Slow recovery for job market
The labour market is expected to improve mildly over the next year, as it shakes off the effects of a deeper than usual recession.
A quarterly report by the Ministry of Business, Innovation and Employment predicts annual job growth of 1.8 per cent by next March, and 2.1 per cent by March 2014.
While the global recovery was uncertain moderate employment growth was expected as the Canterbury rebuild ramped up, the ministry said.
Growth would be lumpy across regions and industries, but jobs in Auckland, Canterbury and the rest of the South Island were expected to increase strongly over the next year.
The recovery was taking longer than previous recessions, despite strong first-quarter growth in GDP, said Vasantha Krishnan, head of MBIE's labour and immigration research centre.
However, it had not been a jobless recovery. "Given the weak pace of the current economic recovery, employment growth looks strong compared to the 1997/98 experience."
The report also sounded a note of warning over Canterbury's rebuild, observing that business optimism had yet to translate into increased employment.
"This suggests that there may be a mismatch between the skills demanded by Canterbury employers and the skills held by those left in the region or willing to move to the region.
"The Ministry will continue monitoring developments in this area."
Youth unemployment was expected to remain at high levels but to gradually ease as firms found it harder to hire skilled staff.
During the year to June, employment rose by a lower than expected 0.6 per cent, but full time jobs had increased, with strong growth in Auckland and in the transport, postal and warehousing sectors.
Jobs in the retail and construction sectors also appeared to be recovering, with retail growing by 4.1 per cent and construction by 0.1 per cent in the year to June.
Employment declined in the wholesale trade, public administration and agriculture sectors.
Taranaki, Southland and Auckland grew strongly over the year to June 2012, but jobs were down in Northland, Canterbury and the Bay of Plenty.
The report predicts unemployment will drop from 6.8 per cent currently to 6.2 per cent in 2013 and 5.9 per cent the following year.
It made particular note of the workforce participation figure, which is a historically high 68.4 per cent and forecast to rise to 69.5 per cent by 2014.
The Ministry said this was high because fewer people had lost their jobs during the last recession but it was also keeping unemployment persistently firm.
It believed the elevated unemployment rate was cyclical rather than structural but noted an emerging mismatch of skills.
Farms and manufacturers were finding it harder to find skilled labour, and mobilising a workforce for the Canterbury rebuild would probably be "the most significant challenge for the labour market in a generation".
Canterbury would need a broad pool of labour as the rebuild took off, driving growth in areas like hospitality and retail.
Advertised vacancies in Canterbury had increased dramatically over recent months, but it was not clear yet how much of that was due to people leaving the region and how many were new jobs.
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