Prior to the onset of COVID-19, it was forecast that net migration would remain high and that global demand for export goods and international tourism would continue to sustain regional economies. New Zealand’s labour market was projected to show modest employment growth with unemployment remaining relatively static over the next few years. The country’s unemployment rate had fallen to 3.9 percent in the second quarter of 2019, the lowest rate since the second quarter of 2008, at which time the effects of the GFC and global recession began to take hold.

In the March quarter of 2020, as COVID-19 started to impact in Asia and Europe, unemployment still stood at just slightly above 4 percent. Data from Statistics New Zealand’s experimental weekly paid job series, though, shows that paid jobs across the entire labour market fell by 24.2 percent between the 02 June 2019 and 07 June 2020. With a year-on-year decline of 19.8 percent, the goods producing sector fared somewhat better than either the primary industries or services sector, at 26.6 percent and 27.3 percent, respectively. Those figures from the second quarter of 2020 were taken to be an early indicator of employment and labour market effects of COVID-19.

While those figures from the first week in June last year portrayed a rather gloomy picture of the labour market, data from the same StatsNZ source for the week ended 26 July 2020, indicate that, across the labour market, there were 3 percent more paid jobs that week than in the same week a year earlier, the week ended 28 July 2019. This comprised an increase in the number of paid jobs in the service sector of 1.5 percent; in the goods producing sector of 2.3 percent; and in the primary sector of 9.2 percent. Overall, this suggests the country’s labour market was far more resilient than initial forecasts made during and immediately following last year’s nation-wide lockdown had suggested.

Not unexpectedly, the effect of the COVID-19 pandemic on jobs has been uneven, with some industries expanding, and others contracting. The impact of COVID-19 on labour supply has been, to some extent, a consequence of (temporal) shifts in demand. For instance, as shown in Figure 1, the greatest job losses were in those industries that were directly affected by border closures and the concomitant loss of international tourists. This includes transport, postal and warehousing, which includes air transportation, and education and training, which has become reliant upon a growing share of students who come from outside of New Zealand. Those two industry groups, accounting for a combined total of 13 percent of the country’s labour market, experienced net job losses in the 12 months following New Zealand’s first reported case of COVID-19 of 7500 (8.2%) and 3800 (2.1%), respectively.

Another sector hit hard by the global pandemic is, of course, hospitality, comprised of accommodation and food services. Nevertheless, those industries experienced a net gain of around 2000 jobs (1.4%) between the first quarter of 2020 and the first quarter of 2021. At first glance, this appears surprising, given how dependent the hospitality sector typically is on international tourism. Nevertheless, the number of full-time jobs in accommodation and food services did, in fact, drop by 4.2 percent over that 12-month period. This was offset, however, by 5.6 percent increase in part-time jobs, in which the job holder typically works fewer than 30 hours per week.

Figure 1: Filled Jobs by Industry and Status in Employment, March 2020 and March 2021

Despite shifts such as this between full- and part-time status, across the entire labour market, part-time jobs increased by 0.3 percent, slightly lower than the 0.5 percent increase in the number of full-time jobs over that period. In some industries, part-time jobs decreased in number, while full-time jobs increased by at least a commensurate share. Public administration and safety, where the latter fell by more than 15 percent and the former increased by nearly 17 percent, is one such example. A starker example of where part-time jobs declined but full-time jobs increase is found in the manufacturing sector, which added 4200 (2.2%) full-time jobs while losing 2100 (13.5%) of its part-time job, for a net gain of 1 percent in the 12 months to the end of March this year.

Unsurprisingly, higher demand during the pandemic resulted in increased job numbers in health care and social services, with around 9900 jobs added between March 2020 and March 2021. However, not all industry growth in that period was directly related to COVID-19. One obvious example of this is the construction industry, with 9,000 jobs added, a consequence of continuing growth in demand in the housing market (MBIE, 2021). Some of that growth, nonetheless, can be attributed to the country’s population growing due to an influx of expat Kiwis returning home during the pandemic.

Other industries where job numbers fell in the first year of the dual health and economic crises include professional, scientific, technical, administrative and support services (23,300 jobs lost); wholesale trade (11,200); rental, hiring and real estate services (3300); and forestry and mining (1700). In addition to health and social assistance and construction, other industries where job numbers noticeably increased in that time include the public utilities (4400 jobs gained); retail trade (5500); finance and insurance (5000); arts, recreation and other services (6000); and information media and telecommunications (800). The latter reflects a 2.9 percent increase in jobs filled in the year to March 2021, notwithstanding that, along with the accommodation and food services, this industry was forecast by most economists at the start of the COVID-19 crisis to be that most likely to suffer the greatest long-term job losses as a consequence.

Despite what looked until mid-August to be some promising signs that our labour market may have been quicker to recover than initially thought, if there is a message to be learned from the experience of the GFC and global recession of 2008-09, it is that New Zealand’s economy is more vulnerable to exogenous shocks than most. This suggests that, notwithstanding developments over the past fortnight, it may have been premature to celebrate the country’s success in withstanding the potentially devastating economic impacts of the COVID-19 pandemic. When all is said and done, though, the Government’s COVID-19 recovery package, including more than $5 billion in wage subsidies for affected businesses in all sectors and regions, an additional welfare payment providing up to $490 a week for those who have lost their jobs to COVID-19, and a $3 billion package of infrastructure investments aimed at creating more than 20,000 jobs, will undoubtedly prove to have cushioned the blow to the economy and labour market resulting from this crisis.