Quarterly Labour Market Report February 2015 MB13090_1228 March 2015
Ministry of Business, Innovation and Employment (MBIE) Hikina Whakatutuki - Lifting to make successful MBIE develops and delivers policy, services, advice and regulation to support economic growth and the prosperity and wellbeing of New Zealanders. MBIE combines the former Ministries of Economic Development, Science + Innovation, and the Departments of Labour, and Building and Housing. More information www.mbie.govt.nz 0800 20 90 20 Information, examples and answers to your questions about the topics covered here can be found on our website www.mbie.govt.nz or by calling us free on 0800 20 90 20. Disclaimer This document is a guide only. It should not be used as a substitute for legislation or legal advice. The Ministry of Business, Innovation and Employment is not responsible for the results of any actions taken on the basis of information in this document, or for any errors or omissions. ISSN 2253-5721 February 2015 Crown Copyright 2015 The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identified as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders.
Contents Executive summary... 4 Economic conditions... 5 Domestic conditions... 5 Exports... 6 Economic outlook... 6 Labour demand... 7 Overall employment growth... 7 Employment growth by full-time/part-time status... 7 Employment growth by sex... 8 Employment growth by industry... 9 Employment growth by region... 9 Labour supply... 11 Labour force participation rates... 11 Migration... 12 Labour market matching... 14 Unemployment by ethnicity... 14 Unemployment by region... 14 Unemployment by duration... 16 Jobseeker support benefits... 16 Youth labour markets... 17 Job vacancies... 18 Wage growth... 19 Special feature: New Zealanders in the Australian labour market... 20 New Zealanders in the Australian labour market... 20 Migration patterns... 21 3
Executive summary Labour market indicators reflect the underlying strengths of New Zealand s economy. Employment was up 1.2 per cent in the December quarter, beating market expectations of 0.6 to 1.0 per cent growth. Over the year to December, employment has increased by 80,000 (3.5 per cent). While Canterbury remains a significant source of labour demand, most of the employment growth in 2014 was in the upper North Island. Labour supply rose sharply in December, up 36,000 (1.4 per cent), the largest level increase since the data series began in 1986. This reflects increasing labour force participation (which rose to 69.7 per cent, the highest on record) and migration-led population growth (with annual net migration also the highest on record). Labour market outcomes have improved for women in particular. The female employment rate (60.4 per cent) and participation rate (64.6 per cent) are both at their highest levels since the series began. The NEET rate for women aged 15-24 is at its lowest level since the data series began in 2004 (12.6 per cent). As more people are drawn into the labour force, the unemployment rate has risen over the quarter, up 0.3 percentage points to 5.7 per cent. Wage growth remains subdued, but this comes against the backdrop of low inflation. Figure 1- Key labour market indicators (seasonally adjusted) Indicator December 2014 Quarterly change Annual change Employed 2,375,000 +28,000 (+1.2 %) +80,000 (+3.5%) Unemployed 143,000 +8,000 (+5.8%) -3,000 (-2.6%) Participation rate (%) 69.7 +0.7 pp. +0.9 pp. Employment rate (%) 65.7 +0.4 pp. +1.0 pp. Unemployment rate (%) 5.7 +0.3 pp. -0.3 pp. MBIE forecasts employment growth to remain strong but for growth rates to decline over the next three years. The unemployment rate is forecast to drop below 5.0 per cent by March 2017. Figure 2- Short-term labour market forecasts (year ending March, or March quarter) Actual Forecast 2014 2015 2016 2017 Employment growth (AAPC) 2.8 2.4 2.2 1.6 Participation rate (%) 69.3 69.4 69.8 69.9 Employment rate (%) 65.1 65.7 66.4 66.6 Unemployment rate (%) 6.0 5.3 5.1 4.8 Source: Ministry of Business, Innovation and Employment 4
Economic conditions New Zealand s economy maintained a robust rate of growth through 2014, and recent indicators point to an overall positive outlook for 2015. Global conditions provide the main risks: both the IMF and World Bank have lowered their global growth forecasts for 2015 and 2016, due to subdued growth in China and other emerging economies, weaknesses in some advanced economies, and increasing geopolitical uncertainties. Figure 3- Annual and quarterly production GDP growth Domestic conditions GDP rose 1.0 per cent in the September 2014 quarter, up from 0.7 per cent in June. The primary industries were the main drivers of this rise (up 5.8 per cent, their largest quarterly increase in 15 years). Growth in these industries was supported by a strong start to the new milk production season, and a surge in oil exploration and extraction activities. The second largest contributor to September quarter growth was manufacturing, up 2.0 per cent on the back of increased activity in machinery and equipment manufacturing (up 3.7 per cent) and metal product manufacturing (up 4.9 per cent). Recent indicators point to continued growth in this sector, generating increased labour demand. In NZIER s Quarterly Survey of Business Opinion, a net 15 per cent of manufacturers intend to increase employment over the March 2015 quarter, the most since 2004. Construction activity fell 1.2 per cent in the September quarter, largely due to a drop in heavy and civil engineering construction. The outlook for this sector remains strong. While the Canterbury rebuild is expected to peak in 2015/16, construction activity should continue to grow out to 2017, supported by housing demand in Auckland, and a range of major infrastructure and commercial projects. Growth in the services sector was modest (up 0.3 per cent in the September quarter), but followed a 1.3 per cent increase in June, the largest since December 2006. 5
Exports Merchandise exports increased 0.9 per cent in the December quarter, following two quarters of decline. Rising meat prices, particularly for frozen beef, drove this modest increase (meat export values rose 15.0 per cent, while quantities only rose 4.6 per cent). Falling dairy prices provided a partial offset. Economic outlook Indicators of firm activity remain buoyant, even if they have fallen from record levels recorded at the start of 2014. In December, the ANZ Business Outlook reported that a net 20 per cent of firms intended to increase employment over 2015, with hiring intentions highest in construction and services. Similarly, in NZIER s December quarter Quarterly Survey of Business Opinion, a net 21 per cent of businesses intend to increase employment over the next quarter, the highest in ten years. Figure 4- Indicators of firm hiring activity Sources: ANZ Business Outlook (ANZBO), NZIER Quarterly Survey of Business Opinion (QSBO). Hiring intentions is defined as the percentage of businesses expecting their staff levels to increase minus the percentage expecting them to decrease. 6
Labour demand Employment growth was strong throughout 2014, and remained so in the December quarter. While Canterbury and the construction industry remain important sources of labour demand, the drivers of employment growth have broadened. Overall employment growth The number of people employed in New Zealand increased by 28,000 (1.2 per cent) between the September and December quarters, and 80,000 (3.5 per cent) in the year ending December. This annual growth rate is just below the 3.7 per cent recorded in the March and June quarters, which were the highest annual increases since December 2004. Figure 5- Annual and quarterly employment growth Employment growth by full-time/part-time status Full-time employment has been the main driver of recent employment growth, although parttime employment was also up strongly in December. Over the December quarter, full-time employment increased by 19,000 (or 1.0 per cent). This is the ninth consecutive quarter of growth in full-time employment. Over the year, full-time employment increased by 68,000 (3.8 per cent). Part-time employment rose 15,000 (2.9 per cent) in December after two quarters of decline. This is the largest quarterly increase of part-time employment in three years. Over the year, part-time employment rose by 13,000 (2.5 per cent). Part-time employment growth was stronger than full-time employment growth at the end of the last business cycle (around 2007), but growth for both types of employment stalled during the recession. Since 2012, full-time employment growth has been strong, while part-time employment growth has been volatile. 7
Figure 6- Full-time/part-time employment indices, Ministry of Business Innovation and Employment Employment growth by sex The quarterly increase in employment consisted of a 16,000 (1.4 per cent) increase in female employment, and a 12,000 (1.0 per cent) increase in male employment. The female employment rate reached 60.4 per cent this quarter, the highest since the series began in 1986. Male employment growth fell relative to female employment growth during the recession, although the growth gap has narrowed since 2013. Figure 7- Female/male employment indices, Ministry of Business Innovation and Employment 8
Employment growth by industry Around a third of annual growth in employment came from the construction industry (up 25,700, or 13.8 per cent). This increase in construction employment was concentrated in Canterbury (up 9,600) and Auckland (up 7,200). Outside construction, employment growth was also recorded by arts, recreation and other services (up 19,000, or 13.9 per cent) and public administration and safety (up 11,800, or 9.9 per cent). Over the past decade, nearly 90 per cent of employment growth has been in five industries: health and social assistance, business services, construction, other services and retail trade and accommodation. Declining manufacturing employment partially dampened overall growth in this period. Figure 8- Cumulative employment growth by industry since December 2004, Ministry of Business Innovation and Employment Employment growth by region Employment growth was strongest in the upper North Island over the year to December: in Auckland (up 22,300, or 2.9 per cent), Waikato (up 17,400, or 8.9 per cent), Bay of Plenty (up 15,600, or 13.5 per cent), and Northland (up 7,500, or 11.2 per cent). These regions have also undergone strong population growth, accounting for around 70 per cent of the annual increase in working-age population. Canterbury employment rose by 15,800 (4.6 per cent) in the year to December, although growth rates have eased in this region. Employment rates have picked up in most regions over the year. The strongest increases were in the upper North Island, particularly Bay of Plenty (up 4.9 percentage points to 64.2 per cent) and Northland (up 3.3 percentage points to 58.7 per cent). Employment rates are still higher in the South Island, with the highest being Southland (71.0 per cent) and Canterbury (70.4 per cent). 9
Figure 9- Employment rates by region 10
Labour supply In the December quarter, the labour force grew by 36,000 people (1.5 per cent), the largest level increase since the series began in 1986. This comprised an additional 28,000 people in employment and 8,000 people in unemployment. Approximately two-thirds of this labour supply growth is due to the increased labour force participation rate, which reached the highest level (69.7 per cent) recorded in New Zealand. The remaining one-third of labour supply growth is due to a strong rise in working-age population, which has been underpinned by record levels of net migration. Labour force participation rates Growth in labour force participation rates has been broad-based. Over the year to December, participation rates increased for all but two age-groups, and for all major ethnic groups. Most regions saw increased labour force participation over the year, with the largest increases being in Northland (up 2.9 percentage points to 63.8 percent) and Bay of Plenty (up 2.7 percentage points to 68.2 per cent). Female participation increased by 1.2 percentage points, compared with 0.4 percentage points for males. The number of people not in the labour force fell by 18,000 (1.6 per cent), over the December quarter, and by 9,000 (0.8 per cent) over the year to December. On an annual basis, the fall in those not in the labour force is due to a mix of factors. The number of people who gave studying as their reason for not being in the labour force fell by 13,000 (6.5 per cent) compared to December 2013. Those not in the labour force due to caregiving, which has been declining for the past couple of years, fell by 5,800 (3.7 per cent) over the year. The number of people who gave at home but not looking after children as their reason for not being in the labour force fell by 7,800 (5.5 per cent) over the year. Figure 10- Not in labour force by main activity (not seasonally adjusted) 11
Migration In the year to December 2014, New Zealand had a net gain of 50,900 migrants, the highest level of annual net migration on record. MBIE forecasts annual net migration to exceed 60,000 by June 2015 before dropping back to about 53,000 by December 2016. Net migration consisted of 109,300 arrivals and 58,400 departures. Compared with the December 2013 year, growth in net migration has been driven both by more arrivals (up 16 per cent from 94,000 people) and fewer departures (down by 18 per cent from 71,500 people). Three trends are underpinning the growth in arrivals. Firstly, since 2011, work visas have returned to a pre-recession growth trajectory, a trend supported by workers arriving for the Canterbury rebuild. Secondly, from 2012 onwards, the number of New Zealand citizens returning from abroad has been increasing. 29,000 New Zealand citizens migrated to New Zealand in the year ending December, the highest since the year ending April 1991. Finally, in the last two years there has been a sharp uptick in the number of student visas, primarily for Indian students. Alongside the increasing arrivals, departures of New Zealanders has been dropping since mid- 2012. 36,700 New Zealand citizens migrated from New Zealand in the year ending December, the lowest number of annual departures since September 1995. This largely reflects reduced departures to Australia. Figure 11- Annual net migration to New Zealand 12
Figure 12- Annual arrivals by visa type 13
Labour market matching In the December quarter, the number of unemployed people increased by 8,000 (5.8 per cent), and the unemployment rate rose from 5.4 to 5.7 per cent. Unemployment has fallen over the year to December (down 3,000, or 2.6 per cent), as has the unemployment rate (down 0.3 percentage points from 6.0 per cent). Unemployment by ethnicity Unemployment rates have fallen for every major ethnic group over the year. Pacific peoples unemployment continued its downwards trend, dropping 2.5 percentage points to 11.2 per cent, the lowest Pacific unemployment rate since December 2008. The Asian unemployment rate is also at a six year low, after dropping 0.3 percentage points to 5.5 per cent. The Māori unemployment rate, (which hit a four year low in September), fell 0.8 percentage points over the December year to 11.2 per cent. Figure 13- Unemployment rates by ethnicity (not seasonally adjusted) Unemployment by region Over the year to December, unemployment rates fell in eight out of twelve regions, with the biggest drops recorded in Bay of Plenty (down 3.6 percentage points to 5.7 per cent), and Southland (down 2.3 percentage points to 3.4 per cent). Auckland s unemployment rate (which fell 0.6 percentage points over the year to 5.7 per cent) is at its lowest level since December 2008. The gap between the North Island and South Island unemployment rates narrowed slightly over the year, but still remains wide (6.2 per cent and 3.4 per cent respectively). 14
Figure 14- Unemployment rates by region, annual averages Figure 15- Unemployment rates by North Island/South Island (not seasonally adjusted) 15
Unemployment by duration Both medium and long-term unemployment fell over the year to December 2014. Compared to December 2013, 4,000 fewer people were unemployed for over 6 months, and 1,000 fewer people were unemployed for between 9-26 weeks. Figure 16- Unemployment by duration, (not seasonally adjusted) Jobseeker support benefits In July 2013, Work and Income New Zealand introduced Jobseeker Support for people who are preparing for, and looking for, full-time work. Jobseeker Support incorporates the unemployment benefit, sickness benefit, domestic purposes benefit with children 14 and older, widows benefit with children 14 and older, and domestic purposes women alone benefit. The number of Jobseeker Support clients fell by 5,594 (4.0 per cent) over the year ending December 2014. Decreases were recorded across all age groups, with the largest falls coming from the 40-54 age group. Since 2011, there has been a divergence between the numbers of people officially unemployed (the HLFS measure) and the number of Jobseeker Support beneficiaries. Persons ineligible for Jobseeker Support (but classified as unemployed include: Unemployed 15-17 year olds Unemployed people aged 65 years or older Unemployed people looking for part-time work (such as students) Unemployed people with sufficient family or personal income to support them while looking for work Unemployed people already on another benefit 16
Figure 17- Jobseeker Support beneficiaries and unemployment Sources: Statistics New Zealand, Ministry of Social Development Youth labour markets The overall NEET rate for 15-24 year olds has remained unchanged (at 11.3 per cent) over the December quarter, and the year to December. However, the NEET rate for woman fell 1.6 percentage points over the quarter to 12.6 per cent, the lowest recorded since the series began in March 2004. Figure 18- NEET rates for 15-24 year olds by sex 17
Job vacancies MBIE s Jobs Online skilled vacancies index measures the change in job vacancies advertised on the two main internet job boards- SEEK and TradeMe jobs. The overall trend for online skilled job vacancies has increased in recent months. Online vacancies for skilled jobs grew by 1.1 per cent in December, while all vacancies increased by 0.8 per cent. Vacancies increased in most industry groups, with the largest increases coming in the healthcare and medical industry. Skilled vacancies have increased in every region over the year ending September. The biggest annual increases were in Auckland (up 9.9 per cent), South Island- Other (up 9.5 per cent) and Canterbury (up 9.3 per cent). Figure 19- Skilled vacancies index (May 2007 = 100) Source: Ministry of Business, Innovation and Employment Figure 20- Skilled vacancies index by region (May 2007 = 100) Source: Ministry of Business, Innovation and Employment 18
Wage growth The Labour Cost Index (LCI) and Quarterly Employment Survey (QES) provide complementary measures of wage growth. The LCI measures wage inflation, and reflects changes in the rates paid by employers to have the same job done to the same standard. The QES measures the average gross earnings paid to employees in economically significant businesses. Changes in the QES may result from changes to New Zealand s industrial composition (e.g. if a lower-paying industry increased its total paid hours relative to other industries, it would lower the QES earning measure). Shifts in the QES may also reflect changes within industries, such as the skill levels or performance of employees. Wage growth has been subdued over the December quarter, but this comes against a backdrop of low inflation. LCI wage inflation (salary and wage rates including overtime) was up 1.8 per cent over the year, while QES average ordinary time hourly earnings rose 2.6 per cent. This compares to annual CPI growth of 0.8 per cent. Figure 21- Annual wage growth 19
Special feature: New Zealanders in the Australian labour market This special feature looks at the characteristics of New Zealanders in the Australian labour market, and movement between the two countries. New Zealanders in the Australian labour market In December 2014, there were 520,800 New Zealand-born people in Australia s working-age population. 1 Of these, 380,500 were employed (289,600 in full-time employment, and 90,900 in part-time). A further 13,600 were unemployed, and 120,900 were not in the labour force. Almost 40 per cent of New Zealand-born people employed in Australia live in Queensland, and growth in employment of New Zealanders has been strong in this state over the past decade. Western Australia had a sharp increase in employment of New Zealand-born in 2011, but growth has stalled since then. Employment of New Zealand-born in New South Wales has been volatile, but is neither increasing or decreasing over the longer-term. Figure 22- Employment of New Zealand-born in key Australian states Source: Australian Bureau of Statistics Employment growth in both New Zealand and Australia has been driven by a similar mix of industries, with the most noticeable difference between the two countries being the role of mining. Mining employment in Western Australia peaked around 2012, plateaued, and started falling this year. In New South Wales, employment growth has been concentrated in three 1 Published Australian labour force statistics include a breakdown by country of birth, but not citizenship. 20
main industries (health and social assistance, business services, and retail and accommodation) all of which have seen falling employment over the past year. Migration patterns In the year ending December 2014, 27,000 people emigrated from New Zealand to Australia, the lowest number of permanent and long-term departures since June 2004. The majority (23,700 or 87 per cent) of these departures were of New Zealand citizens, while another 7 per cent were Australian citizens. In the year ending December 2014, 23,000 people emigrated from Australia to New Zealand, the highest number of arrivals from that country since the series began in 1979. The majority (16,000 or 67 per cent) of those arrivals were of New Zealand citizens, while another 18 per cent were Australian citizens. Overall, in the year to December, a net 8,000 New Zealanders moved to Australia, the lowest net departures since the series began. Annual departures of New Zealand citizens to Australia have declined since 2013, while New Zealand citizens returning from Australia have been increasing over the same time period. Figure 23- Migration of New Zealanders to/from Australia 21