Bad or not too bad?

Written By: - Date published: 11:52 am, May 7th, 2009 - 24 comments
Categories: economy, employment, workers' rights - Tags:

The latest unemployment figures look better than expected but appearances may be deceptive. The seasonally adjusted unemployment rate is up to 5.0%, lower than expected, but the unadjusted number is 5.6%. There is a seasonal adjustment unemployment usually climbs in the March quarter, then falls later in the year, whether that will happen this year is the big question.

In total the economy shed 54,000 jobs (24,000 seasonally adjusted) in the quarter.

39,000 people (25,000SA) gave up trying to find work and left the workforce entirely. They don’t count towards the unemployment number. So while the total number of working age people went up 11,000 (8,000SA), the workforce decreased by 28,000 (17,000SA). Unemployment – people looking for work who haven’t got it – went up 27,000 (7,000SA).

The recession is not being felt equally across the country.
-Taranaki, Southland and Nelson/Marlborough still have unemployment rates below 3% and steady of falling while there were big jumps in Northland, Auckland and Gisborne/Hawkes Bay to 9.0%, 6.5%, and 7.8% respectively.
-Pacific peoples unemployment jumped from 7.8% to 13.1%. Pakeha remained below 4% (3.2% to 3.8%.)
-Unemployment for 20-24 year olds rocketed from 7.3% to 12% while 25-29 year olds went from 4.6% to 4.9% suggesting that recent graduates are finding it tough but firms are holding on to those with some work experience.

The best number to look at is hours worked because it doesn’t get affected by labour force participation like the unemployment number. Actual hours worked dropped 4 million a week (5%) but with the seasonal adjustment the number is flat.

So are we out of the woods or is the true size of the problem being disguised by a statistical quirk? If things aren’t as bad as feared is it thanks to Labour’s full employment policies or National’s Job Summit? The answer will probably depend on your politics.

– the mathemagician

24 comments on “Bad or not too bad?”

  1. SPC 1

    Unemployment will not rise as fast here because of the tax credit support to families – the female bank staff laid off for example will stay at home and collect the tax credits due from their partners work (WFF).

    The non working partner is not counted as unemployed.

    The problem for the governemnt is that they will still have rising obligations for financial support to families and the impact on the budget will be as if unemployment was rising faster (as it is in this way).

    The other budget problem that will soon occur – is that because the government has chosen not to increase the housing stock while we have spare construction capacity (this of itself results in higher unemployment cost and forgone taxable income) – we will come to a housing shortage which will boost rents. The government will also be liable for higher accommodation supplement costs when this happens.

    As Keynes might note, when the rainy day comes do not wear the insignia of Gordon Coates.

  2. gingercrush 2

    Not too bad. It shows the economy is more resilient than we previously thought. In terms of what other countries are facing, New Zealand’s unemployment rate is very low and looks set to continue to track lower than other countries. The main loss in jobs is in services and Manufacturing. Those types of jobs just do not recover until consumer confidence is back and businesses are spending again. Whilst investing in infrastructure has seen gains in employment its clear that no stimulus package can recover service and manufacturing jobs.

    I think these numbers show the limits of what an economy can do to save jobs. If we go back to the Great Depression. The new deal directly invested in the manufacturing of goods and this was increased even more during world war II. That saw increased employment. Today’s recession is very different and is very dependent on demand for services and goods to return. That will take time and will depend on other countries demanding goods and services again.

    Those who decry the government not doing anything to save jobs. Need to shape up and shape up fast. The biggest loss of jobs are in areas where no amount of infrastructure spending is going to save those jobs. Until consumer confidence returns and other countries demand more services and goods we should expect more job losses.

    • r0b 2.1

      Those who decry the government not doing anything to save jobs. Need to shape up and shape up fast.

      Ummm – what? It is the Government that needs to shape up GC, not those that are pointing out its failings.

      The biggest loss of jobs are in areas where no amount of infrastructure spending is going to save those jobs.

      Well then do what is required to preserve jobs using the mechanisms appropriate to these other areas! Infrastructure spending is not the answer to every question. National had a whole talk-fest summit on jobs. They assured as that they had plenty of big ideas, but it turned out to be an appallingly costed cycleway (gosh – remember that?) and a 9 day fortnight that is going nowhere fast.

      So where were the ideas? Where was the leadership? It isn’t wrong, GC, to point out that the emperor has no clothes, it’s wrong not to.

      • gingercrush 2.1.1

        Ummm – what? It is the Government that needs to shape up GC, not those that are pointing out its failings.

        When people don’t understand the limits a government has in a recession there is certainly a problem with those pointing out its failures when those failures do not exist.

        On your second point. You’ll find very few people who see the job summit as a success. Though what would you suggest the government do?

        —-

        No doubt someone is bound to bring up the fact unemployment fell in Australia last month. I don’t understand it since all the states themselves seem to show umemployment has risen. Theirs is of course done monthly whereas ours is done quarterly. Though that in itself doesn’t answer the question. Economists there seem to be saying that it was simply an abberation and that unemployment should continue to rise. Like us projections are that unemployment should continue to rise and likely peak to 7 or 8% which is very disappointing and there is very little one can to change that. This is of course much better than other countries whose projections look set to be well above 8%.

        —-

        Isn’t it slightly sad that something of importance get little replies whereas the gang insignia and Mt. Albert receive many more replies?

        • r0b 2.1.1.1

          there is certainly a problem with those pointing out its failures when those failures do not exist.

          Doing nothing is a failure GC, and that is what our government has done. Nothing.

          On your second point. You’ll find very few people who see the job summit as a success. Though what would you suggest the government do?

          Cancel future and April 1st tax cuts. Raise taxes on income over $150,000. Institute capital gains tax. Reverse the axing of the R&D tax credit and the New Zealand Trade and Enterprise funding for small exporters. Stop laying people off. Start investing in local transport and green energy. Leave the RMA as is and get serious about carbon reductions. Borrow prudently to get through this (room for this thanks to the low government debt left to us by the Labour government). There you go, that’s off the top of my head for starters.

          • gingercrush 2.1.1.1.1

            The government has been doing things. If you don’t believe that you’re nothing but a partisan hack.

            Cancel future and April 1st tax cuts. Raise taxes on income over $150,000. Institute capital gains tax. Reverse the axing of the R&D tax credit and the New Zealand Trade and Enterprise funding for small exporters. Stop laying people off. Start investing in local transport and green energy. Leave the RMA as is and get serious about carbon reductions. Borrow prudently to get through this (room for this thanks to the low government debt left to us by the Labour government). There you go, that’s off the top of my head for starters.

            The government looks set to postpone those tax cuts anyway. Though exactly how is raising taxes meant to be good for an economy during a recesssion? Considering those people invest in the economy and are important for getting us out of this recession. The government is already investing in local transport. As for green energy, the RMA changes will make it easier to build wind farms. The RMA changes are designed to fasten the process that surely is in the best interests for economic development. Cutting carbon has nothing to do with creating jobs. The government is already being prudent in borrowing. Borrowing for things such as the the Cullen Fund however is not prudent.

            Most of the things you listed have absolutely nothing to do with jobs in the short terms.

          • r0b 2.1.1.1.2

            The government has been doing things. If you don’t believe that you’re nothing but a partisan hack.

            Ahh, GC, you might want to have a look here and here.

            The government looks set to postpone those tax cuts anyway. Though exactly how is raising taxes meant to be good for an economy during a recesssion

            In exactly the same way that cancelling tax cuts is meant to be good for an economy during a recesssion. Hard to argue for one and against the other GC.

            The government is already investing in local transport.

            Seriously GC, no, they are doing the exact opposite.

            The RMA changes are designed to fasten the process that surely is in the best interests for economic development.

            I am not in favour of economic development at the eternal expense of the environment. There has to be a balance, which the RMA should provide. We only have one planet GC.

            Most of the things you listed have absolutely nothing to do with jobs in the short terms.

            Wrong.

  3. bilbo 3

    ” If things aren’t as bad as feared is it thanks to Labour’s full employment policies or National’s Job Summit? ”

    Neither National nor Labour have really got much to do with how bad or good employment conditions are in NZ.

  4. SPC 4

    gingercrush you are ignoring housing – where the industry says there is a looming shortage and yet they are laying off staff. The market will not correct this problem, only government intervention can.

    “That will take time and will depend on other countries demanding goods and services again.”

    Are not many of the jobs lost from falling demand for local services and goods and imported goods?

    • gingercrush 4.1

      Please provide evidence? Yes the government can and should invest in more public housing. But there is no shortage in housing nor is there a great demand for housing. Have you not seen real estate data lately? Those building houses aren’t seeing great returns and developers are going broke. Housing will always attract supply/demands problems because of the speculative nature.

      As for your second point. Of course domestic demand has fallen meaning consumer confidence has to return. But because our economy is dependent on exports. We need our export markets to recover. Increased exporting of goods means increased employment which leads to better demand domestically. Farmers are seeing commodity prices return to better levels but they don’t yet have the confidence to spend which slows down domestic demand for goods and services. Many have debt problems and as such are paying down debt. Until they’re more confident about commodity prices demand from them will be less.

  5. SPC 5

    “But there is no shortage in housing nor is there a great demand for housing.”

    The construction industry states that there is a looming shortage – and unless you think you know more about that than they do (and why) I shall defer to them on that – I shall look up reports of this later, if you doubt it.

    It is based on such things as consents and rising demand (change in migration as occured c2002 post 9/11). You seem to mistake affordability of housing and access to money to buy with demand for property to live in (shortage will push up rents and thus the governments accommodation supplement cost).

    A policy of boosting state house supply is timely for job creation reasons (economic stimulous and to preserve apprenticeships/retain skilled builders in the industry) and to mitigate a looming shortage – which will cost the government. I would go further the government should buy into uncompleted projects (as state housing). Any debt accruing can be repaid as the properties are sold onto the private market as it recovers.

    The speculative side of this market has more to do with tax policy and access to finance than supply and demand in the industry.

    I agree that sustainable growth has to come from exports.

  6. gingercrush 6

    They always say there is a looming shortage and to an extent they are correct. Because when house prices start to rise buyers go back into market and start demanding property again. Short-term it means those needing properties rent till the market is healthy again.

    Most developers are not going to build houses etc when prices are low even if there is a shortage because there just isn’t any value in doing so. Thus you continue to face the shortages you’re talking about. But until demand grows sharply housing development tends to be slow.

  7. SPC 7

    One only faces the shortage in housing IF one relies on the market.

    There is a reason why we have state housing and why building state houses when the market is in this state is the right thing to do.

    That we are also in a recession and this is the right time to stimulate the economy just adds to the question – why is this government not doing anything. Having to borrow the money is not an issue, not when one can sell the housing back onto the private market when it recovers.

    A government neglecting to act is behaving as a government of the 1930’s would have – inadequately.

    • gingercrush 7.1

      I agree the government could do more in regards to state housing. But are you saying the government should play a commercial role by buying stretches of land, building on that land. Renting them in the mean time and sell them when housing picks up? How does that fix the shortage?

      The government is acting, it has acted and will continue to act. It is investing in infrastructure. It is upgrading state houses and it is building new state houses. Those are all stimulatory. But stimulus packages have limits and one only has to look at where jobs were lost to realise that. Building new houses will save some jobs admittedly but it will not solve the problem of unemployment. Something I feel you need to come to terms with.

      • SPC 7.1.1

        I earlier specified “uncompleted projects” – these already have building consents and would bring new housing onto the market the quickest. These would be some where building had already begun etc (these having stalled for lack of finance). It would bring new housing onto the market so it would alleviate the shortage.

        As to (whether new state housing from completing unfinished projects or new ones) the extra state housing being onsold later when the market recovered. Who owns the properties once they are built has no effect on the total extent of the housing stock.

        The National government is not building more state housing – it is merely inreasing stock in one area by cutting back everywhere else. Thus apart from its shrunk down version of the former governments policy on fixing up existing state housing, it’s allowing a housing shortage to occur. Its apparently prepared to accept higher accommodation supplement costs and higher unemployment than necessary (by losing jobs in the construction sector) and why. It’s not cost,as they can pay back any debt from building up state housing stocks in the short term by later on selling the houses.

        There are two paths

        1 adequate housing stock – this affordable in both ownership price and renting cost.

        2. the path the government is on – a shortage in housing to push up home prices (to please their speculator friends at the cost of those sleeping in garages when the shortage and rising rents arrive) . The problem is – higher home prices mean higher foreign debt (the loans used to buy them) and it is this foreign debt which is a threat to our credit rating (the governments won debt is low by most comparisons).

        Yes, I suppose the voter is accustomed to unemployment being high under National governments. Like poverty, unemployment does seem to be something that apologists for National administrations tell us we will just have to get used to.

  8. And the infamous Demographia surveys on ‘housing affordability’ fail to point out that the cheapest houses are in rust-belt towns where there’s little or no work. The Demographia people don’t seem to be interested in affordable homes, but rather, getting cosy with McMansion developers like themselves. The hoiti-toiti NIMBYism towards the Hobsonville Base housing proposal is a case in point.

  9. gingercrush 9

    Ahh, GC, you might want to have a look here and here.

    Duly noted and ignored. I read those pieces when they were first released. Tim Watkin has shown a blatant bias against National. Also the OCED in a very recent report said that New Zealand has reached its limits for stimulus.

    In exactly the same way that cancelling tax cuts is meant to be good for an economy during a recesssion. Hard to argue for one and against the other GC.

    Raising taxes and postponing tax cuts is not the same thing nor will it ever be the same thing.

    Seriously GC, no, they are doing the exact opposite.

    The Standard is openly bias.

    I am not in favour of economic development at the eternal expense of the environment. There has to be a balance, which the RMA should provide. We only have one planet GC.

    That is fine and all and you have a point. But in a post where we’re talking about job creation, you are knocking back proposals that will see job creation. I’m not actually sure why you brought then up.

    Wrong.

    Not wrong. Cutting carbon emissions has nothing to do with job creation. In fact most of what you said just will not create jobs. Taxes are a stimulus but they do not in themselves create jobs. Raising taxes most certainly are not stimulatory and have absolutely nothing to do with creating jobs. How is instituting a capital gains tax meant to provide investment in this country during a recession? Exactly how does that provide jobs? R&D is much more long-term thinking but in isolation does not create jobs and certainly does not create jobs in the short-term. As for RMA and being prudent in borrowing also do nothing to create jobs.

    The only things on that list that would directly create jobs are local transport and green energy. Though that depends on what you consider green energy. Its very easy to say invest in green energy. But what green energy? And as I have previously said this government is investing in local transport and more importantly is investing in roading. Something that very much does create jobs.

    • r0b 9.1

      Duly noted and ignored.

      I know – it’s the only way you can maintain your world view.

      Tim Watkin has shown a blatant bias against National. … The Standard is openly bias.

      You can’t make bad news go away by shooting the messenger GC. Is the information that I linked to factually wrong?

      Raising taxes and postponing tax cuts is not the same thing nor will it ever be the same thing.

      Both raise the government’s tax income GC, both add or maintain an obligation on certain individuals, they are exactly the same thing in effect.

      That is fine and all and you have a point. But in a post where we’re talking about job creation, you are knocking back proposals that will see job creation. I’m not actually sure why you brought then up.

      Green energy and the RMA go hand in hand. There is good economic sense in working smarter, working with the environment not against it. Go google for – green energy economic benefits – or – green energy job creation – do a bit of reading.

      Not wrong. Cutting carbon emissions has nothing to do with job creation.

      Go google for – “cutting carbon emissions” “job creation”.

      In fact most of what you said just will not create jobs.

      Still wrong.

      • gingercrush 9.1.1

        So you actually don’t have a clue about Green energy yourself therefore you are completely incapable of showing how jobs are created. Nice one. Seems to be you who needs to do some reading. You just show how stupid you are because you have not been able to provide anything that creates new jobs.

      • r0b 9.1.2

        So you actually don’t have a clue about Green energy yourself therefore you are completely incapable of showing how jobs are created. Nice one.

        Oh FFS GC, you really are pathetic. I’m not writing you a textbook on green energy and job creation because I don’t have time today. Take some responsibility and educate yourself. Oh no wait – “noted and ignored” is more your style.

        Who do you think builds and maintains wind farms, tide farms, solar farms and the like? Who do you think installs and maintains home solar water heating systems and insulation? Who do you think retools factories to new green methods? Who do you think builds the mass transit systems and the (gasp!) cycleways? Who do you think plants and maintains the forests that sink carbon? Who do you think works on the smaller scale eco friendly farms and market gardens? Who do you think does the planning and the administration? Who do you think does the research and development for all this stuff, and new methods of reducing agricultural emissions, and so on and on and on? Who do you think does all this stuff GC – Santa’s little elves?

        Here’s just one link from the reading that you won’t do for yourself GC, here’s what’s happening in America:

        The administration must also try in the next few weeks to push through Congress a budget resolution that raises spending in several energy-related areas, again with the promise of creating millions of new jobs in the renewable-energy arena.

        It has become increasingly clear that the administration’s central theme — not to mention its pitch to key lawmakers — is that energy-related legislative priorities are based not only on environmental merits but on their ability to create jobs.

        Both Obama’s allies and his critics say such a message is aimed at broadening the constituency for such initiatives — rallying the traditional “green” vote as well as blue-collar workers and the U.S. manufacturing base.

        “This is the kind of ‘for everybody Earth Day agenda’ that the Obama administration stands for,” White House Council on Environmental Quality adviser Van Jones said yesterday. “There’s a wingspan on these jobs goes from GED to Ph.D.”

        Jones added, “The administration is committed that green jobs be good jobs, and there’s a strong commitment to make sure that it actually happens.”

        • gingercrush 9.1.2.1

          And what out of all that was Labour going to do? And how does Solar Farms even make sense economically? They’re wholly expensive, they don’t actually provide that much power and its much better cost effectively to do wind farms. National isn’t opposed to wind farms. But right now there is a problem in that the RMA is being used to stop wind farms. As for tidal power, there is no evidence that anyone is able to do that quick and economically. To do something like that now would be a waste of time and money. Also planting forests creates very little jobs. Hectares upon hectares and you only need 10 or so workers to do it. Therefore it just won’t create the number of jobs you actually think it does.

          I like the idea of solar water systems. But it wouldn’t actually create that many jobs. The Labour Party didn’t exactly sparkle in this area either. Building mass transit systems takes time. It isn’t something you can just implement. Also there is very little value when the demand is for roading and not public transport. Small scale eco-farms? What the hell is that. That is a recipe for low job creation.

          See I agree with you that green energy can play an important role in New Zealand’s economy. But green measures are not short-term measures and will not supply jobs in the short-term. They’re long-term projects and for much of them, they don’t actually make economic sense. Its one thing to advocate doing things that make economic sense. Its another thing to merely do them because they’re green. What you listed will create jobs. But they are not projects that on the whole can be done fast and will actually do little to get us out of this recession. They most certainly would not lessen the impacts of this recession.

          Hence why despite the billions spent on green projects, the United States unemployment and economy are set to continue deteriorating. You are foolish to suggest the National Party spend billions in green measures and that they will create jobs and lessen the impacts of this recession. What you would actually get is billions spent, very few jobs created and little that gets us out of this recession. Your thinking just doesn’t work. Its rather naive.

  10. jarbury 10

    This government has cut down on the number of state houses being built. I think Labour were pumping out close to 1000 a year across the country.

    I have worked on identifying where around 150 additional houses could be built in Auckland in the next year. That was late last year and nothing has happened since. I identified thousands of potential additional units that could be built in Mt Roskill and Otara in the longer term, but nothing has happened (this is all publicly available info).

    My job is at risk because the government has not continued with this work.

    • r0b 10.1

      Sorry to hear it Jarbury, and good luck.

    • Zaphod Beeblebrox 10.2

      You’re not the only one. Construction is one of our main employers and it always seems to be feast or famine. If they spend a bit now they will get them built a lot cheaper than later, and keep builders, electricians, plumbers etc active and away from Australia.

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