For the foreseeable future, the labour market on display in the March quarter numbers released this week will count as the good old days.
Because they were compiled steadily over the quarter, the numbers capture hardly any of the impact of the Covid-19 shock.
They are very much inthe "that was then, this is now" category. But they give us a picture of the starting point before things turned ugly.
The 4.2 per cent unemployment rate, while up on the previous quarter's 4 per cent, is still only half as high as the peak suggested in the best case scenario among the range the Treasury outlined last month. It assumes a total of two months altogether under alert levels 4 and 3 and an additional $20 billion of fiscal stimulus over and above what has already been announced.
Private sector forecasts, all accompanied by warnings about a wide margin of uncertainty, have the unemployment rate approaching or crossing into double digit territory this year.
ASB economists, for example, expect the unemployment rate to peak at 9.4 per cent in the September quarter but then to improve only slowly, remaining above 7 per cent until mid-2022.
ANZ's April survey of business sentiment found a net 31 per cent of firms reporting they had fewer employees than a year ago and a net 51 per cent expecting to shed staff, compared with a net 22 per cent so minded in March.
The unemployment rate is a crude measure of the state of the labour market. It only captures a fraction of the involuntary joblessness in the economy.
For the statisticians to count you as unemployed, not only must you have no job, but you must also be actively looking for one and available to start. There were 116,000 such people on average over the March quarter.
But there were another 92,000 classified as potential job seekers. They include 73,000 people who, when surveyed, said they wanted a job and were available to take one, but were not actively looking. "Actively looking" means that in the last four weeks you have used job search methods that go beyond looking at job advertisements in newspapers or on the internet.
Another 19,000 people were actively seeking work and, while not currently available, they would be in the next four weeks.
Another indicator of how much labour is going spare is the prime age employment rate, which is what proportion of people aged 15 to 64 — of whom there are currently 3.2 million — are employed.
In the March quarter it was 78 per cent, which is high by historical and international standards. The average across OECD countries is 69 per cent.
But it still means that 22 per cent or 700,00 of the people in that age range had no job.
Even if you exclude 140,000 15-to-19 year olds who are in education but not in the labour force, that leaves 560,000 people. Not to mention the growing ranks of those aged 65 or more.
Then there is the issue of underemployment, a measure of how many people are employed part-time but say they want to, and could, work more hours. In the March quarter 92,000 or 18 per cent of all part-timers were underemployed.
As it is, total hours worked in the quarter were only 0.1 per cent higher than in the March quarter last year, the weakest annual increase since December 2012. As the number of people employed rose 1.4 per cent over the same period, that implies a reduction in average hours worked.
We may well see more of that. Research by Reserve Bank economists released this year found that during a downturn businesses tend to adjust hours worked by their employees before they resort to letting them go. Conversely, in an upturn they tend to increase hours worked by current staff before hiring.
But given the scale of the current shock, the "adjustment" could be more brutal than that.
Sir John Key has predicted that after the lockdown companies will operate with significantly fewer workers: "Everyone is going to kick out 20 per cent of their people ... even if the company is doing well ... their worst performers. Never waste a crisis."
At the moment 1.7 million people, or 60 per cent of the labour force, are covered by the Government's wage subsidy. It only covers the June quarter but has cost more than $10b. So there is scant comfort to be found in the fact that as of April 24, only around 30,000 more people were on Jobseeker support than a month earlier.
Radio New Zealand, citing a leaked Ministry of Social Development document, reports that it is gearing up for an increase of 200,000 or even 300,000 in applications for benefits.
It reckons alert level 4 will have cut GDP from the accommodation and food service sector by nearly 90 per cent, for example, and construction by 80 per cent, but government only 10 per cent and the primary sector 25 per cent.
And these are only estimates of the direct impacts on economic activity while containment measures are in place. "The ongoing impacts are not included in this analysis and, even with significant support from fiscal and monetary policy, these would add to the overall economic costs," it says.
So the bottom line is that people will be selling their labour into a buyer's market for quite a while.
And the competition for work might come not only from an abundant supply of other people, but also from technology. Lingering effects on how and where we work, and shop, are likely.
With the cost of capital likely to remain low, to the extent labour and capital are substitutable, firms might prefer to invest in the latter.
What would in normal times be a desirable rise in the capital-to-labour ratio in our chronically capital shallow economy, lifting labour productivity and ultimately wages, could in these times retard the return to anything the Reserve Bank could regard as maximum sustainable employment.
