Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Why aren't Kiwis getting jobs?

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Even though unemployment is rising, we continue to import new labour to work in certain sectors of industry, including agriculture. Photo / Martin Sykes
Even though unemployment is rising, we continue to import new labour to work in certain sectors of industry, including agriculture. Photo / Martin Sykes

This week's household labour force figures for the March quarter were a portrait of what is working and what is broken in the guts of our economy and, in many ways, the heart of our society.

They showed New Zealand's economy is rollicking along at a reasonable clip - despite the dairy price slump, a stronger currency than the Reserve Bank would like and plenty of headwinds from the rest of the world.

It generated 120,000 new jobs over the past two years at the same time as the price of our biggest export halved.

It's some kind of achievement that GDP could be growing at almost 4 per cent by the end of this year, just as dairy farmers face a third consecutive year of loss-making payouts.

As if by magic, a new construction boom in Auckland is taking over from the one in Christchurch and the tourism sector has surged past dairy to become our largest export earner, thanks at least in part to the currency's fall between mid-2014 and mid-2015.

The fastest mortgage lending growth since June 2008 and the household wealth effect of double-digit house-price inflation is fuelling plenty of consumer spending in shops, cafes and restaurants up and down most of the country.

So plenty of work needs to be done and jobs are being generated.

But the strange and troubling truth is the people who want and need these jobs just can't seem to get them, or don't have the skills, or are in the wrong place at the wrong time, or won't work unless the wage is higher.

This week's figures showed that despite employment growing 120,000 to almost 2.4 million over the past two years, unemployment has fallen only by 2000 to 144,000 (although the total pool of unemployed in March, including those unavailable to work for various reasons, was 270,300). A further 101,000 people have jobs, but say they are under-employed and would like to work more.

A generation seems not to have the work skills, aptitude and life skills to work for the wages employers are able to pay.

This combined number of jobless and underemployed was 380,300 in the March quarter, up from 349,700 in the same quarter two years earlier.

Even more worryingly, the number of 15-24-year-olds not in employment, education or training rose by 6000 to 82,000 during those two years.

Think about that for a moment. New Zealand created 120,000 new jobs in the past two years, but the number of unemployed and underemployed rose.

How did that happen?

Essentially New Zealand imported a net 123,900 people to do those jobs.

We now have more than 300,000 New Zealanders who want a job or more work, but employers are calling for even more relaxed migration rules to bring in people from overseas to do a mountain of construction, aged care, engineering and hospitality work.

Why can't we connect New Zealanders with all this work?

Why can't they be trained or incentivised or moved or encouraged to do that work?

On the face of it, it seems like some sort of giant market failure, and certainly plenty argue higher wages for certain unpopular, difficult and remote jobs could fix that supply-demand mismatch.

Employers might not like it, but that's a market in action.

But something more is going on here that hints at a multi-decade societal failure.

A generation seems not to have the work skills, aptitude and life skills to work for the wages employers are able to pay. Our education, social welfare, justice and child care systems have failed to help these families and kids to help themselves.

Finance Minister Bill English was quick to point out last month the Government had not written off these young people and was investing hundreds of millions in education, training and individual supervision for sole parents under the age of 20.

But the policies and practices of a couple of generations are clearly not working and it's the biggest problem at the heart of our economy and society. Simply opening up the doors for more migrants is not the answer in the long run.

Debate on this article is now closed.

- Herald on Sunday

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Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for Interest.co.nz and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

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