Wednesday, August 04, 2021

The conundrum of low unemployment and high benefit dependence

Stats NZ reports that the June 2021 unemployment rate has fallen to just 4 percent.

MSD reports that the June 2021 working-age Jobseeker dependency rate was 6.1 percent.

The graph at StatsNZ is interactive and shows that back in September 2008 the unemployment rate was 4.1 percent.

Yet in September 2008 MSD reported only 3.6 percent of the working-age population was on a Jobseeker benefit.

Graphed, the difference between the two quarters is quite remarkable.

It is possible to work part-time and receive Jobseeker but the last time I requested relevant data  - December 2019 - only 6.8 percent of Jobseeker recipients were declaring earnings.

As mentioned previously the denominators for the unemployment rate and jobseeker dependence rate differ slightly but that isn't material to the massive difference between Sept 2008 and June 2021.

Out of interest I will chart the percentage unemployed against total benefit dependence.

This graph confirms is that the 2008 lower jobseeker % wasn't because people were 'hidden' on other benefits.

The central question is, why are 190,257 people on a Jobseeker benefit when only 117,000 are officially unemployed?

According to StatsNZ, "Additional people captured only by Jobseeker Support are benefit recipients seeking full-time or part-time work but unavailable for a short period of time, benefit recipients working part-time, and benefit recipients not working or seeking work."

That confirms people are on a Jobseeker benefit but not necessarily counted as unemployed.

That's very handy for the government.


Shadows said...

the thing is, there is no connection between the unemployed statistics and the Jobseeker benefit statistics.

The determination of the number of unemployed is actually based on a survey. So the surveyers ring people and say "Are you looking for work" and if people say yes then they are unemployed.

So why the disparity? My theory is that because this government is very soft on sanctions for those on the Jobseeker benefit who don't actively look for work, when the surveyers ring them, they no longer pretend to be looking for work and just say they aren't. Whereas previously they would have been afraid of sanctions if they said they weren't looking.

I doubt the surveyers back in the days of more sanctions were interested one way or the other, but those they were calling may not have wanted to take that risk and admit they weren't looking for work.

Lindsay Mitchell said...

Thanks. I realise the official unemployment rate comes from the Household Labour Force Survey. There are three ways to measure unemployment: HLFS, benefit dependence or Census data. Census data is too infrequent but useful to establish trends over time. HLFS is useful for making international comparisons. My point is the HLFS is giving the government a much better result than benefit dependence and your explanation is probably part of the reason.