Unemployment goes to the heart of what makes an economic downturn so devastating.
Those who lose their jobs see their lives turned upside down.
The flow on is rapid as unemployment and job insecurity can cause wage growth and spending to fall, exacerbating the contraction of the economy.
Longer term unemployment hits Government revenue with less tax taken and more paid out in benefits.
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Eventually there is the social toll as unemployment becomes entrenched in communities.
Sadly there is no doubt New Zealand now faces a sharp rise in unemployment but how high and for how long will be key to weathering the recession.
New data due tomorrow, for the three months to March 31, will capture the very start of the Covid-19 job crunch.
But as well as hitting employment, the lockdown also hampered data collection so the true unemployment figure for the quarter may be higher, StatsNZ has warned.
ANZ economists are picking the Labour Market Data to show unemployment rose 4.6 per cent in the quarter from 4 per cent at the end of 2019.
But if the survey response rate had not been impacted, the unemployment rate would have landed somewhere in the 5-6 per cent range, ANZ senior economist Liz Kendall says.
And, of course, the full brunt of the lockdown is still to come.
Firms have been able to use wage subsidies, cash reserves and loans to delay lay-offs,
but for some this will not be sustainable, ANZ says.
"Once we went into lockdown, the economic impact of the crisis intensified quickly. The
increase in unemployment that we expect occurred in Q1 will be dwarfed by increases as
we head into the middle of the year," Kendall says.
"Our forecast is for unemployment to increase from 4 per cent at the end of last year to 8 per cent in Q2 and peak at 11 per cent in Q3."
Westpac senior economist Michael Gordon is picking the data will show a rise to just 4.3 per cent. But he sounds a similar note of caution about its relevance.
"In our latest forecasts we predicted a peak unemployment rate of 9.5 per cent in the June
quarter – and we'd be looking at a much higher number if it weren't for the Government's multi-billion dollar wage subsidy scheme," he said.
"Even with Government support measures we expect the recovery to be gradual, with
unemployment still above 7 per cent by the end of next year."
KiwiBank chief economist Jarrod Kerr expects the unemployment rate will rise
rapidly to peak at around 9.5-10.5 per cent.
"We're expecting the unemployment rate to peak by the end of this year," he said.
"However, the coronavirus, and use of strict social distancing measures, have already seen many service-sector jobs lost. The unemployment rate may peak earlier in the third quarter."
The rise of the service sector as the main source of new employment in the past two decades has made economies throughout the Asia-Pacific vulnerable to large scale job losses in the pandemic, S&P Global says.
In a report looking at unemployment in the region, S&P Global says small and medium enterprises (SMEs) have created many of these new service sector jobs.
"Firms with less than 250 employees account for almost 70 per cent of all jobs in Australia, Japan, Korea, and New Zealand," the report said
SMEs usually had fewer resources to draw on to weather a sudden economic stop.
Access to finance is a perennial challenge for smaller firms, and is likely to worsen.
"As revenues collapse, to stay alive, these firms will be forced to cut whatever expenses they can. In many cases, their largest expense will be the wage bill."
As well as causing a rise in unemployment it is expected the pandemic will stop wage growth in its tracks.
ASB economists expect to see unemployment hit 4.4 per cent in the first quarter but expect to see it peak at 9.4 per cent in the September quarter.
They also expect Wednesday's first-quarter figures to confirm the end of the prior upturn in NZ wage inflation.
"Our preferred measure of such – the Labour Cost Index – is expected to ease from 2.4 per cent to 2.3 per cent, on it's way to a forecast low of 1 per cent in mid-2021."
Westpac's Gordon also expected some momentum to continue into the March survey, with a 0.5 per cent rise in wage costs for the quarter lifting annual growth slightly to 2.7 per cent.
"Going forward, though, it's likely that wage increases will be hard to come by, apart from government-mandated increases such as minimum wage hikes and public sector pay agreements," he said.
StatsNZ released some preliminary employment data today based on payday filing data sent to Inland Revenue by employers.
That data did not capture any Covid-19 impacts in March, StatsNZ said.