.5 per cent to as low as 2 per cent by the middle of the year.

But economists say the big surprise in December's figures was the 0.9 per cent increase in the number of people in work in the quarter, mainly due to the 3.5 per cent rise in part-time workers. The number of fulltime employees also rose, but by a modest 0.3 per cent.

Just over 69 per cent of the workforce was employed, up 0.6 per cent, as people tried to make ends meet, economists said.

"All these extra job-hunters overwhelmed the supply of jobs," ASB economist Jane Turner said.

Robin Clements at UBS said the increase in the number of part-time workers suggested employers were turning to casual staff who were "easier to let go if need be".

That could result in a big drop in part-time employment in the March quarter.

The ANZ bank said: "Nevertheless, the strong rise in the quarter shows that the survey was not as unequivocally weak as we, and the market, were expecting."

Despite the recession last year, an extra 20,000 jobs were added.

Total hours worked fell 1.9 per cent in the December quarter and were 2.8 per cent lower than a year earlier.

The sharp fall in hours worked pointed to gross domestic product shrinking for a fourth consecutive quarter, the ANZ said, deepening the recession.

"While employment data may not be as weak as what we or the market had feared, there is enough underlying weakness in it to suggest economic activity will stay very subdued in the near term."

Wellington Chamber of Commerce chief executive Charles Finny said there appeared to be a "dual labour market".

Not all companies were finding it easier to find staff because some businesses were hoarding labour.

"More people are being employed but are working fewer hours on average. This is partly because many employers want to try and hold on to staff through the downturn, in spite of less work, as they may be hard to find later," Mr Finny said.

A recent chamber survey found that 27 per cent of Wellington businesses expected to cut staff in the next few months.