The 45,000 missing unemployed

Thomas Coughlan reports:

The unemployment rate plunged to 3.4 per cent today, lower than it has been at any time since before the global financial crisis, but one group warns that official unemployment statistics may be undercounting Māori.

A report by Sense Partners has looked into how the unemployment rate has diverged from another measure for unemployment – the number of people collecting a benefit.

Normally, you would expect these two numbers to trend roughly in the same direction – as the unemployment rate goes down, you should see the same thing in jobseeker numbers.

Instead, the opposite has happened, Jobseeker numbers climbed and stayed high, while the unemployment rate fell to record lows following the first wave of Covid-19.

Sense Partners economist Shamubeel Eaqub said that just five years ago, benefit statistics registered 6,600 more people than the Household Labour Force Survey or HLFS, the official measure of unemployment collected by Stats NZ.

Today, the number of people on a benefit is 45,500 higher than the HLFS, suggesting a widening gap between what Stats NZ was surveying, and what is actually happening.

“Five years ago, jobseeker numbers and unemployment numbers were pretty much the same, and now they begin to diverge,” Eaqub said.

“It is concerning that benefit statistics and the official unemployment rate are telling such a different story,” he said.

While jobseeker numbers were high for all ethnicities, they were far higher for Māori, despite Māori making up far less of the population than other ethnicities like Pakeha.

“The divergence between HLFS and benefit statistics is acute across ethnic lines, and the largest for Māori,” he said.

This is a fascinating revelation that the gap between those on the dole and the official measure has increased to 45,000, when they used to be consistently very close.

The reasons is simple to divine.

Stats NZ has not changed their definition of unemployed. It is that you are all of the above:

  1. Not employed
  2. Available for work
  3. Seeking work

This is a globally consistent measurement. And it tells us that 3.4% of the working age population is out of work, available to work, seeking work yet unable to find a job.

So why has there been such a growth in those receiving an unemployment benefit, so that the two figures are no longer close.

Well previously you needed to actually be looking for a job to get the dole. Now, under the new kindness regime, this is not applied in practice. The Government doesn’t believe in requiring people who get welfare to make a genuine effort to get a job.

So this means that the official measure of unemployment drops as those 45,000 are not looking for a job, but the numbers in welfare increase as they can get welfare without having to try and get a job.

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