True scale of unemployment shown by under-employment rate of 12.8 per cent

The unemployment rate is low, the under-employment rate is far higher.

The unemployment rate is low, the under-employment rate is far higher.

Unemployment figures spiked up to 5.2 per cent at the close of 2016, with economists blaming high immigration.

But there's another measure of joblessness that goes unreported, that puts the figure far, far higher.

It's the "underutilisation rate" which captures people who want work, or more work, but who fall outside of the definition needed to be counted among the official unemployed.

BNZ chief economist Tony Alexander says distaste at what's happening in the US and UK will drive some expat Kiwis to ...

BNZ chief economist Tony Alexander says distaste at what's happening in the US and UK will drive some expat Kiwis to return home.

Depending on your gender and ethnicity, the labour market could feel more like a Portugal, or a Greece, than Pacific's "Rock Star" economy.

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The Underutilisation Rate is around 13 per cent, and staying stubbornly high since it spiked during the Global Financial Crisis in 2008 and 2009.

Compared to 132,000 jobless, there were 342,000 workers classed as underutilised.

Unemployment has risen as the workforce has expanded, says Westpac economist Satish Ranchhod.

"Rather than signaling a deterioration in economic conditions, the rise in the unemployment rate was due to continued strong growth in the labour force," he says.

The economy is booming, but if you are struggling to find a job it's because people seeking jobs are increasing.

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But when people are competing for jobs, they may find themselves up against far more than the 5.2 per cent of the population that is officially unemployed.

All around the world, it is these largely invisible jobless and part-timers which appear to be behind a Donald Trump-inspired distrust of official jobless figures.

When campaigning last year, Trump told supporters: "Don't believe these phoney numbers. The number is probably 28, 29, as high as 35 (percent). In fact, I even heard recently 42 percent."

There have been similar, though less shrill concerns that UK figures understate the true level of joblessness among Britons.

Modest changes to the way Statistics NZ conducted the three-monthly Household Labour Force Survey (HLFS) of 16,000 households which is the basis for the unemployment data made a big difference, sending the message that the way you count the jobless matters.

Following the changes to the questions asked, the unemployment rate fell from 5.7 per cent to 5.2 per cent.

Instead of there being 144,000 official jobless, there were 132,000, the Council of Trade Unions said in a bulletin to members in September.

"The apparent fall in unemployment is due to a change in definition," it said.

It had got "tougher" to be classed as unemployed.

Getting classed as officially unemployed required a person be actively seeking work and available to work at the time of the survey, and actively, means really actively.

"If they are out of work but not sufficiently 'actively' seeking work, or if they are not available that week, they are classified as 'not in the labour force' and not officially unemployed," the CTU said.

Someone undertaking a short course, or committed to volunteering, or who was so disheartened, or too lazy, meet the tests for "actively" looking for work would not be counted as officially jobless.

Commentators in the US concluded that the US unemployment rate, which Trump believes is phoney, doesn't capture the disheartened, but they also noted those desperate for more hours, often the difference between life on Struggle Street and a decent existence, were not counted in the headline number.

But like the US, New Zealand tracks at least the majority of these people through the new underutilisation rate, a term the CTU calls "dehumanised".

These are people struggling by on part-time work, plus people deemed not active enough in their search for work, plus the officially jobless. It also includes people who want work, but were not available for work in the week the HLFS was done are also included in this number.

It may be time, some believe to start paying more attention to the wider jobless figures capturing all these folks, in addition to the official jobless.

"The official unemployed make up only about a third of those wanting work," the CTU said.

Even that could be ignoring some, like people who have reached 65 and would like to work, but have given up in the face of ageist employers.

Ranchhod said the trend for underutilisation was down, which was encouraging.

It had peaked at over 14 per cent in 2012, he said.

It was a pool of labour the economy could draw on as it grew, but it could also result in lower pressure on employers to pay higher wages.

"It gives us a feel for how much excess labour there is in the economy. It does give us the capacity to grow without a big increases in costs," Ranchhod says.

BNZ economist Tony Alexander did not expect the flow of migrants into the workforce to slow.

"Our net immigration boost is likely to remain high for the next four years as those of us here stay here and the one million of us Kiwis offshore feel more inclined to return," he said.

"This will reflect not just the distaste of some for the new America and uncertainty about the impact of Brexit, but the excrement storm about to flush through Europe as countries undertake elections starting with the Netherlands in mid-March."

"The chances of nationalistic parties with anti-Euro and anti-Muslim agendas gaining greater power are very very high."


  • At 12.8 per cent, New Zealand's underutilisation rate is lower than OECD average of 14.1 percent. Australia's was 21.8 per cent. The UK's was 11.2 per cent. The US rate was 10 per cent.
  • The New Zealand rate for women was 15.6 per cent.  That's around the rate of the Slovak Republic.
  • The rate for Maori was 22.8 per cent, about the same as Portugal.
  • For Pacific Island people it was 18.8 per cent, about the same as Turkey.
  • For Asian New Zealanders, it was 14.6 per cent.
  • For Pakeha it was 10.9 per cent.
  • For those with no qualifications, it was 30.4 per cent, higher even than Spain and Greece, the basket cases of the European Union.

 - Stuff

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