Jobless rate jumps to 5.3% with NZ Economists taking steps to dodge unemployment disaster.
New Zealand economists are predicting record unemployment rates in the September quarter. They’re saying that the rate will jump to 5.3% but that the general public should not be alarmed by these numbers.
One of the reasons for this calm approach is the Covid-19 pandemic. It has caused unemployment to swing wildly in both directions as the public was ordered to observe a level 4 lockdown. This meant that many people could not go to their jobs and some eventually lost their jobs. Businesses closed down with New Zealanders locked in their homes and for some, the closure was permanent.
Unemployment around the world
However, the pandemic has caused business closures all over the world. In America, the unemployment rate recently rose to 6.9% but economists were predicting a strong rebound just as soon as the pandemic could be curtailed. The BBC reported that the jobless rate in the UK rose to 4.5%, which was the highest in three years. The UK estimated that 1.5 million people were unemployed between June and August with redundancies stalling out at 227,000 workers.
There were 1.8 million unemployed Canadians in September. That number was down 214,000 (-10.5%) from last August. For unknown reasons, Canada’s economy has recovered faster than other countries.
Their highest number of unemployed citizens was 2.6 million last May.
An explanation of high unemployment rates
As many economists in New Zealand and around the world point out, it’s difficult to judge the meaning of high jobless rates. In most cases, it doesn’t actually reflect how many people are without employment. Instead, it shows the thousands who are unable to work due to safety concerns. In the past, unemployment rates were used to show how many citizens were wanting to work, but unable to find employment. In the wake of the Pandemic, unemployment rates simply show the number of people who have been on lockdown for safety’s sake.
Lockdown restrictions easing
With the pandemic now easing, thousands of New Zealanders are starting to look for jobs. This is the major reason for the high unemployment rate. It is estimated that between 37,000 to 151,000 people across the country are now starting to look for work. Lockdown restrictions have been eased and most people say they’re ready to resume a normal life.
Stephen Toplis, head of research at BNZ, tried to clear up any confusion by saying:
“This is not to downplay the fact that labour market conditions are still likely to deteriorate further. And the unemployment rate is likely to remain above current levels for at least the whole of 2021. But the unmitigated disaster that was feared now seems eminently avoidable.”
Officials at ASB said they expected unemployment to continue rising though they believed they were in a much better economic position than other countries. ASB senior economist Mike Jones, commented, saying:
“Undoubtedly, the picture is much less gloomy than it could have been were it not for the wage subsidy, New Zealand’s relative Covid success, and the surprisingly rapid recovery in economic activity.” He also remarked that, “A summer without tourism and the wage subsidy beckons, and global growth is now heading south again.”
Bright future ahead
New Zealand officials are quick to remind everyone that border restrictions to stop the spread of Covid-19 severely hampered the travel and tourism industry during 2020. However, now that many countries have the threat under control, it is hoped that all our lives will return to normal. Businesses will reopen. People will be able to find good jobs and the travel industry will rebound. The future looks bright for New Zealanders.