Quarterly Labour Market Report February 2017 MB14052 Feb 2017
Ministry of Business, Innovation and Employment (MBIE) Hikina Whakatutuki - Lifting to make successful MBIE develops and delivers policy, services, advice and regulation to support economic growth and the prosperity and wellbeing of New Zealanders. MBIE combines the former Ministries of Economic Development, Science + Innovation, and the Departments of Labour, and Building and Housing. More information www.mbie.govt.nz 0800 20 90 20 Information, examples and answers to your questions about the topics covered here can be found on our website www.mbie.govt.nz or by calling us free on 0800 20 90 20. Disclaimer This document is a guide only. It should not be used as a substitute for legislation or legal advice. The Ministry of Business, Innovation and Employment is not responsible for the results of any actions taken on the basis of information in this document, or for any errors or omissions. ISSN 2253-5721 February 2017 Crown Copyright 2017 The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identified as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders.
Contents Executive Summary... i Economic conditions continued to be favourable... 1 Domestic demand remained the key driver of economic growth... 1 Labour demand strengthened further as employment growth exceeded population growth... 3 Stronger growth in female full-time equivalent employees... 4 Filled jobs growth was strong in the construction and services industries... 5 Working-age population continued to grow and was concentrated in younger age-groups... 7 Annual net gain of migrants rose to 70,600 people... 7 Labour force participation rate at record high 70.5 per cent... 9 Unemployment rate increased to 5.2 per cent... 10 NEET rate up to 13.6 per cent in December from 11.2 per cent in September... 11 Jobseeker support numbers fell for 18-24 and 40-54 year age-groups... 12 Hospitality and tourism job vacancies continued to increase- Updated... 13 Wage growth remained steady and the CPI inflation has increased... 15 Annex 1: Drivers of migration... 17 Composition of PLT migration... 17 Recent trends in PLT arrivals... 17 i
Executive Summary New Zealand s economy grew steadily in 2016; annual gross domestic product (GDP) increased in the year to September 2016 (latest available) by 3.5 per cent. Real production GDP rose by 1.1 per cent in the September 2016 quarter, beating market expectations. Strong migrationled population growth remained the key driver of the New Zealand economy, stimulating domestic demand. As net migration continued to break records, labour force participation also increased to the highest level (70.5 per cent) it has ever been. As a result, there were more people who were employed and unemployed. Employment growth continued to exceed population growth this quarter, and was largely driven by an increase in full-time employment, particularly among women. Real ordinary-time average weekly earnings growth (as reported by Quarterly Economic Survey) has remained steady and the Consumer Price Index (CPI) inflation has increased. Real wages increased only by 0.3 per cent over the year to December 2016. The gap between average weekly earnings and the CPI inflation has narrowed in the latest quarter. Annual changes should be interpreted with caution as the results could have been affected by methodological changes in the June 2016 quarter Household Labour Force Survey. Table 1: Key labour market indicators (seasonally adjusted) SOURCE: Statistics New Zealand Household Labour Force Survey Indicator December 2016 Quarterly change Annual change Employed 2,510,000 +19,000 (+0.8%) +138,000 (+5.8%) Unemployed 139,000 +10,000 (+7.6%) +15,000 (+12.2%) Participation rate (%) 70.5 +0.4 pp. +2.2 pp. Employment rate (%) 66.9 +0.2 pp. +2.0 pp. Unemployment rate (%) 5.2 +0.3 pp. +0.3 pp. i
Economic conditions continued to be favourable New Zealand s economy grew steadily in 2016; annual GDP growth in the year to September 2016 (latest available) was 3.5 per cent. Real production GDP rose by 1.1 per cent in the September 2016 quarter, beating market expectations. Strong migration-led population growth remained the key driving force behind the continued increase economic activity. Construction drove growth over the 2016 September year, expanding by 12.3 per cent. Retail trade and accommodation (up 5.7 per cent), arts, recreation and other services (up 6.8 per cent) and health care and social assistance (up 4.8 per cent) also significantly contributed to the annual GDP growth in the year to September 2016. Domestic demand remained the key driver of economic growth The leading indicators of economic growth also showed improvement in business confidence in 2016. The Quarterly Survey of Business Opinion in the December quarter remained high, despite a modest softening in activity indicators over the previous quarter. A net 26 percent of businesses expect better economic conditions over the coming months. Likewise the ANZ Business Outlook also reported that business confidence remained solid in December, with firms remaining upbeat about economic prospects. Confidence composite indicator was pointing to GDP growth accelerating into next year. New Zealand Economy continued to make good economic progress. According to the Treasury s Budget Policy Statement in 2016, the economy continued to expand at a moderate rate and the outlook is positive. Economic performance in 2016 was supported by high levels of construction activity, exports (particularly tourism), a growing population and low interest rates. The New Zealand economy faced unexpected domestic challenges (including the Kaikoura earthquake), and the outlook for the global economy is becoming more uncertain and volatile. Despite that, the New Zealand economy is projected to grow more strongly over the next few years than many other developed countries, including most of our trading partners. The positive outlook is consistent with NZIER forecasts, which projected strong growth for 2017, supported by robust domestic demand. 1
Figure 1: Production GDP growth SOURCE: Statistics New Zealand National Accounts Figure 2: Business confidence SOURCES: ANZ Business Outlook, NZIER Quarterly Survey of Business Opinion 2
Labour demand strengthened further as more people were in full-time employment Labour demand strengthened further in the December 2016 quarter. Employment rose by 19,000 (up 0.8 per cent) over the December 2016 quarter, largely driven by an increase in fulltime employment. Employment growth for women was stronger than for men in the December 2016 quarter. The share of the working-age population in employment rose by 0.2 percentage points to 66.9 per cent, the second-highest in the OECD, as employment growth outstripped population growth. Other indicators have also signalled strengthening labour demand. In seasonally-adjusted terms, the Quarterly Employment Survey (QES) measure of filled jobs rose 1.2 per cent in the December 2016 quarter compared to the previous quarter, and 3.3 per cent over the year the largest annual increase since the March 2015 quarter, when it was also 3.3 per cent. Actual hours worked 1 (as measured by the HLFS) also rose 1.3 per cent in the December 2016 quarter, which means that people worked longer hours. There was a break in the series in the June 2016 quarter (due to changes made to the HLFS), therefore employment changes should be interpreted with caution. Figure 3: Main indicators of labour demand SOURCES: Statistics New Zealand Household Labour Force Survey, Statistics New Zealand Quarterly Employment Survey 1 The number of hours a respondent actually works in employment during a particular reference period. 3
Stronger growth in female full-time equivalent employees Full-time equivalent (FTE) employee numbers based on the QES figures increased by 3.2 per cent (47,400) over the year to December 2 and now saw an uninterrupted increase since December 2010. Historically, the number of FTEs has always been higher in the private sector than public. However, over the past decade, growth in the public sector FTEs has been stronger than growth of private sector FTEs. Figure 4 shows that changes in FTEs had a strong seasonal pattern in the public sector but not in the private sector. Since 2010, both male and female FTE numbers have experienced strong growth. The rate of increase was greater for women. In the year to December 2016, male FTEs have increased by 3.0 per cent, and female FTEs were up by 3.4 per cent (see Figure 5). Figure 4: Full-time equivalent employee index by sector SOURCE: Statistics New Zealand Quarterly Economic Survey (QES) 3 2 Not seasonally-adjusted. 3 We are using QES figures for sector employment breakdown due to methodological and question changes in the June 2016 HLFS. 4
Figure 5: Female/male full-time equivalent employee index SOURCE: Statistics New Zealand Quarterly Economic Survey (QES) Filled jobs growth was strong in the construction and services industries According to the QES, professional services 4, accommodation and food services and construction contributed the most to the increase in the number of filled jobs over the year to December 2016. Growth in the construction industry has picked up over the year to December 2016 (up 7.0 per cent) compared to over the year to September 2016 (up 1.2 per cent). These results were consistent with the HLFS industry employment figures. Professional services had a significant increase of filled jobs by 25,500 (up 10.4 per cent) in the year to December, which was nearly half of total growth in filled jobs. Construction and accommodation and food services also picked up with increases of 11,000 (up 7.0 per cent) and 10,300 filled jobs (up 7.5 per cent), respectively. Healthcare and social assistance industry also contributed 9,400 filled jobs to the total growth this year. Figure 6 displays the 10-year cumulative growth in the number of filled jobs across different industries. Particularly strong growth since December 2006 was observed for the professional services, construction and health care and social assistance industries. Most of the filled jobs growth came from the growing number of filled jobs in the services sectors and construction industries as a result of tourism and net migration growth. While the majority of filled jobs growth over the year to December 2016 were in Auckland (27,500 new jobs or 45.7 per cent of total growth), Wellington contributed 9,000 filled jobs or 15.0 per cent of growth, Canterbury - 8,400 filled jobs or 14.0 per cent, and the rest of New Zealand saw an increase of 15,300 filled jobs. 4 Professional services include scientific, technical, administration, and support services. 5
Figure 6: Change in the number of filled jobs from September 2006 (000s) by industry SOURCE: Statistics New Zealand Quarterly Economic Survey (QES) 5 5 Please note for this quarterly update we are using QES figures for industry employment breakdown due to the June 2016 changes in HLFS. 6
Figure 7: The number of filled jobs (indexed to September 2006=100) by main regional council SOURCE: Statistics New Zealand Quarterly Economic Survey Working-age population continued to grow and was concentrated in younger age-groups Labour supply growth has also been strong in New Zealand. In the December 2016 quarter, the working-age population grew by a seasonally-adjusted 17,000 people (up 0.5 per cent). Over the year, the working-age population grew by 98,000 (2.7 per cent), one of the strongest increases on record. The working-age population growth is concentrated in younger age-groups, particularly 20-34 year olds, and is largely a migration effect. Since 2014 the number of people arriving on student visas has increased significantly, primarily among Indian and Chinese students. The number of Indian students arriving peaked in 2015 and has since started to fall. Also fewer New Zealanders in this age group compared to other age-groups are migrating to Australia or other countries. Annual net gain of migrants rose to 70,600 people New Zealand had a net migration gain of 70,600 in the year ending December 2016, the highest net migration on record. The annual net gain in migrants has been setting new records 7
for the last 29 months. This increase in net migration was driven by both increasing arrivals of non-new Zealanders and decreasing departures of New Zealanders. The record net loss of people to Australia of 40,000 in the year to August 2012 year has changed to a net gain of 1,600 people in the year to December 2016. Arrivals from Australia were up from December 2015, while departures to Australia were down. The fall in migrant departures to Australia was primarily due to fewer New Zealand citizens leaving for Australia. Departures of New Zealand citizens to Australia fell 4 per cent to 20,300 in the December 2016 year from 21,100 in the December 2015 year. Migrant arrivals totalled 127,300 in the year to December 2016, up 4.4 per cent from the previous December year, while migrant departures totalled 56,700, down 0.5 per cent. A continued increase in net migration was driven by increases in work visa arrivals; an increase in the number of returning New Zealand citizens since 2012; and increases in the number of student visas since 2014. The year to December 2016 results show a slight drop in the number of student visas mainly due to a decrease in the number of Indian students (down 38.1 per cent or 4,100 people) coming to New Zealand, who represent around a third of all student visa arrivals to New Zealand. In contrast, the number of Chinese students has picked up by 8.8 per cent (or 500 people) since previous year. Figure 8: Annual net migration SOURCE: Statistics New Zealand Permanent and Long-term Migration Series 8
Figure 9: Annual arrivals by visa type SOURCE: Statistics New Zealand Permanent and Long-term Migration Series Labour force participation rate at record high 70.5 per cent Labour force participation rate has risen by 0.4 percentage points to 70.5 per cent in the December 2016 quarter, the highest level on record. This increase was a continuation of a strong increase seen in the June and September quarters of 2016. The labour force grew by 29,000 in the December 2016 quarter. This labour force growth was driven by a 19,000 increase in employment and a 10,000 increase in unemployment. Figure 10 shows changes in labour force and working-age population by age group. Employment in the 15-24 year age group is highly seasonal, and includes many students whose opportunities for part-time work fell during the recession. For the 35-44 year age group the working-age population has been declining faster than the labour force since 2012. This trend can likely be attributed to demographic shifts. Among older workers, the labour force has been growing much more slowly than population, and the gap seems to have widened over time. An ageing population is expected to put downward pressure on the participation rate over the longer-term, especially for the 65 and over age-group. In recent years, stronger-than-anticipated participation rate increases within older age groups (55-64) have kept participation rates buoyant. 9
Figure 10: Change in labour force and population by age group from September 2006 (000s) SOURCE: Statistics New Zealand Household Labour Force Survey Unemployment rate increased to 5.2 per cent The seasonally-adjusted unemployment rate rose 0.3 percentage points to 5.2 per cent in the December 2016 quarter. This was due in part to more people being in the labour force this quarter. The unemployment rates for men and women rose by 0.1 and 0.5 percentage points respectively.. Changes in unemployment varied across regions while Taranaki had the only significant change in unemployment over the year (up 2.9 percentage points to reach 6.8 per cent this December quarter). Gisborne/Hawke s Bay and Northland continued to have the highest unemployment rates in the country (8.1 and 7.3 per cent, respectively). Auckland s unemployment rate was 5.1 per cent (no change from previous year). An unemployment rate increase was slightly higher in the North Island (up 0.3pp to 5.6 per cent) than the South Island (up 0.2pp to 3.9 per cent) over the year to December 2016, which has widened the gap between the two islands. The number of underutilised workers has also increased (up 0.6pp to 12.8 per cent) this quarter as a result of increases in the number of unemployed and unavailable jobseekers. Unavailable jobseekers could be women who are about to return to work from maternity leave or students who are finishing their studies. 10
Figure 11: Unemployment rate by region, % SOURCE: Statistics New Zealand Household Labour Force Survey NEET rate up to 13.6 per cent in December from 11.2 per cent in September There was a 2.4 percentage point increase in seasonally-adjusted youth not in employment, education or training (NEET) rate over the quarter. The NEET rates increased over the quarter for both youth aged 15-19 years (2.4 percentage points) and those aged 20-24 (2.5 percentage points). The NEET rate increased to 13.6 per cent this quarter, up from 11.2 per cent in the September 2016 quarter and 10.9 per cent a year ago. Figure 12 shows that there was an increase in the number of young people (aged 15-24) who are employed but not in education (up 14,000 people since the September 2016 quarter). The NEET figures should be interpreted with caution as the results could have been affected by methodological changes introduced in the HLFS in June 2016. 11
Figure 12: Labour force outcomes for youth aged 15-24 SOURCE: Statistics New Zealand Household Labour Force Survey Jobseeker support numbers fell for 18-24 and 40-54 year age-groups Over the past five years, the number of people on jobseeker support benefits has decreased from 143,500 in December 2011 to 124,300 in December 2016. Changes in benefit numbers over this period largely reflect changes in economic conditions, and an increased focus by Work and Income on moving job seekers into paid work. In the December 2016 quarter, 124,300 working-age people were receiving Jobseeker Support, representing 4.3 per cent of New Zealand s working-age population 6. Consistent with an increase in the number of unemployed (up by 15,000 or 12.1 per cent) jobseeker support numbers also increased by 1.1 per cent or 1,400 (comparing December 2016 with December 2015). There were increases in Jobseeker Support numbers in the 25-39 and 55-64 year age groups, and decreases in the 18-24 and 40-54 year age groups. Jobseeker Support was introduced in July 2013 for people who are preparing for, and looking for, full-time work. It incorporates the unemployment benefit, sickness benefit, domestic purposes benefit with children 14 and older, and domestic purposes women alone benefit. Since 2012, there has been a divergence between the official number of people unemployed (the HLFS measure) and the number of Jobseeker Support beneficiaries. Persons ineligible for Jobseeker Support (but classified as unemployed) include: - Unemployed 15-17 year olds - Unemployed people 65 or older - Unemployed people looking for part-time work (such as students) 6 Based on Statistics NZ National Population Estimate year ended September for relevant years, which only includes 18-64 year olds (Ministry of Social Development definition). 12
- Unemployed people with sufficient family or personal income to support them while looking for work - Unemployed people already on another benefit Figure 13: Unemployed (seasonally-adjusted) and Jobseeker Support SOURCE: Statistics New Zealand Household Labour Force Survey; Ministry of Social Development National Benefit Factsheets Hospitality and tourism job vacancies continued to increase The number of vacancies has been steadily increasing since 2010. Annual changes have been positive, and the number of vacancies has slightly increased from 12.7 per cent in the year to November to 13.0 per cent in the year to December 2016. The All Vacancies Index increased by 1.1 per cent in December 2016 (compared with the previous month), with growth being led by the hospitality and tourism industry (up 1.8 per cent) and healthcare and medical (up 1.2 per cent). The major fall was information technology (down 2.4 per cent), with education and training slightly decreasing by 0.1 per cent. Over the year, job vacancies increased in seven out of eight industry groups. The strongest growth in vacancies was for hospitality and tourism (up 21.0 per cent), followed by education and training (up 14.6 per cent), and healthcare and medical (up 11.7 per cent). At a regional level, the strongest annual increases in vacancies were in Gisborne/Hawke s Bay (up 31.1 per cent) and Waikato (up 29.1 per cent). Vacancies fell in Canterbury (down 3.8 per cent). 13
Figure 14: Annual change in all vacancies index SOURCE: Ministry of Business, Innovation and Employment Jobs Online Figure 15: Jobs Online Vacancies by industry (Indexed to May 2007) SOURCE: Ministry of Business, Innovation and Employment Jobs Online 14
Figure 16: Jobs Online Vacancies by region (Indexed to August 2010) SOURCE: Ministry of Business, Innovation and Employment Jobs Online Wage growth remained steady The Labour Cost Index (LCI) and QES provide complementary measures of wage growth. The LCI measures wage inflation and reflects changes in the rates paid by employers to have the same job done to the same standard. The QES measures the average gross earnings paid to employees in economically significant businesses. Changes in the QES may result from changes to New Zealand s industrial composition (e.g. if a lower-paying industry increased its total paid hours relative to other industries, it would lower the QES earning measure). Shifts in the QES may also reflect changes within industries, such as the skill levels or performance of employees. The LCI increased by 1.6 per cent for the year to December 2016. This was the second consecutive quarter since 2010 that annual public sector wages outgrew the private sector wages (1.8 vs 1.6 per cent). This increase in the public sector wages was influenced by the local government sector. The ordinary time average weekly earnings per full-time equivalent employee, as measured by the QES, rose by 1.6 per cent over the year to December 2016, compared with annual consumer price index (CPI) growth of 1.3 per cent. Real ordinary-time average weekly earnings have increased only by 0.3 per cent over the year to December 7. The gap between average weekly earnings and the CPI inflation has narrowed in the latest quarter (see Figure 17). The subdued growth in QES earnings was likely due to a rise in the number of relatively lower-paid jobs in the healthcare and social assistance, and accommodation and food services industries. 7 The real ordinary-time earnings calculation was based on seasonally-adjusted CPI series. 15
Figure 17: Wage and salary inflation SOURCES: Statistics New Zealand Labour Cost Index, Statistics New Zealand Quarterly Employment Survey, Statistics New Zealand Consumers Price Index 8 8 Not seasonally adjusted series. 16
Annex 1: Drivers of migration In the year ending December 2016, New Zealand s net annual migration reached 70,600 people, the highest on record and well above the 64,900 recorded in the December 2015 year. This Annex provides more detail on the trends behind this record migration. Permanent and long-term (PLT) migration figures are based on people who have spent at least 12 months in or out of New Zealand, including temporary migrants such as students and working holidaymakers. PLT migrants are identified from their stated intentions on arrival and departure cards. While those intentions may change, PLT migration figures are not adjusted to account for this. Composition of PLT migration 127,300 permanent and long-term migrants came to New Zealand in 2016. These immigrants comprised: 31,700 New Zealand citizens (25 per cent of total arrivals) o 16,400 from Australia o 6,300 from Europe (primarily the United Kingdom) o 3,300 from Asia o 5,600 from elsewhere in the world 6,000 Australian citizens (5 per cent of total arrivals) 41,600 people on work visas (33 per cent of total arrivals) o 7,700 from the United Kingdom and Ireland o 7,400 from France and Germany o 3,400 from the United States and Canada o 3,300 from Australia o 2,100 from South Africa o 2,000 from the Philippines o 15,500 from elsewhere in the world 24,600 people on student visas (19 per cent of total arrivals) o 6,700 from India o 5,800 from China o 1,600 from the Philippines o 1,000 from South Africa o 9,500 from elsewhere in the world 16,500 people on residence visas (13 per cent of total arrivals) o 3,400 from China o 1,500 from the United Kingdom o 1,300 from India o 1,200 from Samoa o 9,100 from elsewhere in the world 6,900 people on visitor or other visas (5 per cent of total arrivals) 56,700 permanent and long-term migrants departed New Zealand in 2016. This was composed of 33,500 New Zealand citizens, 2,500 Australian citizens, and 20,700 other citizens. Recent trends in PLT arrivals The number of permanent and long-term arrivals to New Zealand increased by 5,400 (4.4 per cent) between the 2015 and 2016 calendar years. Behind this increase were the following major movements: 17
An increase of 3,800 (10.1 per cent) in work visa arrivals including: o 1,100 more South African work visas (a 108.1 per cent increase) o 1,000 more work visas for France and Germany (a 15.6 per cent increase) o 500 more United Kingdom work visas (an 8.6 per cent increase) o 500 more work visas for Japan and Korea (a 27.1 per cent increase) An increase of 2,400 (17.5 per cent) in residence visa arrivals including: o 800 more residence visas for China (30.0 per cent increase) A decrease of 3,300 (11.9 per cent) in student visas arrivals including: o A fall of 4,100 (38 per cent) in Indian student visas An increase of 1,500 in New Zealand citizens returning to New Zealand An increase of 900 in all other visa categories Total permanent and long-term departures from New Zealand fell slightly between the 2015 and 2016 calendar years, dropping from 57,000 to 56,700. This reflects a 1,400 fall in New Zealand citizen departures, partially offset by a 1,100 increase in departures of non-new Zealand citizens. The three main drivers of New Zealand s increased level of net migration in the past year are the strong growth in work visas arrivals, particularly for those coming from South Africa and Western Europe; an increase in residence visa arrivals; and fewer departures and more arrivals of New Zealand citizens than previously. These trends were enough to offset the sharp fall in Indian student visas, which had been driving net migration growth through 2014 and 2015. 18