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COVID-19 slows labour market activity - Stats NZ

Fuseworks Media
Fuseworks Media

About 650,000 people were away from their job, working fewer hours or less than they wanted, or were otherwise less active in the labour market in the June 2020 quarter due to reasons related to COVID-19 such as sickness or lockdown, Stats NZ said today.

Of these, 35,700 people without jobs in the June 2020 quarter said they left their last job for COVID-19-related reasons. This is higher than the total reduction in employment over the quarter because some people also gained a job over the period.

"One of the key reasons we talk to individuals about their labour market activity is to ask them ‘why’ - why jobless people left their last job, why they weren’t looking for a new one, or why employed people were working fewer or no hours," labour market manager Andrew Neal said.

"In the June 2020 quarter, we knew the answer to many of these questions was likely to involve COVID-19 or lockdown, so we added another response to some questions."

Survey respondents were able to report that COVID-19 and/or lockdown was their main reason for:

not wanting a job

not looking for work

not being available for work

leaving their last job

not being at work last week

working fewer hours than usual, and/or

working fewer hours than they would like.

"This has let us separate out people who were participating less because of COVID-19 and lockdown directly from those with other reasons, like childcare responsibilities or reduced work," Mr Neal said.

"The lockdown may have contributed to some of these other reasons but COVID-19 itself wasn’t cited as the main reason."

COVID-19 extended unemployment rate rises to 4.6 percent

The COVID-19 extended unemployment rate covers both official unemployed and those who did not meet the classification for official unemployment reasons related to COVID-19.

To be categorised as unemployed, a person must:

not have a job,

be available to start work, and

have been actively seeking work in the last four weeks or be due to start a new job in the next four weeks.

In the June 2020 quarter, 20,200 people were not working and said COVID-19-related reasons meant they were not looking or were not available to work but were otherwise meeting the requirements for being classified as unemployed. This meant they were not in the labour force but may have been counted as unemployed in the absence of COVID-19 lockdown restrictions.

If so, this would have increased the number of unemployed people from 108,200 to 128,500, and the official unemployment rate from 3.9 percent to a COVID-19 extended rate of 4.6 percent (not seasonally adjusted).

Another 2,700 people who were not in the labour force said they did not want a job at all, for COVID-19-related reasons.

Since responses are collected in the household labour force survey every week throughout the quarter, Stats NZ can study how unemployment changes within a quarter. This weekly unemployment rate is a volatile measure that Stats NZ does not usually publish, since each week is made up of only a fraction of the survey’s sample. This small sample can lead to imprecise estimates with a high level of uncertainty, but it can also help analysts understand quickly changing environments.

The estimates and sample errors behind the weekly unemployment rates are available in the table with Text alternative for graph Unemployment rate and extended unemployment rate by reference week, June 2020 quarter. It should be noted that the sample errors for early and late weeks in the quarter were over half of the rate estimates. In other words, the actual rate may be as low as half the stated rate or half as big again.

This quarter, unemployment rates steadily rose across weeks as New Zealand relaxed COVID-19 prevention measures, moving from full lockdown in alert level 4, to largely normal work conditions in alert level 1.

Text alternative for graph Unemployment rate and extended unemployment rate by reference week, June 2020 quarter.

Adding in extended unemployment related to COVID-19 shows that our reported unemployment rate might have been higher earlier on if people were available and able to actively look for work during the most strict COVID-19 restrictions, but that these differences narrowed in alert level 2 and all but disappeared by alert level 1. However, it should also be noted that, within alert level 1, these shifts may reflect changing collection methods or increased targeting of low-response groups rates, as well as real world changes.

For the weeks in the June 2020 quarter that were mostly in alert level 1 (weeks 10 through 13), the average unemployment rate was 4.9 percent, and the extended unemployment rate was 5.2 percent.

People working less because of COVID-19

Of the 651,800 people who said that COVID-19 or lockdown were the main basis for participating less in the labour market, 585,900 were employed people who were away from a job, working fewer hours than usual, or working less than they wanted.

In total, 894,500 employed people worked fewer hours than usual at their main job in the June 2020 quarter, almost 40 percent of whom were on zero hours.

Over half of those who gave a reason for their reduction in hours pointed to COVID-19, with holidays and lack of work available the next most common reasons.

The industry with the biggest absolute fall in total hours worked, compared with the June 2019 quarter, was retail trade and accommodation and food services. This was followed by the professional, scientific, technical, administrative, and support services; construction; and education and training industries.

Text alternative for graph Unemployment rate and extended unemployment rate by reference week, June 2020 quarter

Line graph shows unemployment rate plus those not unemployed because of COVID-19, and unemployment rate. The table below shows the data behind the graph, including sample errors.

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