The Front Page: Unemployment remains at an all-time high – so why are so many Kiwis benefiting?

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Unemployment remains incredibly low, but many New Zealanders are still looking for work. Photo/Getty Images

Unemployment may be at an all-time high and businesses are clamoring for workers, but New Zealand still has many people on Jobseeker’s Allowance.

While that might sound anomalous, Infometrics senior economist Brad Olsen told the Front Page podcast that’s not surprising given real-world market conditions.

“There are still people who want to find a job, but we often find that the skills these people have and what employers are looking for don’t completely overlap,” says Olsen.

“It’s not that we don’t have more people available to put on the job market. It’s that the interconnection between what companies are looking for and what some people have to offer here, right now, do not completely overlap.”

Companies also told Olsen that some of their potential candidates sometimes also face simple issues, such as getting transportation to get to work on time.

“We need to do a lot more work to get people into this working position so they can find jobs and can continue to thrive.”

Olsen also pointed out that around 9-10% of Kiwis currently receiving JobSeeker work part-time, but need additional support because they have not been able to find full-time employment.

Olsen says there are around 171,000 New Zealanders who are currently receiving support from JobSeeker. This figure is up from around 139,000 in July 2019, before the pandemic.

“You’re looking at about 32,000 more people receiving jobseeker support than pre-pandemic, and about 23,000 of those are ready to work,” Olsen says.

At the national party conference over the weekend, party leader Christopher Luxon said young people who don’t want to work will see their “free ride” end under a national government.

The inference here is that some young people chose to continue to receive benefits rather than join the labor market.

This suggestion was quickly criticized by other political parties as well as New Zealanders who currently receive the JobSeeker Allowance for a myriad of reasons including health and disability.

Christopher Luxon had harsh words for young job seekers.  Photo/NZME

When asked if there was an objective way to measure whether people were continuing to receive benefits rather than joining the workforce, Olsen said it was difficult to provide a definitive answer because this question was so subjective.

“We know two things: you make more money joining the workforce, so there’s always a natural upside to entering the workforce,” he says.

“But we also know that depending on your personal circumstances, starting work doesn’t always bring as many additional benefits as people might think. And that’s because of some of the reduction rates. For example, when you start making money, you start losing some of your job seeker support.”

Olsen adds that it’s also important to look at the personal circumstances of those who have been on the allowance for a long time.

“It’s very difficult to ask what metrics aren’t currently working to get these people back into the workforce. Sometimes it’s about health and disability, but we’re also seeing concern among people who don’t have transportation or the right skills to get back into the job.”

Olsen says he was surprised to hear the suggestion of penalties for those currently receiving job seeker assistance.

“We know from talking to businesses and communities that there are people currently receiving JobSeeker who are not currently able to find employment for a variety of reasons,” says Olsen.

The economist added, however, that National’s idea for career coaching could be a step in the right direction in terms of identifying why some people are currently unable to return to the workforce.

“It’s about making sure people get a proper assessment of the barriers they might face in finding work. Is it a driver’s license? Is it something to do with training?

“Instead of waiting 12 months to do these assessments, we should be doing them much sooner.”

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.

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