Get a resume...its that simple

Labour markets and the lack of a plan

This week we saw the release of unemployment data for December. The number of people out of work rose 33,000 from last year. There are now 156,000 people unemployed. 140,000 people are in work, but want more work and can’t get it. That’s the highest number since we started collecting this data back in 2003. The number of hours worked each week fell 2.5m last year.

The response from the Prime Minister to this challenge has been clear. Increase sanctions on beneficiaries. He said that the unemployed should “Get a resume, show up for the job interview”. As a British-born Kiwi it’s very hard not to hear that being said in the voice of Margaret Thatcher, or David Cameron. Mr Cameron famously said that the welfare state in the UK had created a “something for nothing” culture. The echoes of that are clear from Mr. Luxon.

But the idea that simply getting a resume – or a CV – and that leading to a job interview, which in turn leads to a job - is so far removed from reality as to almost be satire. Unemployment increased in 8 out of 12 regions. Employment fell at its fastest rate in New Zealand since the GFC. Unemployment for Māori and Pacific Peoples is twice the general rate.

The headline unemployment data also hides the fact that many people appear to have given up looking for work. As my friend and fellow economist Ganesh Nana very eloquently put it in a recent note, if the participation rate (i.e. the number of people looking for work) remained unchanged, “then the change in the labour force would have been about 40,000 over the year…this would have resulted in the official unemployment number rising by a catastrophic 73,000; with the total at 190,000 - or a rate of 6.2%”.

But this is just the data on the people seeking work. Is it possible that there are jobs out there that these workers just aren’t seizing? The answer as you would expect is no. MBIE produces an analysis of the jobs being advertised on-line. The details are clear – “Online job advertisements fell by 27.2 per cent over the year to the December 2024 quarter” & “Online job advertisements fell across all industries over the year to December 2024”. Everyone is affected. “Online job advertisements continued to decrease for all skill levels over the year to December 2024” & “Online job advertising fell in all regions over the year to December 2024”.

The SEEK Employment Report for December 2024 showed the same trends. Job adverts are down 22% annually. They are down in the three major cities. You might have a resume, but the jobs aren’t there.

Source: Seek December 2024 Employment Report

In April last year the government set itself a target of reducing the number of people on Jobseekers Allowance by 50,000 to 140,000. That’s a laudable goal, if those falling off the register are going into sustainable, rewarding work. But right now the data is heading in the wrong direction. When this government took office, there were 181,500 people on Jobseekers Benefit. Now there are 213,000. Reaching the goal would take a fall of 73,000 – or the loss of one in three Jobseekers.

With unemployment forecast to keep rising by the Reserve Bank and the Treasury, these numbers will likely get worse. But what has me very worried is what this data means for child poverty. According to the latest MSD “Child Poverty in New Zealand Report” 61% of the households with children who live in material poverty have some form of paid work. Less work, both absolutely (higher unemployment) and relatively (higher underemployment) means higher levels of child poverty.

There are ways of tackling this. Making sure that benefits rise by wages rather than inflation makes sure that those families don’t fall further behind. Except that is what the government has done – with Treasury analysis suggesting that this will put up to 13,000 more children in poverty by 2028. Adding more sanctions in a depressed labour market will inevitably make that worse.

We can tackle this by making sure that the minimum wage rises a least with inflation. In April, the minimum wage will rise by 1.5% - less than inflation. This is the second year in a row that this has happened. A full-time minimum wage worker is now $1,206 a year worse off as a consequence of these real-term wage cuts. Overall, 46% of workers got a pay rise less than inflation. Rents are going up at more than twice the rate of the minimum wage in the Consumer Price Index.

Finally, we can tackle this by encouraging people into training and education, giving them the skills and qualifications needed to change jobs or roles. Only we have now moved from first year free to final year free. This will simply put people off education, and the government admitted that it had “no hard data to back up fees-free final year change”. It’s also cut support for apprenticeships – at a time when we are desperately short of skilled trades.

Above all a government can have a plan. A plan that sees a labour market with real challenges and wonders how it can help families and communities at their most vulnerable. A plan that helps places like Timaru when faced with 600 job losses, or Tokoroa when faced with 230 job losses. A plan that doesn’t rely on 128,000 people leaving the country overseas last year so that the data isn’t even worse.

What we have right now is neither a plan nor a sense of urgency. The Budget in May is already looking to make more cuts on top of those already made. That will likely mean more job losses in the public sector and fewer services being available to those looking for work. Unemployment isn’t a lifestyle choice for many and to treat it as such suggests a lack of connection with the communities affected by it. We must do better.