Recessionary pressures have led to a surge in youth unemployment nationally. Last week’s StatsNZ labour market statistics showed the unemployment rate rose to 4.3%. The Household Labour Force Survey (HLFS) showed total unemployment up by 33,700 people, 31% higher than a year ago. More than half of the increase came from higher unemployment for 15 to 24-year-olds, up 21,000 people, 45% higher than a year ago.

In this article we will look at the trends in youth employment and education at a national level and delve deeper into regional trends.

The proportion of youth aged 15-24 that are not in employment, education, or training (NEET) is captured in the HLFS to measure how many young people are not participating in education, training, or the job market and are already at risk of becoming disenfranchised. NEET includes young parents who are out of school and work or school leavers who haven’t found work and have not entered into formal tertiary education or training. Historically the majority of youth NEET are in their early 20s due to a higher likelihood of younger people being in formal education pathways.

The NEET rate rose to 14% in March 2024, the highest in three years, but what is driving this change?

The number of NEETs increased by 17% (13,500 people) between March 2023 and March 2024. This rise is less pronounced than the 45% increase in the number of unemployed 15-24-year-olds in the labour market (21,000 people), indicating that a greater proportion of NEETs are actively looking for work. This trend illustrates the budget pressures that people are facing with the high cost of living, as rents, supermarket, and fuel bills continue to rise. These cost-of-living pressures take a heavy toll on youth, who tend to have lower incomes and are more likely to be employed on a part-time or casual basis.

In times of financial pressure, many people might look for extended hours to meet the increasing costs of essentials. Many students who do not usually work a part-time or casual job are finding it increasingly difficult to meet their everyday expenses and are out looking for work. As a whole, youth are looking for work more than in recent periods and looking for more hours.

However, as businesses closely monitor their bottom lines, additional hours might be less available, and there will be greater competition from workers for those hours. Backing up this trend, the underutilisation rate (across all age groups) lifted to 11.2%, its highest level since March 2021, driven by a 75,000-person increase in people actively seeking additional hours of work.

Increases in the NEET rate over the last year have tended to be more pronounced in urban areas (see Chart 1). However, there are some exceptions to this trend – Manawatū-Whanganui and Southland saw the largest increases in NEET rates over the past year. Taranaki, Gisborne, and Hawke’s Bay recorded the largest improvements in NEET rates. Some of the fall in Gisborne/Hawke’s Bay might be driven by the recovery of activity after the disruption of Cyclone Gabrielle last year.

Economic pressures are sweeping the entire country, but youth in some regions are struggling to find work more than others. The urban trend is evident in Chart 2, as falls in youth employment in Auckland, Hamilton, Wellington, Christchurch, and Dunedin over the last year have all been larger than 5%, and worse than the nationwide average. Youth job losses have been the most pronounced in Auckland and Wellington, with reductions of 5.8% and 7.0% respectively.

In contrast, the most positive results over the past year have been in areas where international tourism has recovered sharply, with filled job numbers for 15-24-year-olds in Queenstown-Lakes and Westland districts improving by 7.3% and 5.2% respectively. These are areas where youth are likely to fill many of the jobs at tourist-reliant activity-based businesses.

The remainder of 2024 will see the labour market weaken further, and we expect the overall unemployment rate to push to 5.0% by the second half of 2024. More people could find themselves without work for short to extended periods. This trend will put further pressure on youth who are looking to start working, as there will be increased competition for the fewer roles available on job boards. We expect to see further increases in the NEET rate, especially in urban areas.