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More than 60 percent more people are receiving Jobseeker Support job readiness benefits than a year ago, and the number of people under the age of 24 receiving the benefit has increased by 80 percent.
The Ministry of Business, Innovation and Employment has detailed the increase in its quarterly report on the labor market for June.
He said that while the number of people employed did not increase dramatically in the June quarter, the job market was showing tension. More people were underemployed and there was a drop in labor market participation.
To be classified as unemployed, a person must be actively looking for work, which many found difficult due to the closure.
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The underutilization rate rose to 12 percent in the June quarter, down from 10.4 percent in the previous quarter. This is the largest quarterly increase since the series began in 2004.
For women, the underutilization rate increased to 14.9 percent, down from 12.7 percent. In the case of men, the underutilization rate increased from 8.3% to 9.4%.
Salaries and wage rates increased 0.2 percent during the quarter. This increase was driven by the minimum wage increase in April, but was the lowest quarterly increase since December 1994.
MBIE said unemployed people are now more likely to move into the “potential workforce” or to be classified as “not in the workforce” than before Covid. Underemployed people were less likely to obtain full employment and people in the potential workforce were less likely to enter the workforce.
Grant Matthew / Things
More than 80 percent more young workers are receiving benefits than a year ago.
ANZ chief economist Sharon Zollner said she expected the job market to continue to deteriorate. Applications are now closed for all three tranches of the wage subsidy scheme, which he said had been so large and generous that it had “completely masked” the true state of the labor market.
ANZ still expects unemployment to peak at less than 10 percent.
A rebound in economic activity after the lockdown was based on unsustainable fiscal stimulus, he said.
That was being phased out, the lack of international tourists would be felt through the summer and migration had dropped to zero, all of which meant the job market was still unclear, he said.
As of July 24, the original wage subsidy plan had covered 1.65 million jobs and the extension plan 450,000. Some jobs will be covered by both schemes.
Government analysis has shown that just under 60 percent of all jobs in New Zealand (excluding the self-employed) were covered by the original scheme.
If a company claimed the allowance for an employee, it was required to protect that job while the allowance was in effect.
The construction industry had the highest proportion of jobs supported by the Salary Subsidy, and virtually all construction companies received a payment. The arts and recreation services industry had the highest proportion of jobs subsidized by the plan’s extension (48 percent). Younger workers were more likely to be working in jobs that were supported by the wage subsidy.
Twenty-five percent of all workers reported a near-certain or high or average probability of losing their job or business in the next 12 months.
The economists at Infometría talk about employment indicators and the Reserve Bank’s quantitative easing program.
In July 2020, 355,640 people received a primary benefit, an increase of 61,400 from the same time last year and an increase of 2,200 during the month.
Another 20,020 people received the Covid-19 income relief payment, which is not included in the total main benefit, although only 2,920 beneficiaries had transferred from Jobseeker Support.
“Benefits are primarily a measure of how many people need financial assistance rather than how many people are unemployed, but since 2008 the number of recipients of job search assistance has been closely aligned with the number of unemployed people,” said MBIE. .
“We are measuring all major working age benefits here to cover additional circumstances where someone might need additional income, as a better indicator of the rate of underutilization, which is a more useful measure of slack in the labor market than unemployment. alone.
“MSD and MBIE continue to investigate the relationship between benefits and underutilization in the labor market. By regions, the percentage of the population that receives benefits has a similar distribution to regional unemployment rates, while regional growth in the beneficiaries of benefits is more closely linked to the main industries present in the region ”.
Gareth Kiernan, Infometrics’ chief forecaster, agreed that there would be further job losses as the wage subsidy ran out.
The effect could be felt for a longer period than initially expected, he said. Spending had recovered better than expected in some areas and some companies might try to retain their staff until Christmas.
“Generally, I expect the numbers of job applicants to increase over time. It’s just a matter of what time frame is that. “
He said the large increase in youth benefits likely indicates the demographic makeup of the worst-hit retail, tourism and hotel sectors.
