Unemployment statistics for June quarter 2020

The Unemployment statistic for the June quarter 2020 caused some surprise, dropping from 4.2% in the first quarter to 4.0% averaged over April, May and June, but this has been explained with less people unable to look for or start new jobs due to the Covid-19 lockdown.

And the trend is ominously upwards.

The number of people employed fell by 11,000, and 90% of the reduction were women, who work more in the most affected sectors of tourism, hospitality and retail.

With a lot of the recovery targeting construction, dominated by male employees, the outlook for many women looks a bit grim.

Statistics NZ: COVID-19 lockdown has widespread effects on labour market

In the June 2020 quarter:

  • unemployment rate fell to 4.0 percent
  • underutilisation rate rose to 12.0 percent
  • hours worked fell a record 10.3 percent
  • the number of people not in the labour force rose 37,000
  • the number of employed people fell 11,000
  • the wage subsidy scheme was in place from 17 March 2020.

With the country in COVID-19 lockdown when the quarter began, fewer people who did not have a job were actively seeking work. People who were not actively seeking work were not counted as unemployed, resulting in a fall in the unemployment rate. However, many of these people were captured as underutilised.

To be counted as unemployed, a person must have been actively seeking work in the last four weeks or be due to start a new job in the next four weeks. Actively seeking work means going beyond browsing job vacancies. It means the person is going beyond browsing, for example, by applying for jobs (by submitting their CV) or contacting employers.

For obvious reasons there were less job vacancies and less people actively seeking jobs during the lockdown.

“Underutilisation – a broader measure of spare capacity in the labour market – and hours worked provide a more detailed picture of New Zealand’s labour market than the unemployment rate alone. This quarter, underutilisation rose from 10.4 percent to 12.0 percent – the largest quarterly rise since the series began, while hours worked were down by over 10 percent – another record,” labour market and household statistics senior manager Sean Broughton said.

This quarter, the number of unemployed people fell. At the same time, the number of underemployed people rose by 33,000 and available potential jobseekers rose by 18,900.

Record fall in hours

The total number of hours actually worked in the June 2020 quarter fell 9.3 million hours (10.3 percent) compared with last quarter and decreased 8.2 million hours (9.1 percent) compared with a year ago. These were the largest decreases recorded since the series began in 1986.

Paid hours, as collected in the quarterly employment survey (QES), measure the hours a business paid for, whether their employees were working or on paid leave. Paid hours fell by 3.4 percent over the June 2020 quarter, down to 60.6 million hours (seasonally adjusted). This was the largest quarterly fall in hours paid since the current series began in 1989. The annual decrease (down 1.9 percent) was the largest annual decrease since the December 2009 quarter.

The maximum Covid wage subsidy can only be obtained if workers keep working 80% of their of ‘full time’ hours, and many people has their hours cut by 20%.

Slight fall in employment and jobs

The employment rate fell to 66.9 percent in the June 2020 quarter, down from 67.5 percent last quarter. This reflected a fall in the number of people employed (down 11,000) and a rise in the working-age population (up 20,000).

The fall in the number of people in employment and unemployment this quarter resulted in the labour force participation rate falling to 69.7 percent, down from 70.5 percent (revised) last quarter.

The number of people not in the labour force rose (up 37,000) this quarter, while the number of people in the labour force fell (down 17,000). This was the largest fall in the number of people in the labour force recorded since the global financial crisis.

Filled jobs, as measured by the QES, fell 10,800 in the June 2020 quarter to 1,989,400.

COVID-19 alert system and key events timeline

So with the wage subsidy ending this month the employment crunch is likely to start next month. There are already signals that more jobs will be lost from September, but this could be spread over several months. For example H&J Smith have announced they will close their Dunedin store in January, and will be closing a number of other stores too.

Also from Statistics NZ:

RNZ: What’s lurking behind the four percent job figure?

‘Beware’ and ‘unbelievable’ were the first words Kiwibank’s chief economist Jarrod Kerr used to describe the four percent figure just minutes after the Household Labour Force Survey for the June quarter was released yesterday.

Today, Kerr explains to the Detail’s Sharon Brettkelly what’s behind the numbers.

“The unemployment rate itself is rubbish,” he says – stating a more realistic number is closer to five percent. Underlying numbers tell the real story – 11,000 people laid off, of which 10,000 are women.

The number of people participating in the workforce dropped to 69.7 from 70.5 percent. If you lose your job, not everyone goes onto an unemployment benefit. Kerr has heard of many older people in Auckland who lost their job and are using the opportunity to leave, and head out into the regions. “You have actually lost a worker, and that doesn’t show up in the unemployment rate.”

The under-utilisation rate – showing the numbers of people who want more work – rose from 10 percent to 12 percent, which is the biggest jump in decades. The employment rate is down, wage growth is soft.

“When you were in lockdown you weren’t considered to be unemployed,” he says. “One of the questions asked is, ‘are you actively seeking work?’

“I think it’s ridiculous the Stats department actually published that . We need an ounce of credibility in these figures and we know that the current unemployment rate is nowhere near four percent and it’s just a product of a poor survey in a very difficult time. It’s the publishing of a number that no one can believe.”

Some want to believe the number, or want to promote it for political purposes, but if you look at all the numbers, the reasons and the upward trend in unemployment it becomes believable.

Stuff: Politicians say unemployment crunch will come in September, as official rate marginally drops

Finance Minister Grant Robertson says a drop in the official unemployment rate is a “good result”, but the toughest times for workers will come in September.

There would be no extension to the wage subsidy, and workers who lose their job can receive the Covid-19 income relief payment for 12 weeks. Robertson said the payments, at $490 a week, were “effectively the equivalent of the wage subsidy scheme”.

“We’ve always said that it would be the September quarter where we would see the most impact, but [the unemployment rate] does show that the New Zealand economy has been robust, and that the wage subsidy scheme has done what we wanted it to do.”

To really see the effect of Covid on unemployment we will get a better idea from the next two quarters (we won’t know the December quarter numbers until next year) and the flow on effect could run for a year or two.

And what we don’t know is what is going to happen with Covid – whether we have another outbreak here, how long our borders remain virtually closed, and what effect the world economic situation will have. It is likely to be somewhere between tough and grim.

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27 Comments

  1. RNZ – ‘It’s hell’: Reality of unemployment despite drop in numbers

    Sarah Anson was one of those who was looking for more work.

    She lost her job in Australia and moved home but since returning had not been able to get full-time work.

    “It’s hell. I’ve probably applied for over 200 entry-level reception jobs.”

    Anson said with each one of those came a rejections letter, so she moved to part-time work.

    “I’m working three nights a week for a friend and a bar, which is not the dream, but at least it’s like some work.”

    It actually worked out better to do as few hours as possible, she said.

    “It’s so frustrating because if I work 20 hours [or more] a week I don’t get the unemployment benefit or the job seekers benefit but if I work 10 hours a week, I get paid the same amount as I would for 20 hours because I get half of it from the government.

    “Is it worth going to work for 20 hours a week or shall I sit at home for the extra 10 hours a week and get paid?”

    Luke Hempleman also lost his job in promotions and could soon be forced to join the underemployed workforce.

    He was holding out hope for full-time work but would have to look at part-time options soon.

    “I’ve noticed in a lot of my searches that there’s been a lot of sort of part-time positions or like contract and fixed-term positions advertised.

    And:

    He expected the impact of the wage subsidy ending would be “relatively immediate”.

    “That’s when we will see a lot of these workers coming into the market looking for other jobs.”

    Kerr said the report figures did not reflect a robust economy.

    “There is a lot of weakness below the surface and we are by no means out of this and I think the next two employment reports will be critical.”

    It’s just a matter of how worse it gets.

    Reply
    • Duker

       /  6th August 2020

      “She lost her job in Australia and moved home but since returning had not been able to get full-time work.”

      So its ‘imported’ unemployment. Tell me again how many kiwis have come back from overseas either were travelling or lost their jobs overseas ?

      Reply
      • If she’d stayed, she wouldn’t have had any UB in Australia, and probably wouldn’t have found a new job there, either.

        Reply
  2. Reply
  3. John J Harrison

     /  6th August 2020

    Pete, great post.
    Proves once again there are lies, lies and statistics.
    It is absolutely pathetic that Labour and their minions were celebrating the fall from 4.2 to 4.0%.
    Clearly too lazy to drill down and realize that under Level 4 the burgeoning number of unemployed were unable to get out of their home/prison to seek work and thus be registered.
    The willfully uninformed are in for a hell of a shock when the next 1/4 numbers are published on 17/09.
    In the meantime they only want us to see pixie – dust and flying pigs.

    Reply
    • Duker

       /  6th August 2020

      Full of falsehoods.
      The survey comes to random households, its NOT a measure of those registered with MSD for benefits ( which can be done online anyway)
      I had a Stats survey done some time back at home, its wasnt for unemployment, but took around 3.4 hr to answer the questions. I presume during the lockdown period they rang people at home.

      You are the willfully uninformed, [deleted]

      Reply
      • Duker

         /  6th August 2020

        he is complete ignorance to claim this falsehood
        “Clearly too lazy to drill down and realize that under Level 4 the burgeoning number of unemployed were unable to get out of their home/prison to seek work and thus be registered.”

        Who takes part in the survey? How did you select me?
        Sixteen thousand (16,000) households take part in this survey. To select you as one of the 16,000 households, we use a fair statistical method where every household in our country has a known chance of being selected. You were selected because you meet the criteria of being 15 years old or older and living in the selected New Zealand household.

        How long will I be in the survey for?
        If you are selected to participate in HLFS, you will be in the survey for two years.

        Interviews for selected households take place every three months, for a total of eight interviews in two years.
        If your household moves away from this address, we will not contact you at your new address. You will be replaced by new occupants of the selected address.

        When do you carry out the survey?
        We carry out the survey every two years. During the two-year survey period, we interview selected households once every three months.

        They change the minor details all the time but the methods remain
        http://archive.stats.govt.nz/survey-participants/a-z-of-our-surveys/household-labour-force-survey.aspx#gsc.tab=0

        Reply
  4. Blazer

     /  6th August 2020

    people take those numbers with a grain of salt…anyway.

    Reply
    • Not when their hours have been reduced and their employment and career futures are uncertain or ending, and there’s a lot of people with wages and jobs affected by Covid.

      Reply
      • And not when their income has dropped by 100%, as has happened to 10% of ANZ customers.

        It seems to me that Covid is being blamed for the appalling cost of the extended lockdown, which even the MoH opposed; they wanted 4 weeks at L2.

        Reply
        • It’s true that the MoH wanted 4 weeks at L2; PDTs, you can look this up.

          And someone whose business or job is gone will now have no income.

          Reply
          • John J Harrison

             /  6th August 2020

            Kitty, absolutely correct, that was the advice from the MOH which strongly recommend Level 2 for 4 weeks.
            But, Jacinda preferred the advice of “ friends “ in the UK who told her to close the country down and go immediately to Level 4.
            This was in direct contradiction to the professional advice from her MOH.
            As a result 80% of our businesses were effectively closed down for 4 weeks and later under under Level 3 60% were directly affected.
            Make no mistake, Jacinda and her team have destroyed the economy with the carnage yet to appear, currently covered up by the “ sugar high “ of $140 Billion of borrowed money we cannot afford.

            Reply
            • Duker

               /  6th August 2020

              Twisted knickers again..that was level 2 for 4 weeks coming out , not going in .
              The 4 weeks level 4 was supported in parliament by all parties including Bridges and Seymour who saw the same advice the government did.
              What nonsense you talk, an self important rich (sharp object)

          • Blazer

             /  6th August 2020

            I didn’t need to look it…up.

            Reply
            • John J Harrison

               /  6th August 2020

              Blazer and Duker, trying to rewrite the sad history of Jacinda’s grossly imperfect “ captains calls “ which were at odds to the best medical and scientific advice given to her shows your desperation.
              Instead she took the advice of so – called “ friends “ in the UK which resulted in the worst destruction of our economy since 1930.
              And it has only begun.

            • Blazer

               /  6th August 2020

              Admired all around the world John…..suck it…up.

    • Duker

       /  6th August 2020

      Some female oriented jobs like teaching, nursing are more stable, often one of the reasons women stay

      Reply
  5. Sunny

     /  6th August 2020

    Unemployment numbers already gone from the Heralds front page. Number of articles with relevant facts like fiscal outcomes in NZ (infinitesimal) vs Number of articles on Ellen being mean (into week two and still running hot) !

    Reply
    • Duker

       /  6th August 2020

      Thats what the readers click on..
      news is a consumer product, not much point pushing stories onto readers they arent interested in

      Reply
  6. Griff.

     /  6th August 2020

    When you no longer have thousands of students and backpackers willing to work for swf in the grey economy.
    The effect of all the cheap labour is it desentives those on welfare.
    Nz is owned by all kiwis using cheap labour that often is not taxed is a drag on all of us.

    Reply
  7. David

     /  6th August 2020

    The industry hardest hit is tourism and associated industries which are largely staffed by overseas workers here on temporary permits so I dont think the unemployment stats will go anywhere bad. This is dependent on the government continuing to make it near impossible to sort immigration issues and folk give up and return home or employers are properly forced to employ and train locals rather than pick up a visitor that is floating around who will work for nothing much.
    And address the damn bottle store problem and the slavery that many Indians find themselves in by rogue Indian employers, its bloody exploitation and of all governments you would think a “kind” Labour one would get serious about modern day slavery.

    Reply
  1. Business failure rates down | Your NZ

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