A brave new world. CDANZ 9 May Shamubeel Eaqub, CFA fb.me/seaqub

Transcription

1 A brave new world CDANZ 9 May 2018 Shamubeel Eaqub, CFA fb.me/seaqub shamubeel@sense.partners

2 A brave new world A rapidly changing world Economy, jobs Demographics Why it matters: Careers more volatile We crave stability in working and retired life What to do: Lifelong learning; financial resilience; retirement planning; wage negotiation; geographic/industry/occupation nuance. 2

3 Labour market state The world has changed, but we haven t changed our ways 3

4 Ebbs and flows Unemployment rate Real wages & GDP per capita % of labour force Great Depression 2017$/hour Real wage level, left Wage fixing begins GDP per capita, right Economic crisis escalates Economic reforms $000/person Source: Statistics New Zealand & Lattimore & Eaqub (2011), The NZ Economy: An Introduction, AUP 4

5 Persistent inequalities Unemployment rate by selected aspect, March 2018 year U-rate by region U-rate by age U-rate by ethnicity& sex Northland Waikato East cape Manawatu - W. Upper NI Otago European Maori Pacific Peoples Asian Male Female 0 Total= 4.6 0Total= Total= Source: Statistics New Zealand 5

6 Changing nature of work 6

7 Change is constant, but accelerating 80% Employment by sector Primary Goods producing Services Share of total 60% 40% 20% 0% Census year Source: Statistics NZ 7

8 Technology; AI & Robots still to come Smartphone Technology adoption pace Internet Home computer Telephone Source: Asymco Years to reach 50% of US households 8

9 Urbanisation 4 Population distribution Rural Urban 3 Number, m Source: Statistics NZ 9

10 Globalisation not just trade 10

11 Ageing 5% 4% Population growth by age Under Annual % change 3% 2% 1% 0% -1% Source: Statistics NZ 11

12 Catalysts Reality bites 12

13 What is a career? Getting a job, keeping a job Decent income that gives: dignity in working life progression & growth provide for whanau in money & time dignity in retired life. 13

14 Every region is not the same Human capital per capita (2006, $000) Southland Hawke's Bay Marlborough West Coast Gisborne Waikato Northland Economic complexity & human capital Wellington Auckland Otago Canterbury Taranaki BoP Manawatu-Wanganui Nelson-Tasman Economic complexity index (rising compexity --->) Source: Eaqub (2014), Growing Apart: Regional Prosperity in New Zealand, BWB Texts 14

15 This shows in performance Northland Auckland Waikato Bay of Plenty Gisborne Hawke's Bay Taranaki Manawatu-Wanganui Wellington Tasman Nelson Marlborough West Coast Canterbury Otago Southland Industry outperfromance by region Source: Statistics NZ -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% %pa,

16 Skills not the same everywhere 16

17 But education is not enough Trends in relative earnings Below upper secondary Tertiary % of total Source: OECD, Statistics NZ 17

18 Education will be disrupted 7 Government education spend 6 5 % of GDP Source: Statistics NZ, Treasury 18

19 Jobs less secure & reskilling more often Number of years Median tenure length (45-54 year old male, USA) % of all jobs 25% 20% 15% 10% 5% Part time employment Source: EBRI, BLS 0% Source: Statistics New Zealand, Lattimore & Eaqub (2011), The NZ Economy: An Introduction, AUP 19

20 Jobs worth less Income Inequality Lifetime incomes based on cohort Gini Coefficient Lifetime income 2018$, 000s (year of birth) Source: Creedy J.Gemmell N, Nguyen L (2017), Income inequality in New Zealand, , VUW Working Papers in Public Finance Perry B. (2017), Household incomes in NewZealand: Trends in indicators of inequality and hardship, , MSD Source: Sense Partners calculations from Statistics NZ Census age cohort income data 20

21 Generation rent: insecure in retirement 80% NZ home ownership rate, Share of households 75% 70% 65% 60% 55% 50% Sources: Statistics Eaqub & NZ Eaqub (2015) Generation Rent BWB Texts 21

22 and not enough to meet all needs Household income (2017) Taranaki Southland Wellington Canterbury Otago Upper SI Waikato East Coast NZ Manawatu-W. Bay of Plenty Northland Auckland After housing income Housing cost $- $20,000 $40,000 $60,000 $80,000 $100,000 Source: REINZ, RBNZ, Statistics NZ (*Housing cost = cost to service average house mortgage on standard terms) 22

23 Mortgage slavery or insecure Years to save & pay off mortgage Years to buy a house Deposit Repayment Total Source: Sense Partners *Using basic assumptions of saving 5% of income for deposit and repayments at 33% of income. Using spot prices for floating mortgage rate, gross annual household income and median house price with a 20% deposit. 23

24 Casualisation & concentration Part time employment Labour market concentration 25% % 100 % of employment 15% 10% Index, 2000= Employment by fewer employers 5% 60 0% Source: Statistics NZ Source: Statistics NZ Source: Sense Partners calculations from Statistics NZ data 24

25 Negotiating power Phillips Curve Union membership 10% Real wage inflation 8% 6% 4% 2% 0% -2% -4% -6% now % of employed % 0% 5% 10% 15% Unemployment rate Source: Sense Partners calculations from Statistics NZ & Lattimore & Eaqub (2011), The NZ Economy: An Introduction, AUP Source: Statistics NZ 25

26 Consequences & strategies 26

27 Consequences for you Changing nature of work Less security and stability Different speeds of change by region, industry, occupation Personal resilience Financial resilience Negotiating 27

28 Ideas Prepare clients for change To reskill through life Be proactive in understanding local/industry/occupation specifics Need financial resilience for change and prepare for retirement Through savings and negotiating true worth Will need career coaching through life, not a one off 28

29 A brave new world A rapidly changing world Economy, jobs Demographics Why it matters: Careers more volatile We crave stability in working and retired life What to do: Lifelong learning; financial resilience; retirement planning; wage negotiation; geographic nuance 29

30 Thank You