9 Nov 2012

'No jobs' for young Pacific people

10:22 pm on 9 November 2012

A Pacific Island leader in South Auckland says the high unemployment rate shows the Government needs to do more to create jobs, as unemployment bites hard in areas such as Mangere.

Statistics New Zealand figures showed the unemployment rate had risen from 6.8% of the workforce at the end of June to 7.3% at the end of September this year - a 13 year high.

The number of people out of work jumped by 13,000, to 175,000, the third consecutive quarterly increase in unemployment, the Household Labour Force Survey found.

While European unemployment was at 5.4%, the figure for Maori had risen to 15.1% and the rate in the Pacific community was 15.6%.

Mangere-Otahuhu local board chair Leau Peter Skelton told Morning Report the future depends on young people, but there are no jobs for them.

He said many young Pacific people had been working in factories and meatworks which have been closing down.

Maori Party co-leader Tariana Turia says it is up to the Government to do something to grow the economy, so young Maori can be employed.

"We were told that the 90-day (trial period for new employees) would give employers the opportunity to try these young people out - and of course they're not even letting them get in the door."

Mana Party leader Hone Harawira said unemployment statistics would be much worse were it not for Maori responding to joblessness in this country by moving to Australia.

Waipareira Trust chief executive John Tamihere said a lack of skills means young Maori cannot find work and if the Government fails to deal with rising unemployment, there will ultimately be a rise in criminal offending. He says joblessness is a problem for all young people, not just Maori.

Government committed to economic plan

Labour says the unemployment situation is very serious and shows the Government's economic plan is failing.

Finance spokesperson David Parker says the Government promised 170,000 more jobs, but instead more than that number of people have gone to Australia.

But Prime Minister John Key says the Government will not be changing its economic plan despite the rate of unemployment.

"We are reforming the economy, as is absolutely necessary, but we are part of an international circumstance, which is (that) we are seeing difficult international trading conditions."

The Prime Minister says the figures released on Thursday are at odds with what the Government is seeing in other parts of the economy.

Renewed call for rate cut

Calls for the Official Cash Rate to be cut have resurfaced after the shock increase in unemployment raised concerns about the state of the economy.

After a month in the job, Reserve Bank Governor Graeme Wheeler has given no indication he's ready to cut the rate from its record low of 2.5%.

Deutsche Bank chief economist Darren Gibbs says there has been some scepticism about the official joblessness figures from Statistics New Zealand, after recent volatility.

But he says a third consecutive quarterly increase to a 13-year high is fairly conclusive proof the economy is not in good shape.

Mr Gibbs says the Reserve Bank should cut the Official Cash Rate to 2% and if the move leads to Auckland house prices getting out of control it should use new tools to clamp down on bank lending.

Volatile employment figures

The unemployment rate was significantly higher than economists had expected and UBS senior economist Robin Clements says while the labour market is sluggish, there is a question mark over the volatility in the survey.

He said the full time employment figures appeared to be moving up in the June quarter by about 10,000, or just under 1%, and down in the September quarter by the same amount. "Which just beggars belief that you could have got such strong growth one quarter and such weak growth the next."

However he said unemployment has been higher than expected for the last three quarters. "So you've got to take some of it on board, and clearly the labour market is not as strong as we thought it would be at this point".

Hours worked declined in the latest figures, indicating that firms would not be hiring in the immediate future.

Employment fell 0.4% to 2.2 million, led by declines in full time employment among men in manufacturing, wholesale trade and transport industries while construction remained flat.

The participation rate, which measures the proportion of people in jobs or looking for work, remained steady at 68.4%.

Jobs created in Australia

Across the Tasman, employment rose for a second successive month, helping keep the jobless rate steady.

Official figures show its economy created an extra 10,700 jobs in October, led by a rise in full time positions, and the unemployment rate remained at 5.4%.

Analysts say Australia's central bank is now likely to leave interest rates on hold for the rest of the year.

Despite the gains, employment growth is still only running at an annual 0.6%, well below the historical trend of around 1.5%.