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Printable version
Key Statistics - article, January/February 2004, p. 9-12
This article will give an overview of labour market results for the year ended March 2003 using data from a variety of Statistics New Zealand surveys. As a result of strong working age population growth and high demand for labour, the New Zealand economy experienced strong employment growth, a large drop in the number of unemployed, and an increase in labour force participation during this time. The tightness of the labour market has also contributed to continually increasing average hourly earnings and average weekly and hourly income over the year. The effect of trends in hours of work, industrial relations and migration is also covered in this article.
Labour Market Overview 2003 1
Introduction
New Zealand’s labour market has improved over the year to March 2003, from its already strong position in the March 2002 year, reflecting continuing growth in the New Zealand economy. This year saw the highest March year growth rate of the working age population since 1996, due predominantly to strong net gains in permanent and long-term migration. This large increase in the working age population has fuelled demand for labour in the domestic sector, while at the same time providing a larger work force to help meet this demand. The strength of labour demand has created a ‘tight’ labour market, with growth in employment, increasing hours worked and hours paid for, and falling levels of unemployment over the year. The tightness of New Zealand’s labour market has contributed to continually increasing average hourly earnings and average weekly and hourly income over the year.
This article will give an overview of labour market results for the year ended March 2003 (unless otherwise stated), using data from a variety of Statistics New Zealand surveys. The topics that will be covered include: the working age population and migration; employment and job growth; unemployment; the labour force; hours of work; earnings and income; and industrial relations.
The working age population and migration
The working age population grew 1.9 percent in the March 2003 year to 2,986,600. This is the strongest March year growth rate since 1996. Growth in the working age population is influenced by both natural increase and migration flows. Migration flows have dominated this year’s increase, with more than half due to a net gain of permanent and long-term migrants. Net migration trends have fluctuated over recent years, according to the state of the domestic and international economies. Between 1999 and 2001, New Zealand experienced a trend of net migration losses. Since then, the trend has reversed, with net migration gains for both of the last two March years.
Employment and job growth
This section presents employment statistics from both the Quarterly Employment Survey (QES) and the Household Labour Force Survey (HLFS). The two surveys measure employment in different ways. The HLFS measures the number of people employed, while the QES measures the number of filled jobs. The QES and HLFS have shown a similar pattern of continued employment growth over the year ended March 2003.
The average number of people employed (as measured by the HLFS) for the year ended March 2003 stood at 1,883,800. Employment has been growing for the last four years, with a growth rate for this year of 2.4 percent, compared with a rate of 2.8 percent for the March 2002 year. The 2.8 percent growth rate over the March 2002 year was the highest March year growth rate since 1997. These results are mirrored by the QES, with the number of total filled jobs as at March 2003 increasing 2.8 percent over the year to 1,528,400. This growth rate was again slightly lower than the 3.0 percent growth rate of the previous March year.
Full-time work has been the major driver of the employment growth over the year, with HLFS fulltime employment growing 2.8 percent and QES full-time paid employees growing 3.5 percent. This compares with part-time employment growth of 1.3 percent, and 1.8 percent growth for part-time paid employees. The growth in part-time paid employees followed a fall in the previous year, which was the only recorded fall since Statistics New Zealand started publishing the QES. Fulltime employment has not only dominated growth over the last year, but has also driven the strong employment growth that has been seen over the last four years.
Growth in QES filled jobs was far greater for females than for males in the year ended March 2003. This is the one area where the results of the two surveys are not consistent. HLFS results show that employment growth for males was marginally stronger than for females over the year. The QES result was in line with the longerterm pattern of female filled job growth generally outweighing that for males.
HLFS industry statistics show that the wholesale and retail trade industry was the largest employer over the March 2003 year with 327,200 employed, while the mining industry was the smallest with just 4,100 employed. The most consistent drivers of the employment growth over the last four years have been the education, and health and community services industries, growing 16.0 percent and 23.0 percent, respectively, over that period. QES results are consistent with the HLFS in that they show the wholesale and retail trade industry as the largest employer as at March 2003. However, in the QES, it is possible to separate wholesale and retail trade into individual categories. With wholesale and retail trade separated, the manufacturing industry was the largest employer as at March 2003. The QES also showed that the education industry experienced strong growth with a 6.4 percent increase over the year.
Employment growth over the year was concentrated among those aged 55 years and over, with the 55 to 59-year age group experiencing 10.6 percent growth. In contrast, employment fell for both the 25 to 29 and 50 to 54-year age groups. The Māori, Pacific peoples and ‘other’ ethnic groups have experienced high rates of growth relative to the European/Pākehā ethnic group over the year to March 2003. The growth rates for the Māori, Pacific peoples and ‘other’ ethnic groups were 8.4 percent, 7.6 percent and 8.7 percent, respectively, while the employment growth rate for the European/Pākehā ethnic group was just 1.0 percent.
Unemployment
The average unemployment level for the year ended March 2003 was 101,300. This was a fall of 1.3 percent from the previous year. As figure 1 shows, this fall follows much larger falls in the three previous years; prior to 2000, the number of unemployed had risen for three consecutive years.
An important social and economic indicator is the number of people who have been unemployed long term (more than six months). Numbers of long-term unemployed have fallen for each of the past four years, with the fall in the March 2003 year being 8.8 percent. This compares with a fall in overall unemployment of 1.3 percent.
The average unemployment rate also fell in the March 2003 year, dropping to 5.1 percent, the lowest rate for a March year since 1988. This, combined with falling long-term unemployment, reflects the tight state of the New Zealand labour market.
Breaking down unemployment data by region shows that the highest unemployment rate was in Northland at 8.7 percent, while the lowest rate was in the Tasman/Nelson-Marlborough/West Coast region at 3.5 percent. These regions have maintained their placings for the last three March years.
Unemployment data by ethnicity shows that Māori had the highest unemployment rate at 11.3 percent, followed by Pacific peoples at 8.9 percent, the ‘other’ ethnic group at 8.1 percent and European/Pākehā at 3.8 percent. This order has remained unchanged since 1996, although the fall in the unemployment rate over the last year was not as marked for the European/Pākehā ethnic group as it was for the other three. The unemployment rate for the European/ Pākehā ethnic group has fallen by 1.1 percentage points over the last four years, while the unemployment rate for Māori has fallen by 4.2 percentage points, bringing the two rates closer together over that period.
The labour force
The labour force consists of the employed and the unemployed as measured in the HLFS. With the increase in the numbers of employed outweighing the decrease in unemployed over the year, the March 2003 year saw the size of the labour force grow by 2.2 percent to 1,985,100. This compares with 2.3 percent growth in the March 2002 year and 0.9 percent growth in the March 2001 year. The increase in the size of the labour force was slightly larger than the increase in the working age population, leading to an increase of 0.2 percentage points in the labour force participation rate to 66.5 percent for the year ended March 2003. This continues the trend of increasing labour force participation, which began in the March 2000 year, and the current rate is the highest since the survey began.
The labour force participation rate for males is higher than that for females, with average rates for the year ended March 2003 of 74.3 percent and 59.0 percent, respectively. The male labour force participation rate has fluctuated between 73.0 percent and 74.6 percent since 1993, while the female rate has shown an upward trend from 53.9 percent in 1993. The European/Pākehā ethnic group has the highest participation rate of all ethnic groups at 68.0 percent, followed by the Māori, Pacific peoples and ‘other’ ethnic groups, in that order. The labour force has aged over recent years with the older age groups increasing their share of the labour force while the younger age groups have reduced theirs. There has been a 7.1 percent increase over the last four years in the number of 15 to 24 year olds who are not in the labour force.
The main driver of this increase in non-participation among the younger age groups, was an increase in the numbers of 15 to 24 year olds whose main activity was studying.
Hours of work
The total number of actual hours worked in all jobs during an average week in the March 2003 year was 65,868,000. The growth rate for this series was 3.1 percent over the year, the highest growth rate in total actual hours worked since the March 1996 year. This is consistent with the annual increase in the number of people employed that was mentioned above. Also contributing to this strong growth was an increase in the average number of hours people are working each week. Total average weekly hours worked increased by 0.6 percent to 35.1 over the year ended March 2003.
Increasing total actual weekly hours worked reflects the fact that full-time employment growth has been stronger than that for part-time over the year.
Total average weekly paid hours from the QES were 38.88, up 0.9 percent on the previous year. Growth in the 2003 March year was driven by males, and by a large increase in overtime hours for both sexes. The growth rate for males was 1.4 percent and for females was 0.4 percent, while the overall growth rates for overtime and ordinary time hours were 5.5 percent and 0.8 percent, respectively. These results are in contrast to the 2002 results that showed growth being dominated by females and ordinary time hours.
Earnings and income
QES figures show that average total hourly earnings increased by 2.3 percent in the year ended March 2003 to $19.21. This growth rate was lower than the 2.6 percent average over the past 10 years. Growth in earnings was slightly stronger for ordinary time earnings than it was for overtime, and growth in total average hourly earnings was slightly stronger for females than for males. Private sector earnings increased more than public sector earnings with growth rates of 2.6 percent and 1.8 percent, respectively. This was a reversal from the previous year. The industry with the highest average total hourly earnings as at March 2003 was electricity, gas and water supply, while the accommodation, cafes, and restaurants industry had the lowest average earnings.
Income data from the New Zealand Income Survey (NZIS) has shown a similar long-term pattern of earnings to that shown by the QES. However, the growth this year has been stronger than that shown by QES earning measures. Gross average weekly income for all people aged 15 years and over increased 5.1 percent over the year ended June 2003 to $539 per week. Average hourly earnings for those earning wages and salaries increased 6.9 percent over the year, with legislators, administrators and managers showing the largest increase of all occupations, up 16.2 percent to $26.67. Average hourly earnings grew 8.0 percent for females and 6.1 percent for males.
Industrial relations
Industrial relations are an important factor in evaluating the degree of harmony in our labour market, and have a significant impact on our labour force. Industrial relations are evaluated by measuring the number, type and extent of work stoppages.
There were 46 stoppages in the year ended December 2002, the largest number of stoppages in a December year since 1996. The 2002 year also saw the largest number of people involved in work stoppages since 1996. Longer term analysis shows that the number of stoppages has fallen markedly in the last decade from the high levels reached in the 1970s and 1980s. Despite the large numbers of people involved in stoppages in the December 2002 year, there were less days of work lost than in the previous year, and the stoppages were much less costly in terms of wages and salaries lost. The December 2002 year saw a loss of $4,979,000 in wages and salaries, compared with a loss of $7,682,000 in the previous December year. The public sector recorded greater losses than the private sector with losses of $4,138,000 and $841,000, respectively. The most common cause of the stoppages continued to be ‘dispute over wage provisions of employment agreement’ while the most common resolution method continued to be ‘negotiations between employer and employee or their representatives’.
Conclusion
The statistics presented in this overview have highlighted the consistencies between the different measures of the state of New Zealand’s labour market in the March 2003 year. The data shows a strong labour market, from which all groups in the working age population have benefited. There are some demographic groups who have improved their relative position in the labour market over the year, including females, older people, and all three minority ethnic groups. Females have improved both their rate of labour force participation and their level of average hourly earnings relative to males. Older people have increased their share of the labour force while younger people have decreased theirs. Relative improvement is most marked for the three minority ethnic groups, with far stronger employment growth rates, and unemployment rates falling more markedly than for the European/Pākehā ethnic group over the year.
As a result of strong working age population growth and high demand for labour, the New Zealand economy experienced strong employment growth, a large drop in the number of unemployed, and an increase in labour force participation over the March 2003 year. This picture is similar to that seen in 1996. The strong working age population growth in 1996 continued to have a positive impact on the New Zealand labour market over 1997. This suggests that the strong growth in working age population over the last two years is likely to continue to have a positive impact on the New Zealand labour market in the immediate future.
Footnote
1 This article was prepared by Helen Sears, Labour Market Analyst, Labour Market Statistics Division, Statistics New Zealand.
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