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National Labour Force Projections: 2006(base)–2061 update
Embargoed until 10:45am  –  25 May 2010
Technical notes

Latest projections

This release contains updated 2006-base projections of the labour force usually living in New Zealand. The projections supersede the 2006-base series released in May 2008. The new projections cover the period 2006 to 2061 at one-year intervals. The labour force projections are derived from the latest National Population Projections: 2009 (base)–2061 (released 27 October 2009) by multiplying the projected population by the assumed labour force participation rates (LFPRs), by single year of age and sex.

The labour force projections indicate the future supply of people, usually living in New Zealand, available for work. However, they do not indicate the extent to which people are available (eg number of hours per week). The labour force comprises people aged 15 years and over who regularly work for one or more hours per week for financial gain, or work without pay in a family business, or are unemployed and actively seeking part-time or full-time work. The LFPR is defined as the proportion of the population in the labour force. These definitions are used in the Household Labour Force Survey (HLFS) and the Census of Population and Dwellings, and conform closely to the international standard definitions specified by the International Labour Organization.

More detailed projection results, including projections for individual years or projections by age and sex, are available on request. Special projections can also be produced for clients, using different combinations of assumptions or their own assumptions. For more information and quotes, email demography@stats.govt.nz or phone toll-free 0508 525 525.

Base population

These labour force projections have as a base the estimated resident population of New Zealand in the labour force at 30 June 2006. The estimated resident population (4.185 million) was based on the census usually resident population count (4.028 million) at 7 March 2006 with adjustments for:

  1. net census undercount (+80,000)
  2. residents temporarily overseas on census night (+64,000)
  3. births, deaths, and net migration between census night (7 March 2006) and 30 June 2006 (+9,000)
  4. reconciliation with demographic estimates at ages 0–4 years (+3,000).

The estimated and projected population and labour force are not directly comparable with census counts because of these adjustments. For more information about the base population, refer to Information about the population estimates on the Statistics New Zealand website (www.stats.govt.nz).

The estimated resident population in the labour force at 30 June 2006 was derived by applying the estimated LFPRs to the estimated resident population, by single year of age and sex. The estimated LFPRs at 30 June 2006 were derived from HLFS and 2006 Census data. The projections use the same labour force definition as these two data sources, although there are important differences between the two data sources:

  1. The HLFS provides the official measure of the labour force using an interviewer-administered survey of about 15,000 households and 30,000 people each quarter. By comparison, the census provides a snapshot of the labour force every five years.
  2. The HLFS measures labour force status over each quarter, while the census question refers to labour force status in the week before the census date.
  3. Unlike the HLFS, the census is not subject to sample error (although both data sources may contain non-sampling errors). As a result, the census can provide information at a more detailed demographic level (eg single year of age) than the HLFS.
  4. Non-response in the HLFS is minimised through the use of best survey practices. Because the census is self-administered, higher rates of non-response occur.
  5. The HLFS generally excludes people in the armed forces and non-private dwellings (eg retirement homes, hospitals, prisons), while the census includes everyone who is in New Zealand on census night.

Compared with the HLFS, the 2006 Census generally indicated higher LFPRs for males aged less than 25 years and over 60 years, and higher female LFPRs at most ages. The 2006 Census also indicated lower male LFPRs in the main working ages (25–59 years).

Alternative series

Nine alternative projection series have been produced by combining different assumptions on the future fertility, mortality, migration, and labour force participation of the population. At the time of release, projection series 5M is considered the most suitable for assessing future labour force changes. The other projection series allow users to assess the impact on the labour force size and structure resulting from different population and/or labour force participation scenarios. For example, series 1M, 5M, and 9M can be used for assessing the effect of different population outcomes combined with the medium variant LFPRs; and series 5L, 5M, and 5H illustrate the effect of different LFPR assumptions combined with the mid-range population scenario.

Method

The cohort component method was used to derive the population projections. By this method, the base population is projected forward by calculating the effects of deaths and migration within each age-sex group according to specified mortality and migration assumptions. New birth cohorts are generated by applying specified fertility assumptions to the female population of childbearing age.

The labour force projections were subsequently derived by multiplying the projected population by the assumed labour force participation rates, by single year of age and sex.

Projection assumptions

Projection assumptions are formulated after analysis of short-term and long-term historical trends, recent trends and patterns observed in other countries, government policy, and any other relevant information.

Fertility

There are three alternative fertility variants – designated low, medium, and high – which assume that fertility rates will vary until 2026 when the total fertility rate will reach 1.70, 1.90 and 2.10 births per woman, respectively. After 2026, fertility rates are assumed to stay constant. The total fertility rate in the year ended June 2009 was 2.14 births per woman (based on births by date of registration).

The medium fertility variant assumes that fertility rates of women aged less than 32 years will decline between 2009 and 2026, but increase for women aged 32 years and over. By comparison, the low fertility variant assumes fertility rates will decrease between 2009 and 2026 at most ages. The high fertility variant assumes that fertility rates of women aged less than 32 years will drop between 2009 and 2026, but increase for women aged 32 years and over.

A sex ratio at birth of 105.5 males per 100 females is assumed, based on the historical annual average of the New Zealand population.

Graph, total fertility rate 

Mortality

There are three alternative mortality variants – designated low, medium, and high – which assume that mortality rates will continue to drop so that period life expectancy at birth for males will increase to 88.6, 85.6, and 82.6 years, respectively, by 2061. The corresponding life expectancies for females in 2061 will be 91.2, 88.7, and 86.2 years. The life expectancy at birth in 2005–07, from complete life tables, was 78.0 years for males and 82.2 years for females.

Mortality rates are assumed to decrease at different rates at different ages. Between 2006 and 2061, male mortality rates are assumed to decrease by an average of 2.1, 1.6, and 1.0 percent per year for the low, medium, and high mortality variants, respectively. By comparison, female mortality rates are assumed to decrease by an average 2.4, 1.8, and 1.3 percent per year for the low, medium, and high mortality variants, respectively. 

Graph, life expectancy at birth 

Migration

There are three alternative migration variants – designated low, medium, and high – which assume long-range annual net migration levels of 5,000, 10,000, and 15,000, respectively. The medium migration variant assumes net migration of 25,000 in 2010, 19,000 in 2011, and 14,000 in 2012. The low and high migration variants are 5,000 lower and higher, respectively, than the medium variant for each year. These levels are based on an analysis of immigration permits, residence applications and approvals, overseas student numbers, and arrivals and departures analysed by characteristics such as citizenship, country of last/next permanent residence, and age. 

Graph, net migration

Consistent with historical and recent trends, the age-sex patterns of net migration assume the main net outflow at ages 22–25 years, mainly due to young New Zealanders embarking on overseas travel and the departure of overseas students. Net inflows are assumed for most other ages with the highest net inflows at 15–20 and 27–37 years.

Labour force participation

There are three alternative labour force participation variants – designated low, medium, and high – which assume that LFPRs will vary until 2051, when the average working life (to age 80 years) for males will be 45.8, 48.3, and 50.8 years, respectively. The corresponding average working life (to age 80 years) for females will be 38.8, 40.9, and 43.0 years. The base average working life (to age 80 years) in 2006 was 45.3 years for males and 36.9 years for females.

Labour force participation assumptions are based on an assessment of recent trends in HLFS and census data. LFPRs are assumed to change annually between 2006 and 2051. For the medium variant, the main change assumed between 2006 and 2051 is for LFPRs to increase significantly for males and females aged 55 years and over. This reflects increasing flexibility in the age of retirement, with no compulsory age of retirement, and increasing life expectancy and well-being in the older ages.

For males, LFPRs are assumed to remain constant at 2006 levels for those aged 15–19 years. LFPRs of those aged 20–24 are assumed to decrease slightly between 2006 and 2011, and then remain constant. LFPRs of those aged 25–54 years are assumed to decrease slightly between 2006 and 2011, then increase slightly to 2016, then remain constant.  

For females, LFPRs for those aged 15–19 years are assumed to decrease slightly between 2006 and 2011, and then remain constant. For those aged 20–24 years, LFPRs are assumed to increase slightly between 2006 and 2011, and then remain constant. LFPRs of those aged 25–54 are assumed to increase between 2006 and 2016, and then remain constant.

The low and high variants assume LFPRs that are lower and higher, respectively, than the medium variant at all ages. 

Nature of projections

Demographic projections are designed to meet both short-term and long-term planning needs, but are not designed to be exact forecasts or to project specific annual variation. These labour force projections are based on assumptions made about future fertility, mortality, migration, and labour force participation patterns of the population. Although the assumptions are carefully formulated to represent future trends, they are subject to uncertainty. Therefore, the projections should be used as guidelines and an indication of the overall trend, rather than as exact forecasts.

The projections do not take into account non-demographic factors (eg war, catastrophes, major government and business decisions) which may invalidate the projections. Demographic trends are monitored regularly and, when it is necessary, the projections are revised to reflect new trends and to maintain their relevance and usefulness.

For more information about the projections, refer to Information about the demographic projections on the Statistics New Zealand website (www.stats.govt.nz).

Definitions

Average working life (to age 80 years): the average number of years that a person would spend in the labour force if they experienced the labour force participation rates of a given period, assuming they lived to age 80 years.

Baby boomers: usually someone born in the years 1946–65, although the definition of the baby boom period varies between sources and between countries.

Estimated resident population of New Zealand: an estimate of all people who usually live in New Zealand at a given date. It includes all residents present in New Zealand and counted by the census (census usually resident population count), residents who are temporarily overseas (who are not included in the census), and an adjustment for residents missed or counted more than once by the census (net census undercount). Visitors from overseas are excluded.

Labour force: the population aged 15 years and over who regularly work for one or more hours per week for financial gain, or work without pay in a family business, or are unemployed and actively seeking part-time or full-time work.

Labour force participation rates (LFPRs): the proportion of the population in the labour force.

Life expectancy: the average length of life remaining at a given age. As derived from a period life table, it assumes that a person experiences the age-specific mortality rates of a given period from the given age onwards. It represents the average longevity of the whole population and does not necessarily reflect the longevity of an individual.

Total fertility rate: the average number of live births that a woman would have during her life if she experienced the age-specific fertility rates of a given period (usually a year).

Copyright

Information obtained from Statistics New Zealand may be freely used, reproduced, or quoted unless otherwise specified. In all cases Statistics New Zealand must be acknowledged as the source.

Liability

While care has been used in processing, analysing, and extracting information, Statistics New Zealand gives no warranty that the information supplied is free from error. Statistics New Zealand shall not be liable for any loss suffered through the use, directly or indirectly, of any information, product, or service.

Timing

Timed statistical releases are delivered using postal and electronic services provided by third parties. Delivery of these releases may be delayed by circumstances outside the control of Statistics New Zealand. Statistics New Zealand accepts no responsibility for any such delays.

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