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Liam Dann: NZ Herald Business Editor on unemployment rising to 5.4% · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: The unemployment rate has arisen to five point four percent,
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  Speaker 2: the highest since September twenty fifteen. New Zealand Herald Business
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  Speaker 2: editor at largely and Dan joined me, now I believe.
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  Speaker 2: So what do we make of this? When I announced
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  Speaker 2: when I read out the news, my caller Troy went,
• 0:37
  Speaker 2: that's not great in an election.
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  Speaker 1: Yet that's some very good analysis.
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  Speaker 2: I mean, we should have stuck with Troy, do you.
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  Speaker 1: Think, well, I think the numbers. We hope the number
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  Speaker 1: goes down, not up, and it's gone up, so that's
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  Speaker 1: a good starting point. Economists had thought it would sort
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  Speaker 1: of hold steady at five point three. I think asb
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  Speaker 1: thought it might go down. So there was some hope
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  Speaker 1: that we were we had seen the peak of unemployment,
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  Speaker 1: and it appears we haven't. I mean, I was talking
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  Speaker 1: to an economist last night who said, look in the ground,
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  Speaker 1: scheme five point two, five point three, five point four,
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  Speaker 1: all of those are possible and probably don't change what's
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  Speaker 1: happening in the economy that much. But as a political story,
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  Speaker 1: it's not going to be a good day for the government.
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  Speaker 1: I wouldn't think just because you know, it's it's so
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  Speaker 1: sort of I mean, it's an emotional thing. It's a
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  Speaker 1: big thing, unemployment and the worst in ten years. This
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  Speaker 1: is a government that came in was certainly in opposition.
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  Speaker 1: They talked a lot about jobs and what hadn't gone
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  Speaker 1: well with the previous government. What we're seeing is that
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  Speaker 1: the employment creation in the December quarter just was really flat.
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  Speaker 1: There was a tiny little bit of employment growth, so
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  Speaker 1: that not many jobs new jobs were created. What's made
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  Speaker 1: the difference is for the past few quarters, the participation
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  Speaker 1: rate has fallen, so fewer people have been engaging with
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  Speaker 1: the workforce because they've been going into further training or
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  Speaker 1: things like that, staying in school, and that didn't happen
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  Speaker 1: this time. More people, the size of the labor force
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  Speaker 1: has actually grown and more people are engaging in the
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  Speaker 1: labor market so are available to be classified as employed
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  Speaker 1: or unemployed, and that's lifted the numbers of unemployed. I think,
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  Speaker 1: so it is you know, it is fairly technical, but
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  Speaker 1: you know that's one hundred and sixty five thousand unemployed
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  Speaker 1: New Zealanders and it's a quarterly increase of five thousand people.
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  Speaker 1: So it's a it's a real thing.
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  Speaker 2: I was just going to say, you know, there'll be
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  Speaker 2: people saying, what's the difference really between three five point four.
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  Speaker 2: The difference is families who are going to struggle to
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  Speaker 2: pay rental mortgage.
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  Speaker 1: Yeah, oh absolutely, at a personal level that that's very real.
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  Speaker 1: It's also you know, and when we look at step
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  Speaker 1: back and look at the economic story and the recovery,
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  Speaker 1: it's it's sort of like a timing thing. It's just
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  Speaker 1: it suggests that it's taking a bit longer for the
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  Speaker 1: you know, the jobs market to turn around, or it
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  Speaker 1: may take a bit longer, and that's not great. We
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  Speaker 1: know it's a sort of lagging indicator and it takes
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  Speaker 1: longer for unemployment to recover, but it means that we
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  Speaker 1: might not be seeing a recovery and that that part
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  Speaker 1: of the economy, you know, the job, jobs, creation and
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  Speaker 1: things until later in the year. And of course it
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  Speaker 1: is election year, so it is going to be a
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  Speaker 1: political football, I would imagine.
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  Speaker 2: Paul writes, could you ask mister Dan what the historic
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  Speaker 2: average is for unemployment? He says five percent is helpful
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  Speaker 2: for the economy. That means there's workers available but it
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  Speaker 2: doesn't put excess pressure on higher wages, which will keep
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  Speaker 2: inflation down.
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  Speaker 1: Yep. That is a way of looking at it, because
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  Speaker 1: you know, the historic average I think is around five
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  Speaker 1: point two five point three percent. I don't have the
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  Speaker 1: exact number in front of me, but that includes some
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  Speaker 1: periods of obviously lower and unemployment, and it this particular
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  Speaker 1: survey goes back to nineteen eighty six and includes periods
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  Speaker 1: like the early nineties when we got up into nine
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  Speaker 1: point eight ten percent. So you know, so by historic
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  Speaker 1: standards you might say, well, it's not terrible, but then
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  Speaker 1: you've got to look at it in the context of
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  Speaker 1: the world we live in now, and so we have
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  Speaker 1: a lot more workers on contracts and working numerous part
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  Speaker 1: time jobs, and they tend to feature in underutilization numbers,
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  Speaker 1: which is to say, if you're a contract or you're
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  Speaker 1: a small business person or something like that, you haven't
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  Speaker 1: got enough work to survive on, you would be considered underutilized.
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  Speaker 1: And that rate is about thirteen percent. So there are
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  Speaker 1: a lot more people out there who have some work
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  Speaker 1: but not enough than there are people who are completely unemployed,
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  Speaker 1: which of course is categorized by stats n Z as
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  Speaker 1: being no work at all. So if you have any
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  Speaker 1: part time work, you're not unemployed, you fall into the
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  Speaker 1: under utilization rate. And I think the world's changed a
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  Speaker 1: bit since the eighties and nineties when everyone sort of
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  Speaker 1: had a salaried or a wage job, you know, and
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  Speaker 1: things were a lot more stable around that sort of thing.
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  Speaker 1: So I think it is tough. The the point your
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  Speaker 1: caller makes, your texture makes is relevant in terms of
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  Speaker 1: where interest rates might go and the fact that there
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  Speaker 1: may be more what economists call spare capacity in the
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  Speaker 1: economy because of the higher unemployment rate. You know, it's
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  Speaker 1: a trade off though, because you really don't want to
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  Speaker 1: see people on the sort of unemployment scrap heat, particularly
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  Speaker 1: long term. The youth unemployment rates are always much higher,
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  Speaker 1: and some of the ethnicities re unemployment and things are
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  Speaker 1: always much higher, So there are some social things there
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  Speaker 1: where it's not good. You'd probably say, you know, the
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  Speaker 1: economy can't cope when unemployment falls too low because it
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  Speaker 1: does gener inflation, so that's built into the system. But
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  Speaker 1: you know, we'd rather see it sort of four point
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  Speaker 1: five something like that and the economy running at capacity.
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  Speaker 1: We haven't got that much capacity in the economy we
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  Speaker 1: might as well run run at it.
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  Speaker 2: Why don't we put out underutilized and unemployed at the
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  Speaker 2: same time.
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  Speaker 1: Well, we do, it is there, It's just that we
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  Speaker 1: just don't report it as well. Yeah, I mean it's
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  Speaker 1: it's in the story that you know. I definitely definitely
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  Speaker 1: do report it. But I guess the bigger motive figure,
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  Speaker 1: the one that we all have grown up learning to understand,
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  Speaker 1: you know, going right back, is unemployment. So that's the
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  Speaker 1: one that grabs the headline.
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  Speaker 2: But yeah, I think I think we should do both henceforth. Yeah,
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  Speaker 2: I think, well we announced both.
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  Speaker 1: It's true, although it can be very hard to fit
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  Speaker 1: under utilization and unemployment as words into the Herald's headline template.
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  Speaker 2: But no, but where I can do that, So I
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  Speaker 2: think I think that's what I'll do. Yeah, I think
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  Speaker 2: I think it is worth that's a better measure of
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  Speaker 2: the economy and what people are doing.
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  Speaker 1: Yeah, yeah, that's right. I think it reflects more accurately
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  Speaker 1: the kind of workforce we actually have. It's not cut
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  Speaker 1: and dried and black and white, and it's not a
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  Speaker 1: situation where you know, people are totally employed or totally unemployed.
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  Speaker 1: Most people where a lot of people are in that
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  Speaker 1: middle category.
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  Speaker 2: And Bruce another text says, it does an unemployment go
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  Speaker 2: up every December because kids are leaving school and university.
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  Speaker 1: Well, it does, but these are seasonally adjusted figures, so
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  Speaker 1: stats n Z is aware of what the changes are
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  Speaker 1: based on seasonal trends and factors those into the numbers,
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  Speaker 1: so that hopefully, I mean, I'm sure there's some complicated
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  Speaker 1: maths and some subjective calls they have to make, but
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  Speaker 1: they should be accounting for that in the numbers. So
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  Speaker 1: these are seasonally adjusted figures and they will capture things
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  Speaker 1: like people all leaving school at once and that kind
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  Speaker 1: of thing.
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  Speaker 2: Another textas says they're very engaged, are Texters? Yeah, listeners
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  Speaker 2: very engaged. Could people be holding off on retirement due
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  Speaker 2: to high inflation be contributing to higher unemployment.
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  Speaker 1: Yeah, that'll keep the participation rate up, but keep the
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  Speaker 1: size of the you know, the labor force up, and
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  Speaker 1: that can keep I guess you know, it means there
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  Speaker 1: are fewer jobs available for people coming through. But you know,
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  Speaker 1: as you say, it's it's a cost of living thing.
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  Speaker 1: A lot of people are working longer because they have to.
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  Speaker 1: And you know, look, look some people there is a
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  Speaker 1: demographic thing where people are also probably working longer because
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  Speaker 1: they are still you know, contributing and doing great things
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  Speaker 1: in the workforce. And that's a choice, but it is
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  Speaker 1: the demographics of it probably are playing a part in
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  Speaker 1: the way that our unemployment figures are shaped these days.
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  Speaker 2: And another one says, what is unemployment? I'm forty one,
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  Speaker 2: I don't have a job, but I live off my
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  Speaker 2: managed funds. Do I have to declare I want a
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  Speaker 2: job to be considered unemployed?
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  Speaker 1: Well, the this is or for survey. There are two
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  Speaker 1: ways that could measure it. They you know, so presumably
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  Speaker 1: you're not on a job seeker so you're not unemployed
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  Speaker 1: by that measure. By this measure, if you were surveyed
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  Speaker 1: and you were, yeah, you'd have to be actively looking
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  Speaker 1: for a job, as the simple answer. So if you're
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  Speaker 1: not looking for a job because you're doing okay, living
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  Speaker 1: off the living off your savings and things, then you
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  Speaker 1: wouldn't classify as being engaged in the workforce. So yeah,
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  Speaker 1: it's a it's it's a it's a measure. The labor
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  Speaker 1: market stats are fairly complicated, but they are and I've
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  Speaker 1: sort of said this before, but they're a measure that
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  Speaker 1: we've used since nine eighty six, so they give us
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  Speaker 1: a pretty good long term look at what's happening in
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  Speaker 1: the market, and and you know, some of those things
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  Speaker 1: under the hood will be I'd expect, you know, some
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  Speaker 1: economists to start writing some reports and things shortly about
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  Speaker 1: what's happening with the participation rate and what all this means.
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  Speaker 1: I just think, you know, it may be that it's
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  Speaker 1: not that material to what's happening in the recovery, and
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  Speaker 1: the recovery give will take a few months. But I
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  Speaker 1: just can see that that politicals You know, if it
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  Speaker 1: had been five point two percent and it had come
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  Speaker 1: down a tiny bit, it might not have changed the
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  Speaker 1: overall equation much, but you could bet that the Finance
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  Speaker 1: Minister and the government would be out there talking it up.
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  Speaker 1: And unfortunately for them, that's not going to be much
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  Speaker 1: fun for them today.
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  Speaker 2: No, here's a text Spin Spin Spin from hosting earlier saying,
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  Speaker 2: asb it'd be five point two This government have no idea.
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  Speaker 2: Can't wait to see the back of them November. Back
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  Speaker 2: on growth, growth, more money in your back pocket, fixing
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  Speaker 2: the basics. What crap two hundred and seventy made redundant
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  Speaker 2: from the warehouse and work going to some Vietnamese call center.
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  Speaker 1: So well at the warehouse, is it? I mean, I
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  Speaker 1: was all prepared for it, to talk about the irony
• 10:54
  Speaker 1: because if it had been a lower unemployment rate today
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  Speaker 1: and we had the warehouse jobs going, of course, but
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  Speaker 1: I think the warehouse has some specific issues and some
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  Speaker 1: internal restructuring to do, and that's probably driving their job
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  Speaker 1: cuts as much as the overall, you know, cyclical downturn.
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  Speaker 1: You know, Briscoe's had a great result yesterday and Ike
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  Speaker 1: is hiring more staff, so you know, there are still
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  Speaker 1: you know, I think the signs there that the economy
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  Speaker 1: is starting to turn the right direction. It just may
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  Speaker 1: be turning in a much slower at a much slower
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  Speaker 1: pace than is helpful for someone who's trying to win
• 11:32
  Speaker 1: an election.
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  Speaker 2: Thank you very much, as always, Business New Zealand Herald
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  Speaker 2: Business editor at largely Dan, Thanks Garry for more from
• 11:40
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• 11:44
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