job_search
Underutilisation rates in New Zealand
Introduction

Underutilisation represents an important way to understand employment in New Zealand and the untapped potential our labour force holds. In 2008 responding to economic and social critic of un/under employment as the sole indicators of labour market efficiency the International Labour Force Organisation presented underutilisation as an additional measure. Underutilisation in the context of labour force efficiency refers to how people of working age, are not fully utilised being,

  • Unemployed: Those not in any form of formal employment. This would include NEETs (Not in Education, Employment or Training).
  • Underemployedt: This refers to persons who are employed but would prefer to work more hours. Note that in the Household Labour Force Survey underemployment does not capture skills related under-employment, only referring to hours-based under-employment. If for example, someone with a master’s degree was working as a receptionist, this form of under-employment would not be captured.
  • Available job seekers: Those who are not employed and are not seeking work but may work if a job was offered to them.
  • Unavailable job seekers: Persons who are not employed and are not seeking paid work but may start searching soon.

Underutilisation as a measure of labour market efficiency is therefore crucial as it considers not only un/under employed but the wider inefficiencies and inequalities of the labour market which effect employment options for citizens.

Our work with underutilisation statistics is derived from the Household Labour Force Survey (HHLFS), the data of which sits in Statistics New Zealand’s Integrated Data Infrastructure (IDI). One of our research projects used the HHLFS to assess the workforce capabilities and gaps in New Zealand, focusing on the construction industry. At a high level this research found that in the construction industry underutilisation is both an issue in terms of gender and age. The findings of our research are summarised below.

Underutilisation rates by age and gender

Underutilisation by age and gender rose 5% during the global financial crisis and has not recovered since. As such underutilisation by gender and age have been ongoing. It remains that,

  • Younger people (under 20 years) remain underutilised.
  • Women overall remain underutilised.
  • Younger women (under 20 years) are most underutilised.
  • Older women (35 years and older) are slightly less underutilised than men.

The underutilisation trends following the global financial crisis express that women and young women and men (under 20 years) sit outside the New Zealand labour market as untapped employment potential. Women rather than men being less underutilised for the 35 plus age bracket. These trends reflect wider socio-cultural and contextual factors,

  • Lack of work/work options in specific sectors.
  • Variance of higher educational participation (and therefore availability/need for employment) by gender (i.e. more women than men enter tertiary education).
  • Educational policy changes- The new Labour coalition governments first year of free education has increased tertiary participation levels (affecting the under 20 underutilisation rate).
  • Age- Women tend to live longer than and work longer than men do.

Download data

Methodology

Data is derived from the Household Labour Force Survey (HLFS) through the Integrated Data Infrastructure.

Underutilisation is a measurement of labour force efficiency. It combines those working but seeking more hours of work (underemployment), those seeking work (unemployment), as well as those who aren't seeking working but would either take a job if offered or will start seeking work soon (potential labour force).

The HLFS does not capture those those who are employed under their skill level, e.g. someone working in a fast food chain with a masters degree in engineering.

Utilisation of underutilised people in construction

To derive underutilisation results we used individual persons from the HHLFS and their IRD number to ascertain whether underutilised persons go on to find employment in the construction sector within three years. This therefore looked at whether people identified as unemployed/underemployed, seeking work or about to start seeking work went on to acquire employment in the construction industry three years after stating their first employment status.

Looking at the proportion of underutilised workers who went on the work in the construction sector it was mostly men who went on to work in construction. We can observe that,

  • Five percent of underutilised men in 2006 went on to be employed in construction in the following three years.
  • Men as underutilised workers entering construction grew until 2015 and then declined, which may in part be due to incomplete self-employment records being a data entry anomaly in 2018.

Women on the other hand remain much less likely to shift from an underutilised status to being employed in the construction industry than men do. Only 1% of underutilised women go on to employment in the construction sector. This represents a clear gender disparity, with underutilised women not entering construction roles, suggesting underutilised women go on to work into other sectors outside construction. This is interesting as women’s participation in construction generally is growing (albeit slowly) in New Zealand, and there are promising commitments from within the sector to increase diversity. The trend we identified may reflect that how underutilised women are prompted into new employment options is not construction focused, representing an area for potential improvement in recruitment for the construction sector.

Download data

Methodology

We link individuals who report being underutilised in the Household Labour Force Survey through to their tax records and determine how many go on to find employment in the construction industry within the next three years.

Underutilization is a measurement of labour force efficiency. It combines those working but seeking more hours of work (underemployment), those seeking work (unemployment), as well as those who aren't seeking working but would either take a job if offered or will start seeking work soon (potential labour force).

The HLFS does not capture those those who are employed under their skill level, e.g. someone working in a fast food chain with a masters degree in engineering.

Underutilisation by gender and region

Underutilisation when broken down by gender and region overtime shows that irrespective of these factors women remain more underutilised than men in the construction industry. This means regardless of where people live women more so than men are underutilised in construction. Generally male underutilisation sat 2-5% lower than women.

Aligned with un/under employment trends generally Northland had the highest levels of underutilisation, interestingly however Northland were superseded by Manawatu-Wanganui from 2016 for male and female underutilisation levels. This may be influenced by the new Labour coalition governments investments in employment schemes for the Northland region ($46 million dollar investment package). Regions with large urban centres like Auckland, Wellington and Canterbury also tended to have lower underutilisation levels than other regions, which is unsurprising as regions with large urban centres would have more employment options relative to more rural areas.

Download data

Methodology

Data is derived from the Household Labour Force Survey (HLFS) through the Integrated Data Infrastructure.

Underutilisation is a measurement of labourforce efficiency. It combines those working but seeking more hours of work (underemployment), those seeking work (unemployment), as well as those who aren't seeking working but would either take a job if offered or will start seeking work soon (potential labourforce).

The HLFS does not capture those those who are employed under their skill level, e.g. someone working in a fast food chain with a masters degree in engineering.

Underutilisation by age and gender

When looking at underutilisation by age and by region overtime younger people (under 20 years of age) were over-represented across all regions. This communicates irrespective of geographic location in New Zealand young people in New Zealand are significantly more underutilised in the workforce than older cohorts sitting between 20 and 30 percent. These underutilisation rates for the under 20s cohort are more double than the 20-34-year-old cohort which sits between 10-15% underutilisation.

Older persons in the 35 tears plus cohort were the least underutilised group across all regions, suggesting this group is in employment, being utilised.

Overall these trends regarding young people underutilisation are a concern as it suggests that they are not in employment or in employment situations that do not maximise their potential contribution to the labour market efficiency. Again, these statistics are influenced by factors such as,

  • Younger people being in tertiary education, and while studying working less.
  • Lack of work and work options, which varies by sector by region.

Youth underutilisation, particularly for the Not in Employment, Education or Training group, is an area of national investment, with the former National and current Labour coalition government together investing $63m into youth investment initiatives.

Download data

Methodology

Data is derived from the Household Labour Force Survey (HLFS) through the Integrated Data Infrastructure.

Underutilisation is a measurement of labourforce efficiency. It combines those working but seeking more hours of work (underemployment), those seeking work (unemployment), as well as those who aren't seeking working but would either take a job if offered or will start seeking work soon (potential labourforce).

The HLFS does not capture those those who are employed under their skill level, e.g. someone working in a fast food chain with a masters degree in engineering.

hiring

Underemployment rates in New Zealand

Investigate how underemployment rates compare across industries and occupations in New Zealand

construction.png

Where do apprentices end up?

See what past apprentices are doing today