BNZ economist Stephen Toplis wants the Government's policy-makers to get a better understanding of the way the nation's labour market is working.
"There's a lot of wild and woolly stuff going on that is raising significant question marks over whether the necessary labour supply is available to meet New Zealand's ongoing growth needs." Policy-makers at both Treasury and the Reserve Bank would need a deep understanding of the labour market to set the ground rules, he said.
There had been a disproportionate rise in the nation's youth unemployment rate for workers aged 15 to 19 years, which was now a "staggering" 27.5%, and the next age group - 20 to 24 years - had a rate of 13.5%.
Workers over 25 - who could be seen as a proxy for "skilled workers" - had a rate of just 4.6%, lower than the 6.3% peak level for that age group in 1998 and 8.5% in 1992.
On average, the youth unemployment rate had been 11.8 percentage points higher than the non-youth rate since 1986, but by March this year that difference had climbed to 21.9 percentage points.
Whatever the reason for youth unemployment being so high, there were three key risks involved, Mr Toplis said.
They were: social problems associated with a high number of young unemployed; the future social problems if the young people were unemployed for a sustained period because of lack of access to jobs; immediate inflationary problems if labour supply could not match demand.
But he said it was "curious" that despite the relative surge in the youth unemployment rate, the proportion of unemployed people who were youths had actually fallen.
"What this means is that youth employment fell and rather than unemployment rising, folk simply left the labour force altogether," he said.
Between the peak in youth employment at the end of 2007 and now there were 50,500 fewer workers in the 15-19 year age group, a fall of 31.6%, even though there had been an increase of 2400 in the total number of people employed.
"The oldies are on the march ... it's an oldies takeover."
Despite the general economic malaise, more than 56,000 people aged over 60 found jobs over the same period, and 41% of them were aged 65 and over.
Reasons could include people living longer and in better health, rising costs making life on a benefit more uncomfortable, and reduced investment earnings and general wealth losses for older people requiring them to work longer than planned.
It was probably positive for the economy to have people work longer, and for young people to stay longer at school.
"But is the growing participation rate of the older generation crowding out opportunities for the youth of today to enter the labour force?"
It was important to find out exactly what was happening, including whether the kinds of jobs the elderly were taking were the sort that young people could have done.
"As things stand, we maintain our view that the labour market is probably tighter than many care to believe.
"The ultimate impact of this is to lower the economy's potential growth rate."
That being so, inflation emerges at lower rates of growth than would have been the case in the past, resulting in higher interest rates and possibly currency that might otherwise be considered desirable, Mr Toplis said.
Social Development, Employment and Youth Affairs Minister Paula Bennett says the number of New Zealanders on benefits has fallen for five months consecutively.
Nearly half of the decrease in unemployment benefits in the past year had been made up of young people aged 18 to 24.
Last month, 7800 people went off welfare and into work.
"It's particularly positive that more than 2700 young people cancelled benefits for jobs," she said.
There was general scepticism late last week that Ms Bennett's claims on young people going off the benefit were finding jobs.
The concerns of Mr Toplis appear to be borne out by a survey released on Friday by finance and accounting recruiter Robert Half.
Despite the positive outlook for business confidence, hiring predictions for the second half of 2011 remained modest.
Nine out of 10 hiring managers surveyed were confident in their company's growth prospects over the next 12 months but that confidence was not mirrored in the corresponding hiring predictions.
Managers reported just a net 4% rise in plans to increase the number of full-time permanent staff in finance, accounting and banking roles in the second half of the year.
Managers who were intending to hire were doing so to help ease the workload of existing staff members (51%) while other new hires would be tackling a new project or help grow the business.
Sixty-six percent of employees reported their workload had increased in the past 12 months with 27% of those saying their workload had increased significantly.
Robert Half New Zealand general manager Megan Alexander said that suggested people were already overstretched and might not be able to cope with increasing workloads that would eventuate if companies did not grow staff in line with the confidence level.
"Over-stretched staff threatens retention as people start feeling undervalued and look to opportunities that provide better work-life balance, further affecting the potential growth of an organisation.
"Businesses will miss out on crucial opportunities for growth if they do not have the right resources in place."
The current modest intentions to hire would not sustain growth expectations, she said.
In Australia, the jobs trend was viewed as weak and seen as staying that way.
The latest official figures offered hope the labour market was picking up, but the big picture showed the economy was unlikely to generate strong employment growth in a hurry, AAP reported.
The trend in employment was upward but not very steep, according to the seasonally adjusted data published by the Australian Bureau of Statistics (ABS).
The number of people with jobs rose by 23,400 in June, seasonally adjusted, not quite enough to offset falls totalling 28,000 over the preceding two months.
Those changes continued a choppy month-to-month pattern for employment and not too much should be made of the latest blip up or dip down.
The ABS introduced its trend measurements many years ago to cut a smooth path through these peaks and valleys.
Those trend figures show a monthly growth rate of 3800 for employment, barely one-tenth of the growth of the recent peak pace of 36,600 a month in August last year.
The estimated unemployment rate in June was in line with May's 4.9%, a touch over the 30-month low of 4.8% in April but barely changed from the 5% rate in December.
