NZ's unemployment rate rises to 3.9%

Published 7 November 2023 | 2 min read

A growing pool of job seekers and part-time workers seeking more hours

Stats NZ recently reported that our beloved Aotearoa's unemployment rate has risen to 3.9% in the third quarter of 2023, up from the previous 3.6%. The underutilisation rate also climbed to 10.4%, reflecting a growing pool of job seekers and part-time workers seeking more hours.

Now, before you start sipping your flat whites and worrying about your businesses, let's dig a little deeper. What's causing this uptick in unemployment, and what does it mean for us? In essence, this increase is a result of the changing tides in the labour market. Competitive labour conditions in 2021 and 2022 led to tight competition for jobs, but it appears we're now experiencing a shift in the labour market's dynamics.

Sudden increase in the underutilisation rate

The number of underutilised workers grew by 13,000 in the third quarter of 2023. Interestingly, this growth was roughly split between those unemployed (up by 8,000) and those underemployed (up by 7,000). Meanwhile, the potential labour force decreased slightly by 2,000. The employment rate, which reached a series high of 69.8% last quarter, dropped to 69.1%, reflecting a surge in the working-age population and a simultaneous decrease in the number of employed people.

But don't let these numbers dishearten you. The employment rate remains historically high, ranking as the fifth-highest since 1986. So, while there's a shift in the labour market's landscape, it's not all doom and gloom. Instead, it's a gentle reminder that we, as New Zealand managers and decision-makers, need to adapt and find innovative ways to navigate these changes.

How can we respond to the changing labour market?

As resilient Kiwis, we've overcome many challenges before, and we'll do it again. The Reserve Bank is likely to react positively to this labour market data. While wage growth may have peaked due to substantial settlements in the public sector, we shouldn't expect this trend to continue.

Moreover, with increasing slack in the labour market and potential pressures on wage demands, we need to be proactive. This is an opportunity for us to reassess our workforce strategies, consider training and upskilling programs, and foster a more adaptable workforce. In the face of evolving employment conditions, our adaptability as Kiwi managers and decision-makers will be our greatest asset.

So, while these statistics may catch our attention, they are not insurmountable challenges. It's time to adjust our sails, embrace change, and lead our teams through this new phase in New Zealand's labour market. Together, we'll find innovative solutions and continue to thrive in our beautiful Aotearoa. Cheers to our resilience and adaptability!

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