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Summary
- The unemployment rate in NZ increased from 4% to 5.3% in the September 2020 quarter since the companies laid-off workers, as COVID-19 induced restrictions weighed on the economy.
- The number of unemployed people rose by 37,000 to 151,000 in the September quarter, the biggest quarterly rise, despite the wage subsidy extension and 2-week Resurgence Wage Subsidy.
- RBNZ expects the jobless rate to rise towards 8% in the quarters ahead.
New Zealand recorded the largest quarterly rise in the unemployment rate in 3 months ended September 2020, in line with economists' predictions, as firms were compelled to lay off workers amid coronavirus induced recession.
The official unemployment rate in New Zealand rose from 4% in the June quarter to 5.3% for 3 months from July to September, as per Stats NZ data released today (4 November 2020).
The number of unemployed people increased by 37,000 to 151,000 in the July-September quarter, the most massive increase in a quarter since the series began in 1986.
Source: Stats NZ
Some of the other highlights of the unemployment data for the September quarter included the following:
- The number of employed people declined by 22,000 during the quarter, pushing the employment rate down to 66.4% compared to 67.1% in the last quarter.
- Underutilisation rate stood at 13.2% for the quarter with 392,000 underutilised people, a rise of 38,000 from the previous quarter.
- Hours worked bounced back to typical levels and were at 91.4 million even after alert level 3 lockdown in Auckland.
- Wages rose by 0.6% in 3 months ended September with public sector and private sector wages increasing by 0.9% and 0.4%, respectively.
Reasons for a rise in unemployment
Auckland was in a strict lockdown for most of September 2020, at level 3 and then 2 with added controls because of a new COVID-19 cluster. Borders were closed, which ruined the tourism industry.
Subsequently, Auckland lockdown disrupted the recovery process of the country from a 12% decline in NZ's GDP in the June quarter, and several businesses made tough decisions to lay off their staff. Since last quarter, the number of unemployed people in Auckland soared by 15,800, and 14,200 compared to the same quarter in 2019.
The government released a 2-week Resurgence Wage Subsidy and extended the 8-week wage subsidy to overcome the financial hurdles faced by businesses and people. The move helped in mitigating the blow, with the unemployment rate rising by lower numbers than it could have been.
Sean Broughton labour market and household statistics senior manager stated that 151,000 is the highest number of jobless people witnessed by NZ in 8 years.
He also added that jobless rate of 4% in the June quarter was due to the inability of people to actively look and be available for work amid lockdown in the country. However, the rise in unemployment for this quarter shows a return to more normal job-hunting behaviours.
The RBNZ estimates that in the upcoming quarters, the unemployment rate will rise to 8%, but it is lesser than the economists' double-digit projections instantly after a tight national lockdown in April.
