Australia confirmed as New Zealand’s poor jobs cousin
Earlier this year I
wrote about New Zealand’s
improved economic performance and how it was putting Australia in the shade.
wrote about New Zealand’s
improved economic performance and how it was putting Australia in the shade.
The official data released since that blog only further highlights the strengthening
of New Zealand’s position.
of New Zealand’s position.
Consider the following comparative data:
|
Area
|
New Zealand
|
Australia*
|
|
June 2014 total employment
|
2.328 million (+3.8%)
|
11.578 million (-0.7%)
|
|
June 2013 total employment
|
2.242 million (+0.5%)
|
11.668 million (+1.4%)
|
|
June 2012 total employment
|
2.227 million (+0.6%)
|
11.500 million (+0.4%)
|
|
|
|
|
|
June 2014 unemployment rate
|
5.6%
|
6.0%
|
|
June 2013 unemployment rate
|
6.4%
|
5.7%
|
|
June 2012 unemployment rate
|
7.0%
|
5.2%
|
|
|
|
|
|
June 2014 participation rate
|
68.9%
|
64.7%
|
Note 1: *Seasonally adjusted data
Note 2: The percentage figure in brackets refers to the change
from the previous year
from the previous year
Note 3: New Zealand releases labour force data every quarter compared
to monthly releases in Australia.
to monthly releases in Australia.
The comparison is actually worse for Australia because the July 2014
unemployment rate for Australia
has just been released and it shows a jump to 6.4% caused by a slight increase
in the labour force participation rate. This level of unemployment is a
twelve year high for the Australian economy, a rather unwanted landmark.
unemployment rate for Australia
has just been released and it shows a jump to 6.4% caused by a slight increase
in the labour force participation rate. This level of unemployment is a
twelve year high for the Australian economy, a rather unwanted landmark.
The reality is that in the past two years Australia has only increased total
employment by 78,000 jobs (0.67%) compared to New Zealand increasing total
employment by 101,000 jobs (4.5%). This means that since June 2012 New Zealand
has beaten Australia in job creation by a factor of nearly seven .
employment by 78,000 jobs (0.67%) compared to New Zealand increasing total
employment by 101,000 jobs (4.5%). This means that since June 2012 New Zealand
has beaten Australia in job creation by a factor of nearly seven .
Australia’s unemployment rate is now (as at July 2014) 1.4 percentage points
higher than two years’ ago whereas New Zealand’s unemployment rate
is 1.4 percentage points lower than it was two years’ ago.
higher than two years’ ago whereas New Zealand’s unemployment rate
is 1.4 percentage points lower than it was two years’ ago.
The other incredible fact to consider is that New Zealand has a much higher
labour force participation rate than Australia, even when around 20% of
its home-grown workforce is working outside of its
shores (predominantly in
Australia).
labour force participation rate than Australia, even when around 20% of
its home-grown workforce is working outside of its
shores (predominantly in
Australia).
To put the two countries’ labour force participation rates into context
consider the following:
consider the following:
-
If Australia had a labour force participation rate as high
as New Zealand’s we would have an additional 800,000 people in the
workforce. If we made the simplistic assumption that this massive labour
influx would be sufficient to fill every job vacancy (146,000 per month)
then unemployment in Australia would still double to around 1.5 million
people, equating to an unemployment rate of around 13%.
If New Zealand had a labour force participation rate as low
as Australia’s then they would have 104,000 fewer people in the
workforce. Again, using simplistic assumptions (ie only unemployed people
exit the labour market, not employed people) this massive labour drain
would be sufficient to reduce New Zealand’s unemployment to around 33,000
people, equating to an unemployment rate of around 1.3%.These examples show you what an incredible job the small New Zealand economy
does to continually produce enough workers to service and grow its economy.Why have New Zealand done so well while Australia has done so poorly?Of course there is no simple answer.Some
commentators believe that
New Zealand has prospered
due to the government’s efforts to unlock competition which has powered
growth in the small to medium-sized business community. This has been achieved
through simplifying rules, removing tariffs and reducing taxes. It would
seem that more and more Kiwis are starting their own business.Factors that I mentioned in
my blog of 6 June include:-
NZ’s growing trade relationship with China
(an annual gain of 51% compared to the
previous year, and accounted for around 22% of all exports).NZ export growth has been led by a boom in demand
for dairy products from Asia. Over the year to March 2014, milk powder,
butter and cheese exports advanced 31% to $NZ14.9 billion, with total
dairy exports accounting for over 30% of total exports.Housing construction activity has followed higher house prices recorded
in recent years (New Zealand is now rated as having the second mostover-valued
housing
in the world )
and is growing strongly, while private consumption
and business/public investment are also slated to support positive economic
growth over the medium term.Statistics New Zealand reported that of the 3.8% annual growth in employment, 2.3 percentage points of jobs growth came from existing businesses. This leaves 1.5% of growth (or approximately 40,000 jobs) coming from new businesses, that is locals starting their own business and foreign-owned companies setting up shop
in New Zealand. This is phenomenal growth.Only two years ago I
wrote about the record numbers
of New Zealanders arriving in Australia with long term plans to settle in
Australia.The figures for the most recent financial year (2013/14) have not been
released yet but for the 2012/13
year there was
a decrease of 13.7 per cent on the previous year of New Zealand citizens
coming to Australia as permanent and long-term arrivals.Twinned with this was the permanent departures
from Australia of New Zealand citizens, increasing in 2012/13 to 10,875
(up 19.5 per cent from 2011/12).Overall the net permanent and long-term
increase of New Zealand citizens in Australia during 2012/13 decreased 20.3
per cent, compared to the previous year.I suspect when the 2013/14 financial year figures are released they will
show that the trends are continuing in New Zealand’s favour.No wonder the
RCSA International Conference
(which is being held in Queenstown) in two weeks’ time is sold out; it must
be all those cashed-up Kiwi recruiters treating themselves after a productive
year.Thankfully the NSW Waratahs won the Super Rugby title so we Aussies have
at least some small, and uncommon, semblance of rugby joy to balance this
economic spanking our cousins across the ditch are handing out to us right
now.Well done New Zealand, it looks like the drinks are on you in Queenstown!