Workers unemployed while employers complain of shortages

There are organisations which “have been crying out for staff with the closure of borders due to Covid-19, and Covid-related sickness, while industries such as the construction and technology sectors had already been grappling with labour shortages before the pandemic” (Carroll, 2022); while there are "90,000 people actively looking for work" (Hargreaves, 2022). So why do employers still seek workers in Aotearoa, while we still have people out of work? 

As a nation, we technically reached full employment in 2022, but this doesn’t translate as no unemployment. The term maximum sustainable employment which is “the level of employment at which the job market is tight, but not so tight that inflation is rising out of control” (Reserve Bank of New Zealand, 2023), or "the highest amount of employment the economy can maintain without creating more inflation" (Reserve Bank of New Zealand, 2022, 0:21). Achieving an inflation rate of 2% will require an unemployment rate of 4.5% and monetary policy will likely keep increasing interest rates until this point is reached (Vaughan, 2022).

Job market conditions, even with record levels of low unemployment, mean that "There are still people out there who are keen to get jobs, but often [...] the skills those people have and what employers are looking for don't fully cross over” (Venuto, 2022). The job market remains dysfunctional, as “having effectively hit a stalemate [...] it’s looking like the domestic labour market has ‘simply reached the limits of its ability to match job seekers with vacant positions’ (eg due to skills or geographical mismatches)” (Hargreaves, 2022).

Today, compared to previous generations, we have a high level of technology in our lives, with a corresponding reduction in physicality, so some under-employment may come back to an employer need for physical workers. Few of us are interested working our bodies hard (Commonwealth of Australia, 2006); we tend seek more cerebral roles. Some of the mismatch may come from perceived work quality. Understanding the motivation of young people entering the workforce, research has found that “employment quality is essential to young people, and this includes factors such as skills, learning opportunities, social interaction and autonomy” (Hjelte et al., 2018, p. 13). Some mismatch will come from employees having characteristics - injury, illness, histories - which makes them appear less employable.

And this is where career practitioners can help.

Sam

References:

Carroll, M. (2022, July 28). Kiwis earned $13.3 billion in June, $1b more than a year ago: Stats NZ. Stuff. https://www.stuff.co.nz/business/industries/129412132/kiwis-earned-133-billion-in-june-1b-more-than-a-year-ago-stats-nz?cid=app-android

Commonwealth of Australia (2006). Perspectives on the future of the harvest labour force. Australian Senate Standing Committee on Employment, Workplace Relations and Education. https://www.aph.gov.au/~/media/wopapub/senate/committee/eet_ctte/completed_inquiries/2004_07/contract_labour/report/report_pdf.ashx

Hargreaves, D. (2022, August 8). Westpac economists think NZ is finding where the unemployment floor lies, with no net growth in Job numbers and all of the heat in labour market coming through in pay rates. Interest. https://www.interest.co.nz/business/117077/westpac-economists-think-nz-finding-where-unemployment-floor-lies-no-net-growth-job

Hjelte, J., Stenling, A., & Westerberg, K. (2018). Youth jobs: Young peoples’ experiences of changes in motivation regarding engagement in occupations in the Swedish public sector. International Journal of Adolescence and Youth, 23(1), 36-51. https://doi.org/10.1080/02673843.2016.1269653

Reserve Bank of New Zealand. (2023). Inflation and maximum sustainable employment. https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflation-and-maximum-sustainable-employment

Reserve Bank of New Zealand. (2022, January 26). What is 'Maximum Sustainable Employment'? [video]. YouTube. https://youtu.be/VYZ9ux_4RVg

Vaughan, G. (2022, May 18). BNZ's Stephen Toplis argues the labour market is causing RBNZ monetary policy more problems than the highest inflation in 30 years. Interest. https://www.interest.co.nz/banking/115875/bnzs-stephen-toplis-argues-labour-market-causing-rbnz-monetary-policy-more-problems

Venuto, D. (2022, August 10). The Front Page: Unemployment remains at record lows - so why are so many Kiwis on the benefit?. New Zealand Herald. https://www.nzherald.co.nz/business/the-front-page-unemployment-remains-at-record-lows-so-why-are-so-many-kiwis-on-the-benefit/F5L7Q34L3L3RXWS2CC6BJGHV4Q/