6. UNEMPLOYMENT TRENDS AND YOUTH WHO ARE NOT IN EDUCATION, EMPLOYMENT OR TRAINING

As shown in the previous sections, progress has been made in recent years in terms of increasing Māori educational achievement. This has translated into improved labour market prospects, and has seen more Māori enter higher skilled jobs. Despite these gains, Māori unemployment rates remain high.

Unemployment has a major impact on young people in particular. It affects the rate at which youth learn work skills such as timeliness and teamwork that are needed throughout a person's working life. When we look at youth disengagement from the labour market, we can look beyond the traditional measure of unemployment towards a new, more encompassing measure: those youth who are 'Not engaged in Education, Employment or Training' (NEET). Youth categorised as NEET are most at risk of poor labour market outcomes.

This section looks firstly at trends in Māori unemployment, with a look at unemployment benefit trends, and then focuses on gender, age and regional differences in unemployment rates from the Household Labour Force Survey, which is the official measure of unemployment. Given the high NEET rate for Māori youth, the remainder of the section is devoted to NEET youth. This includes a breakdown of the study and employment status of Māori youth as well as analysis by age and gender.

6.1 Unemployment

The unemployment rate is the proportion of the labour force that is unemployed.^[57] The effects of the economic downturn have flowed through to the labour market, evident in the marked rise in the unemployment rate for New Zealand. The unemployment rate for Māori has risen at a faster rate over the last year to an annual average of 11.2% in the year to September 2009, while the non-Māori unemployment rate reached 4.7% (Chart 19). This equated to 31,900 Māori unemployed. Te Puni Kōkiri has recently put in place programmes relating to industry, trade and professional training as well as cadetships that have provided support to around 2,000 Māori in industries identified as showing strong growth prospects over the next few years.^[58] These programmes should also help address Māori unemployment.

Prior to the recession, there was a decline in the Māori unemployment rate, which saw it change from 9.2% in September 2004 to 8.0% in September 2008. The narrowing of the gap between Māori and non-Māori unemployment rates occurred at a time of economic and employment growth in New Zealand.

Chart 19: Māori and non-Māori unemployment rates, 2004-2009

Source: Household Labour Force Survey, Statistics New Zealand.

Data table for Chart 19

6.1.1 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. The decline in the unemployment rate highlighted in Chart 19 above between 2004 and 2008 was generally reflected in unemployment benefit^[59] numbers over that time. In part, this decline is a result of gains in Māori educational achievement and the sustained period of economic growth over this time. During this period, the Ministry of Social Development and Te Puni Kōkiri developed a Policy Framework for Sustainable Employment Outcomes for Māori^[60] to reduce the number of Māori on an unemployment-related benefit and to increase the number of Māori in sustainable employment. By mid 2008, the programme's initiatives succeeded in reaching the government set target of reducing the number of Māori on the unemployment benefit to 7,500.

However, over the last year there has been a sharp rise in the number of unemployment benefit recipients. In September 2009, 20,900 or 34.5% of those receiving an unemployment benefit were Māori. This is a sharp rise of 134% over between 2008 and 2009, reflecting the impact of the recession. However, over the last year, the number of recipients of all ethnicities grew at a faster rate (161%), as Chart 20 highlights.

Chart 20: Māori Unemployment Benefit recipients, 2004-2009

Source: Ministry of Social Development

Data table for Chart 20

6.1.2 Unemployment by gender

Chart 21 shows clear evidence that Māori have been particularly affected in terms of growing unemployment rates, with the rate for Māori males increasing since September 2007 to reach 10.8% by September 2009. The female Māori rate also increased sharply to 11.5% in September 2009, undoing much of the decline shown over the last five years. While data from the Household Labour Force Survey can be quite volatile at this level of breakdown, a clear pattern of increased unemployment is emerging.

Chart 21: Māori and non-Māori unemployment rates by gender, 2004-2009

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 21

Charts 22 shows that the Māori unemployment rate rose for all age groups in the year to September 2009. Youth are frequently the most affected during an economic downturn, with an unemployment rate around double that of all workers. The rapid increase in the rate of youth unemployment at the start of a downturn is also common because youth generally have less work experience and are often clustered in lower skilled jobs This is particularly evident over the last year, where the unemployment rate for Māori aged 15-24 years rose from 16.8% in the year to September 2008 to 23.1% in September 2009.

Over the last year there has also been a noticeable increase in Māori unemployment in the 25-34 years age group (10.0% at September 2009), 35-44 years age group (7.2%) and 44 years and over group (5.8%). In comparison, as shown in Chart 23, non-Māori unemployment in all age groups is below the respective Māori rates.

Chart 22: Māori unemployment rate by age group, 2004-09

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 22

Chart 23: Non-Māori unemployment rate by age group, 2004-09

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 23

6.1.3 Unemployment rate by Region

Chart 24 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 Māori unemployment rate is particularly high in some of the less populated regions. These regions include local areas where employment is dependent on one type of industry, which makes them particularly vulnerable in a recession. There are 49 area units in New Zealand where an industry accounts for 30% or more of employment (area units are population bases of similar size to a city suburb or small town). While many industries have some concentration in small areas, there are two or three main industries that dominate the data. Meat and Meat Processing, and to a lesser extent Log Sawmilling and Timber Dressing are the two most frequently identified industries, followed by Other Transport Manufacturing, Other Wood Product Manufacturing and Dairy Product Manufacturing. Many of these industries have high proportions of Māori in their workforces.

Chart 24 : Unemployment rate for Māori by region ^[61], September 2009

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 24

6.2 NEET rates

Over recent years, the proportion of young people who are not engaged in employment, education, training or caregiving (NEET) has been increasingly monitored as an indicator of youth disengagement.

Youth who are categorised as NEET are disengaged from both formal learning and work, and as such are considered to be missing the opportunity to develop their potential at an age that heavily influences future outcomes. While the NEET measure does not count young people involved in other activities that could contribute to their well-being, or are 'in between' activities for a short period of time (for example, just returned from or about to leave for overseas, or on holiday from work or study), it is still a particularly useful indicator of youth disengagement.

Overall, Māori have higher NEET rates than non-Māori. In the 15-19 year age group, 14.2% of Māori and 6.8% of non-Māori were NEET. In the 20-24 years age group, the rates were slightly higher, with 16.1% of Māori and 9.7% of non-Māori being NEET.

Diagram 2 highlights Māori youth who are NEET. It shows the high rates of tertiary study, caregiving and studying while working (especially among the 20-24 year age group). In the 15-19 year age group, 14.2% (or 9,900) of youth were not working, studying or caregiving and were thus defined as NEET in the year to September 2009. The NEET rate was higher among the 20-24 year age group, at 16.1% at this time (7,800 youth). Those in the older age group have a higher NEET rate largely because school is compulsory until the age of 16 years.

Young people aged 15-24 are undergoing a major developmental phase, with young people generally transitioning from living at home and attending school to adulthood and employment. Importantly, a 15 year old generally has quite different characteristics to someone aged 24. Data from the 2006 Census shows that 79% of all 15-19 year olds lived with their families, while the corresponding figure for 20-24 year olds was 32%.

Diagram 2: Study status of employed and not employed Māori youth, September 2009

Long description for Diagram 2

6.2.1 NEET by age and gender

In the 15-19 age group, the Māori NEET rate has been consistently higher than for non-Māori for both males and females (see Chart 25). In the year to September 2005, 15.3% of male and 14.5% of female Māori aged 15-19 years were NEET. Since then, there has been an overall decline in the rate, but there is recent evidence of a sharp rise, due to the impact of the recession. As of September 2009, the Māori male rate was 15.0% and the female rate was 13.7%. Overall, the rates for Māori males and females in this age group have been quite similar, with both well below the respective non-Māori figures.

Chart 25: Māori and non-Māori NEET rates (15-19 year age group), 2005-2009

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 25

In the 20-24 year age group, there were large differences between the Māori male and female rates. In the year to September 2005, the Māori male rate was 15.4%, which was lower than the 16.6% for Māori females. However, by September 2009 the rate for Māori males was considerably higher at 19.1%, compared with a Māori female rate of 14.1%. The Māori male rate has been increasing since December 2007. As with the 15-19 year age group, the NEET rate for Māori males and females in this age group is reflecting the impact of the recession, as shown in Chart 26.

Chart 26: Māori and non-Māori NEET rates (20-24 year age group), 2005-2009

Source: Household Labour Force Survey, Statistics New Zealand

Data table for Chart 26

6.3 Discussion

Not all youth who are NEET are at serious risk. Some may be involved in voluntary work or travel, which can be personally beneficial. However, those who are inactive for prolonged periods of time have a heightened risk of poor social and economic outcomes - lower earnings; greater reliance on social assistance; and higher rates of unemployment, criminal offending, substance abuse, teenage fertility, suicide, homelessness and mental or physical ill health.^[62]

Perhaps the most worrying aspect in this section is the increase in the NEET rate for Māori males aged 20-24 years. This indicates that many youth are not transitioning from school into tertiary study or work. Given the lower age of the Māori population (of whom 53% are below the age of 25 years),^[63] the impact of high NEET rates is likely to be even more profound.

With economic conditions currently weak, there is a risk of an even higher NEET rate for Māori youth. However, a range of 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^[64] aims to 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.^[65]

Other measures that should improve the outcomes of youth have also been created. The new job opportunities package for youth, 'Job Ops'^[66], 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.

Similarly, 'Community Max'^[67] 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 environments such as parks and reserves. It offers 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 more than 800 participants. Additionally, the Employment Relations Amendment Act 2008, which provides new workers with a 90 day probation period,^[68] also potentially gives more at-risk youth a chance to succeed in the workforce.

The Youth Guarantee programme,^[69] 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.

These key programmes and recent gains in educational achievement should play an important role in addressing the growing unemployment and NEET rates, but the fact remains that Māori youth are particularly vulnerable in the labour market.