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Introducing the employment rate

This article describes the employment rate, which has been added to the suite of labour market statistics available from the Household Labour Force Survey (HLFS). It explains how New Zealand's employment rate is calculated, how it has changed, and how it is useful.

The employment rate and the Household Labour Force Survey

Employment rates are useful as both a direct indicator of the health of the labour market and as a broader indicator of the state of the economy. The employment rate is calculated as the number of people employed as a percentage of the working-age population.

Different view of employment

The employment rate gives a different view of changes in employment to the levels of employment alone as it takes into account changes in the base population. Base populations can change over time, for example, positive levels of migration into New Zealand can increase the working-age population or the number of people in an age group can change as the population ages. So, changes in employment levels can sometimes be the result of a structural change in the base population. This means that the employment rate takes into account both the level changes in employment as well as the structural changes in the population.

Large difference between male and female employment rates

Since the Household Labour Force Survey began in 1986, the male employment rate has always been higher than the female employment rate. In the March 1986 quarter, the difference in employment rates between the sexes was over 25 percentage points. Over time this difference has decreased and in the June 2011 quarter the difference was about 11 percentage points. This decrease is due to a large drop in the male employment rate early on in the survey and a convergence between the male and female employment rates over time.

Drop in youth employment rates since 2009

Since 1986, the employment rate for youth (those aged 15–24) has averaged almost 58 percent. In 2009, however, the youth employment rate dropped to around 50 percent and has not risen in the last two years. Overall, prime-aged adults (those aged 25–54) have had consistently high employment rates, never decreasing below 73 percent. For those aged 55 and over, the employment rate has been steadily increasing from about 22 percent in the early 1990s to 44 percent in 2011.

New Zealand’s employment rate higher than average

With an employment rate of 72.3 percent, New Zealand had the eighth-highest employment rate among OECD countries in the year ending December 2010. This was higher than the employment rates in both the United States and the United Kingdom, as well as the OECD average of 64.6 percent. New Zealand was placed just below Australia, which had an employment rate of 72.4 percent for the same period. These values are for those aged 15–64 to account for different definitions of working-age population between countries. The following graph compares the employment rates of all the OECD countries. 

Graph, Employment rate by OECD country, year ending December 2010.

Lagging indicator of economic market

The employment rate is a useful economic indicator as well as a labour market indicator. New Zealand’s employment rate can change as gross domestic product (GDP) changes. These changes do not happen at the same time. This phenomenon is easiest to see after a recession, when the employment rate begins to increase after a two or three quarter lag. One of the reasons that changes in the employment rate lag behind changes in GDP is due to the risk and cost of hiring new employees. Employers may prefer to wait for the economy to recover before hiring new staff, and generally in the period after a recession the total number of hours worked increases at a greater rate than employment. The following graph compares quarterly changes in GDP with the employment rate.

Graph, Quarterly changes in GDP compared to the employment rate, seasonally adjusted, June 1988 quarter to June 2011 quarter.

Further information

Employment rate data is now available on Infoshare and will be updated every quarter. Full descriptions and definitions of the labour force categories used in the Household Labour Force Survey are available on our website.

For more information contact:
Mallika Kelkar
Wellington 04 931 4600

Published: 28 October 2011 

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