The Treasury has just released a crop of Working Papers. Great to see and will read them with interest.
I had a quick read through the first one, which is on “Recent Unemployment Experience in New Zealand”
It’s an interesting paper and worth a read. But they reach a surprisingly strong conclusion, where I think a more nuanced interpretation is required:
“… the rate of New Zealand unemployment can be explained entirely by economic growth outcomes, and do not seem to reflect any structural change in the labour market. This suggests that there are not any impediments to the rate of unemployment falling back to levels that existed in the mid- 2000s.”
I am a little surprised at this rather strong conclusion, as this paper did not explore the reasons for job losses.
The 2013 Census shows that jobs losses have been widespread across regions and industries. This was a combination of:
- structural (eg hollowing out of manufacturing, some of which may never come back)
- cyclical (eg construction downturn, which is likely to come back).
The recovery since then has also been uneven (services and metro city dominated). This could indicate some difficulty in getting the unemployment rate back to the lows in 2000s – especially as those who lost jobs may not have the skill set to match the skills for the new jobs created in the recovery.
I would suggest the Working Paper is a good start to look at the evolution of the unemployment rate. But they need to do work on understanding the job losses, and which are likely to come back and what skills may be redeployed elsewhere to reach a convincing conclusion.
I am a big fan of these Working Papers and really enjoy reading them. This is not a criticism of the work, rather a suggestion to extend it.