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Executive Summary Report

MĀori in the New Zealand labour market

1. THE RECESSION'S IMPACT ON MĀORI: A SUMMARY

The recession has had a significant impact on Māori. Working Māori are especially vulnerable in a recession because of their over-representation in lower skilled jobs in at-risk industries. Other factors, such as the concentration of Māori in regions dominated by only a few susceptible industries and the lower qualification levels of Māori overall can make finding alternative work more difficult. The comparatively youthful age profile of the Māori population has also heightened the impact. Traditionally, youth have twice the unemployment rate of older groups, due to their lower skill levels and limited work experience.

This section begins with a look at two traditional measures of labour market performance - the unemployment and labour force participation rates. A detailed focus on how Māori employment patterns have changed is then presented. The performance of Māori youth receives special focus, including a look at Not in Education, Employment or Training (NEET) rates and targeted assistance programmes. The section concludes with an outlook for Māori in the short-term. More detail on many of the themes raised here can be found throughout the report.

1.1 Māori unemployment

Māori are less resilient[4] than other groups in a recession and thus subject to higher levels of unemployment when a recession occurs. Māori unemployment is exacerbated by Māori having comparatively fewer qualifications, a youthful population, and the decline of industries like manufacturing and forestry that have traditionally employed high proportions of Māori workers. Once unemployed, Māori are also more likely to stay unemployed longer.

1.1.1 The unemployment rate

The unemployment rate for Māori has risen at a faster rate over the last year to an annual average of 11.2% in the September 2009 quarter,[5] while the non-Māori unemployment rate reached 4.7%. This equates to an estimated 31,900 unemployed Māori in September 2009, which followed a declining trend in the Māori unemployment rate over the period 2004 to 2008, as shown in Chart 1.

Chart 1: Māori and non-Māori unemployment rates, 2004-2009


Source: Household Labour Force Survey, Statistics New Zealand.

Data table for Chart 1

1.1.2 Unemployment benefit numbers

While unemployment beneficiary statistics are not the official measure of unemployment, and are subject to policy changes, they are nevertheless a useful guide to labour market performance. In September 2009, 20,900 or 34.5% of those receiving an unemployment benefit[6] were Māori. This is a sharp rise of 134% between 2008 and 2009, which indicates the impact of the recession. However, over the last year, the number of recipients of all ethnicities grew at a faster rate (161%). Between 2004 and 2008, there had been a noticeable decline in the number of Māori benefit recipients, as Chart 2 highlights. In part, this is a result of gains in Māori educational achievement and the sustained period of economic growth over this period.

Chart 2: Māori and non-Māori Unemployment Benefit recipients, 2004-2009


Source: Ministry of Social Development

Data table for Chart 2

1.1.3 Unemployment by region

Chart 3 shows the Māori unemployment rate for different regions as at September 2009. The highest unemployment rate was in Gisborne/Hawkes Bay at 15.8%, followed by Northland at 12.6%. In the larger centres, the rates were 10.4% in Auckland, 10.2% in Wellington and 8.5% in Canterbury.

The majority of the Māori population is based in northern regions, and there are often high proportions in remote regions. These regions have some of the highest rates of unemployment and lowest rates of labour force participation. Some of the areas where Māori represent a relatively high share of the population are heavily reliant upon one industry. These communities are vulnerable to a downturn in their key industry, putting the employment of local Māori at risk, especially as many of these industries produce commodities where profitability tends to be susceptible to changes in world prices.

Chart 3: Unemployment rate for Māori by region[7] in the year to September 2009


Source: Household Labour Force Survey, Statistics New Zealand.

Data table for Chart 3

1.2. Māori labour force participation

Despite the easing in the labour market over the past eighteen months, labour force participation has remained relatively steady in New Zealand. For both Māori and non-Māori, the participation rate is similar to that recorded at the beginning of the recession. The participation rate for Māori was 67.7% in the year to September 2009. This was slightly lower than the non-Māori rate of 68.6%. Perhaps more importantly, Chart 4 shows the beginning of a slight drop in Māori participation, which could potentially undo much of the closing over the gap between the Māori and non-Māori rates that has occurred over the last five years.

Chart 4: Māori and non-Māori labour force participation rates, 2004-2009


Source: Household Labour Force Survey, Statistics New Zealand.

Data table for Chart 4

During a recession, the participation rate is expected to fall over time as people are discouraged from participating in the labour market due to weak job prospects and instead turn to other activities such as study and childcare. Over the next year, as the labour market eases further, it is likely that the participation rate for both Māori and non-Māori will fall slightly.

1.3. The impact on Māori employment

  • recession has impacted strongly on Māori employment, in part because some of the industries and occupations in which many Māori work are particularly vulnerable to international economic problems and are feeling the full brunt of the downturn. In the year to September 2009, 253,700 Māori were employed. This was a drop of 2.0% (or 5,100 jobs) on the same period a year earlier. In comparison non-Māori employment was much more stable, and dropped by only 400 jobs.

By occupation, the number of Māori trades workers had the largest fall (down 15.0% or 3,600 workers), followed by elementary occupation workers (down 9.2% or 5,100 workers). The latter are the least skilled workers who are frequently most at risk in a recession.

1.3.1 Affect on key industries

It is important to note that nearly all industries have felt the impact of the recession. Declines in one industry can have flow-on effects on others. For example, declining manufacturing leads to decreased demand for transport. Similarly, fewer tourists can lead to a decline in retail sales and hospitality activity. Given that many Māori-owned businesses are associated with tourism, this is a significant concern.

It is useful to look at the effect of the recession on Māori employment in selected key industries, including construction, manufacturing, as well as agriculture, forestry & fishing and transport & storage, to better understand the impact of the recession.

Construction

Over the five years until 2008, Māori employment in construction grew strongly, but much of this progress has been undone over the last year, with employment in utilities and construction down 15.0% or by 4,100 jobs in the year to September 2009. The number of Māori trade workers fell 15.0%. Construction activities tend to move in conjunction with the economic cycle. The Department's recent Construction Sector Outlook report[8] concluded that the construction industry is approaching the bottom of its downturn.  However, employment is likely to fall further before starting to recover in 2010.  When employment picks up the rise is likely to be gradual, as the working hours of existing staff can be increased again before firms need to recruit.

Manufacturing

While the number of Māori working in manufacturing has declined over the past five years, it continues to be the largest employer of Māori, employing 40,200 Māori in the year to September 2009. However, over the last year, Māori employment in manufacturing has fallen 3.0% or by 1,300 jobs. Manufacturing has had high levels of redundancy, as workers in the industry tend to have longer job tenure, be older and lower skilled and have limited levels of self-employment [9].

Agriculture, forestry and fishing

Māori employment in this industry has declined over the past five years and is no longer a leading employer of Māori. While over the last year Māori employment in these primary industries has increased by 700 jobs, many Māori-owned businesses are concentrated on the production of commodities within this sector. Because commodity markets are particularly vulnerable to global economic conditions, the impact on Māori has been significant.[10]

Transport and storage

Māori employment in this industry declined 12.9% or by 2,000 jobs in the year to September 2009. Manufacturing and transport are industries containing a relatively high proportion of workers likely to face greater difficulty reattaching to work.[11]

But there have been a few promising signs...

Māori employment has stood up well in some industries and occupations over the last year. In part this is due to an increase in Māori employment in skilled and highly skilled jobs across a range of sectors over the past five years, linked to improved educational outcomes.

There were gains in the number of Māori employed in some skilled and semi-skilled occupation groups over the past year, with technicians and associate professionals up 4.0% or 1,000 workers and clerks up 5.5% or 1,500 workers, despite the recession. By industry, around 19% of Māori are now employed in the education, health and community sectors, which have continued to grow through the recession. Māori employment has held up better than total employment (for all ethnicities) in property and businesses services (up 4.7% 0r 800 workers). These trends are an indication of a growing knowledge economy, based upon an increasingly skilled labour market.

Agriculture and construction, two badly affected industries, have been found to have resilient workforces. Agriculture contains a high proportion of workers with more experience of shifting to other work areas. Similarly, construction has workers who are relatively skilled, more flexible and more used to changing jobs. This resilience may help mitigate the longer-term consequences of job loss for workers in these industries.

1.4 How have previous recessions affected Māori?

In the past two recessions,[12] Māori unemployment rates have risen by more than the average for the total population. During the 1991/92 recession, the overall unemployment rate rose from 7.2% to 11.2%, however the Māori rate rose from 18.4% to 26.2%. Similarly, during the 1997-98 recession associated with the Asian Financial Crisis, the unemployment rate for Māori increased from 15.3% to 18.7% while the overall rate increased from 6.2% to 7.9%.

One of the reasons Māori are typically more affected can be attributed to their over-representation in lower skilled occupations. During the past two recessions, employment in highly skilled occupations also continued to rise while there were declines in the number of lower skilled jobs. With the recent movement towards higher skilled employment, this impact is likely to occur less in future recessions.

1.5 The impact on Māori youth

Youth are particularly vulnerable during the economic downturn due to their relatively low skill levels and lack of work experience. The younger Māori age profile means that the impact of youth labour market disengagement has had more severe consequences. According to the 2006 Census of Population and Dwellings, over half (53%) of Māori were younger than 25 years of age, compared with just over a third (36%) of the total New Zealand population.

1.5.1 Unemployed youth

Among Māori, youth have been worst affected by unemployment. Youth frequently have an unemployment rate around double that of all workers. A quicker increase in the rate of youth unemployment is also common in recessions. This is particularly evident over the last year, where the unemployment rate for Māori aged 15-24 years rose from 16.8 percent in the year to September 2008 to 23.1 percent in the year to September 2009. In comparison, the overall youth unemployment rate increased from 10.5% to 15.0%, over this time.

1.5.2 Youth not in education, employment or training (NEET)

Another way to see the impact of the recession on youth is via the Not in Education, Employment or Training (NEET) rate. In the year to September 2009, the NEET rate for Māori aged 15-24 years stood at 14.9%, well above the 8.2% for non-Māori.

Between 2005 and 2008, there had been a declining trend in the NEET rate for Māori males and females, with the exception of males aged 20-24 years whose rate has sharply increased since late 2007. The female rate for those 20-24 years was highest in 2005, but has shown the greatest decline. Among 15-19 year old Māori, the male and female rates have largely mirrored each other.

In the 15-19 year age group, 14.2% of Māori youth were NEET in the year to September 2009, which indicates an increase from 12.5% a year ago due to the recession, after a general decline over the past five years. The 20-24 year age group shows a higher NEET rate (16.1%) than the 15-19 year age cohort, but there has been a sharp rise in the Māori male rate since December 2007 due to the recession. There were significant differences between the Māori male and female rates in this age group. In the year to September 2009, the rate for Māori males aged 20-24 years was considerably higher at 19.1%, compared with a Māori female rate of 14.1%.

Chart 5: Māori NEET rates by age group and gender, 2004-2009


Source: Household Labour Force Survey, Statistics New Zealand.

Data table for Chart 5

1.5.3 Measures to assist youth

Several important policies should play a large role in addressing the problems faced by Māori youth in the recession.

The government focus on national infrastructure projects[13] will create job opportunities over the next few years for specialised construction skills such as engineering within major civil construction projects. The government has also recently announced that more than 1,800 Māori will receive training in industries with strong employment prospects, including 250 in civil infrastructure, and more in the seafood industry in the months ahead.[14]

The new job opportunities package for youth -'Job Ops'[15] - targets unskilled 16-24 year olds with low or no qualifications who have limited job prospects by providing subsidies to employers prepared to take employ them.

'Community Max'[16] provides a wage subsidy for six months for young people helping complete community-based projects. Community Max projects could include projects such as renovating public buildings or public spaces such as marae, or improving access to local environment such as parks and reserves. It provides an opportunity for young people to build skills and work experience while contributing to the community. In October 2009, Māori youth were the majority of the programme's over 800 participants.

The Employment Relations Amendment Act 2008, which provides new workers with a 90 day probation period[17] also potentially gives more at-risk youth a chance to succeed in the workforce.

The Youth Guarantee programme,[18] which will be implemented in 2010, aims to keep young people in education who otherwise might be left behind, recognising that some students can be better motivated in non-work settings. The programme provides free study towards school-level qualifications in settings such as polytechnics, wānanga and private training establishments. A key objective of the programme is increasing the educational achievement of 16 and 17 year olds who are not engaged in education or who would have otherwise entered work by providing them with improved access to study towards qualifications at level 1 to 3 on the National Qualifications Framework. Māori youth will be specifically targeted, with trade and service academies within schools set to be selected in areas with high proportions of NEET Māori youth.

1.6 Outlook for the labour market

The outlook for the labour market over the medium-term remains relatively weak. While the labour market exited recession in the June 2009 quarter, growth is expected to remain subdued throughout the remainder of 2009. In addition, any improvement seen in the labour market will lag that of the recovery in the wider economy. 

Employment growth is expected to remain weak in coming quarters with the unemployment rate to continuing to increase into 2010.  The September 2009 National Bank Business Outlook and Quarterly Survey of Business Opinion both show that firms are intending to keep staff numbers at current levels. This may signal that job destruction has slowed, but may also suggest there is little sign of job creation. Employers may be waiting to see if the recovery will be sustained before hiring new staff. As a result, we could see employment losses begin to slow in the near future, but unemployment continue to rise as new entrants to the labour force struggle to find work. 

Weakness is expected to continue in a number of industries such as manufacturing, retail and tourism-related industries, such as hospitality that are expected to experience a fall in employment over the short-term. Māori are over-represented in these industries, so Māori are likely to be disproportionately affected by the downturn in employment. However, confidence in another key employer of Māori, the construction industry, is rising.[19]

Gains that have been made in Māori participation in training and education should help dampen the impact of the recession. One important upside of the recession is evident in Māori tertiary enrolments. September 2009 Household Labour Force Survey figures show a 17.2% increase in 15-24 year old Māori engaged in formal study, compared with a year earlier. This will translate into upskilling and should help ensure students entering (or re-entering) the workforce are better positioned once the labour market improves.

For more on the outlook for the labour market, see our monthly Labour Market Update.[20]


[4]A recently released Department of Labour report measures 'resilience' in the face of economic downturn, including the resilience of Maori: 'Identifying the Resilience of the New Zealand Workforce in a Recession': http://www.dol.govt.nz/services/LMI/workforce2020/recession.asp. (Retrieved on 10 October 2009)

[5] The Household Labour Force Survey data presented throughout this report is annual average data. Four quarter moving averages are used to reduce the effects of sample error and seasonal variation. These numbers may differ from those found in other publications, which do not use this method.

[6]Unemployment Benefits include Unemployment Benefits and Unemployment Benefits - Hardship and excludes Unemployment Benefits - Student - Hardship. Source: http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/benefit/2009-national-benefit-factsheets.html (Retrieved on 3 November 2009).

[7] Statistics New Zealand suppresses data from the Household Labour Force Survey (HLFS) with a low cell estimate count as these estimates are subject to sample error to great for practical purposes. This was the case with the number of unemployed in some of these regions from which the unemployment rates were derived.

[8] Department of Labour, Construction Sector Outlook report, http://www.dol.govt.nz/publications/lmr/construction-sector/summary.asp (Retrieved on 18 October 2009).

[9] Department of Labour, 'Identifying the Resilience of the New Zealand Workforce in a Recession':

http://www.dol.govt.nz/services/LMI/workforce2020/recession.asp (Retrieved on 5 November 2009).

[10] For more analysis of the social and economic impact of the recession on Māori see http://www.tpk.govt.nz/en/in-print/our-publications/publications/the-implications-of-a-recession-for-the-maori-economy/ (Retrieved on 22 August 2009).

[11] For more, see http://www.tpk.govt.nz/en/in-print/our-publications/publications/the-implications-of-a-recession-for-the-maori-economy/ (Retrieved on 22 August 2009).

[12] For more on the scale of the recession, see our recent report: http://www.dol.govt.nz/publications/discussion-papers/current-recession/summary.asp (Retrieved on 13 October 2009).

[13] For more, see http://www.beehive.govt.nz/speech/speech+throne+0, (Retrieved on 9 December 2009).

[14] For more, see http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10586163, (Retrieved on 23 July 2009).

[15] http://www.beehive.govt.nz/release/job+ops+young+kiwis (Retrieved on 9 August 2009).

[16] For more, see http://www.workandincome.govt.nz/community/a-z-grants-and-other-help/community-max.html (Retrieved on 8 September 2009).

[17] For more, see http://www.parliament.nz/en-NZ/PB/Legislation/Bills/BillsDigests/8/b/1/49PLLawBD16501-Employment-Relations-Amendment-Bill-2008-Bills-Digest.html (Retrieved on 15 September 2009).

[18] For more, see http://www.beehive.govt.nz/release/jump-start+youth+guarantee, (Retrieved on 16 November 2009).

[19] For more, see the Department of Labour’s Construction Sector Outlook report, http://www.dol.govt.nz/publications/lmr/construction-sector/summary.asp(Retrieved on 15 October 2009).

[20] For more, see Department of Labour, Labour Market Update November 2009, http://www.dol.govt.nz/publications/lmr/lmr-labour-market-update.asp (Retrieved on 16 November 2009).