New Zealand's workforce participation rate has lifted to the
highest level on record but the unemployment rate remains
stubbornly high at 6%, as population growth and rising
immigration take care of the extra jobs created.
The high participation rate is also keeping wage growth weak.
Statistics New Zealand figures released yesterday showed
annual employment growth had risen by a solid 3.7%.
That means a total of 83,000 more people were employed in the
March quarter compared with the same quarter a year ago.
New Zealand's participation rate was now 69.3%.
A substantial driver of the overall movement in employment,
participation and migration was Christchurch, where the
rebuild was swinging into action.
BNZ head of research Stephen Toplis said there was something
for everyone in the labour market employment reports.
''The data shows, unequivocally, the economy is on fire. That
would tend to suggest the Reserve Bank needs to get interest
rates back up to at least neutral as soon as possible.
''But that said, there was little sign in the data such
economic strength was translating into inflationary pressure,
particularly in the labour market.''
Soaring employment was a major driver of the total
compensation of the PAYE sector, which in turn fed directly
into expenditure on housing and through the retail sector, he
Indirectly, it also supported spending through the elevated
confidence levels occurring as a consequence of heightened
It also appeared as a large chunk of the growth was
supply-driven, Mr Toplis said.
The substantial increase in net migration was adding supply
to the labour force.
The number of people entering the labour force over the 12
months ended March was almost identical to the numbers
That kept the participation rate high and unemployment at 6%.
With the unemployment rate hanging up at 6%, there was the
suggestion of still more capacity in the labour market and
wages did not yet need to push higher.
That was the case in March.
The quarterly increase in the Labour Cost Index - private
sector all salary and wage rates - was just 0.4%, leaving the
annual reading at 1.6%, below the Reserve Bank's 1.8%
Labour Party labour issues spokesman Andrew Little said the
wage figures showed 46% of wage and salary earners did not
get a pay rise in the past year, a higher percentage than
those who missed out the previous year.
The annual median increase - the level where half of all
earners earn more and half earn less - showed the lowest
increase in more than 13 years.
Wage rates were the most important measure of whether the
benefits of economic growth were being shared, because they
related to the price of labour as agreed between workers and
''Today's figures show they are not keeping pace with the
cost of living. The one thing we expect as a matter of
fairness is that as the economy grows, wage rates will rise
in real terms.
''When that doesn't happen, inequality widens and wealth
distribution is less fair,'' Mr Little said.
At a glance
• Workforce participation rate
highest ever at 69.3%
• 83,000 people added to employment force in year to March
• Population growth and immigration drives participation rate
• Unemployment remains high at 6%
• Average ordinary time hourly earnings rise 2.5% to $28.18