The Finance Minister says unemployment will continue to grow, and could rise as high as 8% over the next 12 months.
The number of people officially unemployed hit a 10-year high of 138,000 at the end of June.
The Household Labour Force Survey released by Statistics New Zealand on Thursday shows the unemployment rate as a percentage of the workforce jumped from 5% to 6%, the largest quarterly increase for 21 years.
An extra 48,000 people lost their jobs in the previous 12 months. Almost half of that increase came in the final three months of the period.
Bill English says that shows the impact of the global recession, on top of the domestic recession, which started 18 months ago. He says the Government must have a concerted focus on sustainable jobs, a growing economy and a good investment environment.
While total unemployment rose from 4% to 6% of the workforce in a year, the number of Maori unemployed rose from 8% to almost 13%, and joblessness for Pacific Islanders has almost doubled - also hitting almost 13%.
Meg Poutasi from the Pacific Cooperation Foundation says the recession has hit young, often unskilled, Maori and Pacific people disproportionately, and will leave its mark for some time.
Fall in full time employment
Westpac economist Dominick Stephens says new jobs are not being created. He says that is pushing people made redundant onto the unemployment benefit or into part-time jobs they would not otherwise have taken.
He said this showed up most prominently among women, where 16,000 full-time jobs disappeared and 1000 part-time jobs were created. Mr Stephens says a slowdown in industries such as retailing helped undermine female employment.
Employment among men rose overall, with a fall in full-time employment outweighed by an increase in part-time jobs. Male employment fared better because of a recovery in construction, where job losses have stabilised.
Economists from three of the four main banks expect the unemployment rate to keep rising through this year and into 2010, despite signs of recovery in the economy. They are sticking to forecasts for unemployment to peak at between 7.5% and 7.7% next year.
Deutsche Bank's economist Darren Gibbs says increasing immigration is pushing up the numbers looking for work. He says not enough jobs are being created for those immigrants and the newly unemployed.
Union reaction
The Council of Trade Unions says the figures are a shock. Spokesperson Bill Rosenburg says it is concerned that Treasury's forecast of unemployment peaking at 8% will be surpassed.
He says unemployment could go as high as 200,000 people, which will have consequences for many families.
Mr Rosenburg says the Government needs to be doing more to stimulate the economy.
Meanwhile, Australia's unemployment rate remained steady at 5.8% in July.
The number of full-time jobs fell by 16,000 as 48,200 part-time positions were created, indicating companies are hoarding labour as long as possible by cutting hours rather than positions.
