There are jobs 'for Africa', so why does NZ still have unemployment? An economist explains

While there are record numbers of jobs out there, getting the last 4 percent of Kiwis still without one into work will be harder than it looks, an economist says.

Job listings site SEEK on Wednesday said it had 88 percent more jobs available than this time a year ago, but applications dropped 9 percent in just a month - employers struggling to fill jobs with so few unemployed.

Unemployment unexpectedly fell to 4 percent in the June quarter, back to where it was before COVID-19 hit. 

"What we're seeing now in the SEEK data is that robustness is continuing into July," economist Cameron Bagrie told The AM Show on Thursday.

He said the comparison to 2020 was "perhaps a little bit misleading", with that year's figures falling right between the two biggest lockdowns of the pandemic to date - the nationwide level 4 restrictions earlier that year, and the level 3 lockdown in Auckland right afterwards.

But even compared to 2019 they were well up - about 30 percent. So what's stopping the 4 percent without jobs from getting one when there's "work for Africa", as Bagrie puts it? 

"What we've done is we've eliminated cyclical unemployment - that's that unemployment that can wobble around when the economy goes through a little bit of weakness," he says.

"What we've got left at the moment with unemployment around 4 percent, is that deep-rooted structural or institutional unemployment. There's demand out there, there's work available, but what we've got is a pool of available workers that do not have the skills that employers actually want. 

"That requires some pretty deep-rooted structural change… to try and eliminate or make it a little bit better in regard to matching what employers want versus what the employees can offer."

For those with jobs looking to change roles, now's a good time.

"It's all power to the worker out there at the moment in regard to where the balance actually sits," said Bagrie, with employers having to offer better pay and conditions to attract talent.

"It's a fundamentally good news story, but it's a story that's got a few hooks," said Bagrie.

"What we're starting to see as well… is wages accelerate - that's the real good part of the story - but wages are one of those inputs that go into the inflation side of the equation, and we're starting to see an awful lot of pressure on inflation. Inflation moves up, interest rates move up as well."