Ngā Take Pūtea - Employment and unemployment rates explained

In this week's edition of Money Matters, economist Brook Grant analyses the job market. We began by discussing the latest statistics, and I start by asking how both the employment and unemployment rate can increase when the logical explanation would be that if one falls the other should rise, right? So Brook is here to explain. It's due to a difference in how those numbers are calculated that this situation can happen. But first let me explain; while the unemployment rate has grown, it's still a positive. Now, it's quite easy to calculate the employment rate - it's the number of employed as a percentage of the working population, which is everyone aged between 15–65 years old. For the unemployed, that working population is adjusted to exclude those who are constrained from being able to work, such as those with disabilities. It also excludes those who really don't want to work - who have become exasperated and discouraged about finding work and have given up. Now, let's say that the time comes when these discouraged ones begin to feel that the employment sector has improved, and they put their hands up to look for a job again. Some of them might even find a job, which, therefore, increases the employment rate. Others might not be so lucky but still keep looking, which also increases the rate of unemployment. Now, if we go back to what I said in the beginning, although the unemployment rate has gone up, it's OK because our available working population has increased which is our available resource to grow our economy. If we talk about jobs, the majority of jobs are to be found in construction and manufacturing, with Maori featuring largely in those sectors - what are the driving forces for those sectors? And what drives the growth of those sectors? In NZ, the main sources of construction growth are Christchurch and Auckland. In Christchurch, it's due to the continued rebuild from the earthquakes. In Auckland, it's the strong influx of migration flows - foreigners as well as New Zealanders returning home. So that has caused housing demand to outstrip housing supply. In my view, for the foreseeable future that imbalance will remain, and so it's a good career path for our young people to consider. Another avenue mentioned in the latest reports is technology. Do you believe it's an avenue for Maori to pursue in gaining employment? No doubt it is. I have spoken at length about my view that we need to look to the future when thinking about which industry to become involved in - we need to consider which industries and jobs will be in demand in the years to come. Going back to your question, I have read many reports forecasting that in the future there will be a lot of jobs lost to technology. For example, in Europe they are testing driverless trucks. In NZ, Domino's are trialling non-human pizza couriers. So, firstly, I reckon that we should think about what impact technology will have on employment and on jobs in the years to come. Secondly, we should definitely embrace technology. That's where the future lies. Brook Grant, thank you.