CTU economist, Dr Bill Rosenberg is warning that a” high unemployment rate could inhibit New Zealand’s recovery from recession. The unemployment rate in December surprised most economists: 7.3 percent or 168,000 workers.
“Predictions were that the level would be well below 7 percent. That was not the whole story either: as well as the jobless, there were a further 114,600 part-timers who would like more hours of work.”
For many workers, the likelihood is that times will remain tough for the next 2-3 years. Government forecasts are for unemployment levels to remain well above 6 percent for this period, and consensus forecasts are for unemployment to still be at 7 percent in March next year.
“However, it also is possible that skill shortages will revive, due either to the government’s failure to increase investment in tertiary education and loss of apprenticeships due to unemployment, or to workers moving to Australia, which did not go into recession and for the first time in many years has lower unemployment (5.7 percent) than New Zealand.”
Given the promising signs in other economic indicators, such as a small 0.2 percent growth in gross domestic product, unofficial signs of growth in manufacturing and service industries, and the health New Zealand’s financial deficit compared to so many other OECD countries, Dr Rosenberg says, New Zealand needs to be careful that it addresses unemployment to give the recovery a chance.
“New Zealand’s public finances are far from crisis. It is much more important to ensure that, with the support of government spending, the economy revives, people are protected from a crisis they did not create, and given the skills they need, and for the government to take an active role encouraging productive sustainable development for the longer run.”