By Brian Fallow
WELLINGTON - The drop in the unemployment rate in the June quarter was caused by a shrinking labour force, not more jobs.
The growth in employment in the previous two quarters was not sustained in the latest quarter.
However, the unemployment rate fell from 7.2 per cent to 7 per
cent, its lowest level for 18 months.
The apparent paradox is explained by the fact that the unemployment rate is the proportion of the workforce without jobs, not the proportion of the working-age population.
The drop of 3000 - to 131,000 - in the number of unemployed was matched by a rise of 3000 in the number of people classified as "not in the labour force" rather than unemployed.
The difference is that they were not actively seeking work or were not in a position to accept a job if one was offered.
The one million people classified as not in the labour force included 181,000 students, up 13,400 on a year ago.
Bank of New Zealand economist Peter Jolly said: "Most of the weakness in employment continues to be in manufacturing [where 11,900 jobs disappeared in the quarter] while employment in the previously fast-growing telecommunications and financial services sectors seems to have come off a tad."
Business surveys continue to show a trend where more employers expect to shed staff rather than boost their workforce.
Of the 21,000 jobs created in the year to June, 16,000 were part-time and 18,000 were filled by women.
Unemployment continues to be highest among Maori and Pacific Islanders, at 18.2 per cent and 12.8 per cent respectively.
This compares with the low unemployment rate of 5.1 per cent for Pakeha.
Associate Work and Income Minister Peter McCardle said forecasters were predicting growth of around 30,000 new jobs in the year to March 2000.
But Labour employment spokesman Steve Maharey said New Zealand was not producing the secure, quality jobs needed in vital sectors.
"New Zealand will end up as a theme park with nothing but service jobs unless we get a government prepared to invest in education, research and business growth," he said.
Act's Ken Shirley said the employment laws were an impediment to small businesses hiring more staff.
