The EMA says the increasing unemployment rate is revealing the true picture of the New Zealand economy and the financial stresses facing Kiwi businesses.
The latest numbers released by Stats NZ show that the unemployment rate increased from 4.3% in the March quarter to 4.6% in the June quarter.
EMA head of advocacy Alan McDonald says the rate was always expected to climb as enquiries to its AdviceLine service about restructuring and redundancy reached record highs, and worse may be yet to come.
“Despite inflation falling and a growing expectation of an economic recovery, with lower interest rates, these changes will take a long time to filter though the economy,” says McDonald.
“The signs of an economic recovery are a decrease in unemployment, an increase in consumer spending, rising incomes, an increase in the GDP, and improved business activity. We have yet to see any of these indicators.
“There are also several international headwinds that may further delay this expected recovery, including the upcoming US election and the threat of tariffs, which will have a huge effect on our exporters,” says McDonald.
“At the EMA, we’ve seen the evidence of the struggles facing Kiwi businesses, with the number of requests for help from our members in the areas of restructuring and redundancy skyrocketing this year.
“Our AdviceLine, which provides specialist employment advice to our members, has seen calls about restructuring and redundancy at their highest level for years in July.”
The AdviceLine received 163 calls on the topic in July, with the next highest period being 138 calls in March this year.
In addition, calls about 90-day trials have been high between May and July this year, indicating employers are being cautious in their hiring.
“Instead of increasing headcount, we expect businesses to upskill their existing staff in the likes of health and safety and leadership courses while they wait for the economy to improve.
“However, the numbers of youth (15-24) not in employment, education or training (NEET) is at 12.8%. This is an alarming statistic and suggests that job creation must be a priority for the Government in the coming months, particularly among our young people.”
McDonald says while inflation is beginning to fall, business conditions are likely to remain difficult for some time given interest rates are expected to remain elevated into 2025.
