Jacinda Ardern hails unemployment drop as 'envy of many countries' as National demands answers over flexi-wage promise

Prime Minister Jacinda Ardern is hailing New Zealand's strong job market as the "envy of many countries" but National wants to know what's holding up the Government's promise to extend the flexi-wage scheme. 

The latest data from Stats NZ on Wednesday showed the unemployment rate fell from 5.3 percent to 4.9 percent, defying Treasury's half-year economic forecast last year of 6 percent. 

Finance Minister Grant Robertson says it was the Government's "decisive actions" to keep New Zealanders connected to their jobs through the wage subsidy and making trades and apprenticeships free that led to the strong job market. 

Employment rose by 17,000 in the December quarter, up 0.6 percent on the previous September quarter. Women made up 10,000 of the increase in the last three months of the year.

"Construction jobs rose by 21,000 annually, which included those working as plumbers, electricians, and roofers. This more than offset the impact of COVID-19 on tourism-related industries," Robertson said.

"Māori employment is up 5100 from a year ago. Our focus is on keeping the economy moving in the right direction and build back better, including investing heavily in education, skills and training."

Social Development and Employment Minister Carmel Sepuloni said the stronger labour market saw more people come off the benefit in the December quarter, with nearly 27,000 entering paid work. 

"We will continue to invest in support services to help people who lose their jobs up-skill and re-enter the workforce. Our job is far from over."

Indeed it is far from over, according to National's social development spokesperson Louise Upston, who told Newshub the Government has a long way to go before it can claim the country has recovered from the COVID turmoil. 

National's social  development spokesperson Louise Upston.
National's social development spokesperson Louise Upston. Photo credit: Newshub

"Obviously the fact that the unemployment rate is lower than anticipated is good news, but what it doesn't do is excuse from taking further action to help Kiwis into jobs," she said. 

"We've got 214,000 New Zealanders who are out of work and the Government should be taking urgent action to support them to get a job."

Upston says Prime Minister Jacinda Ardern needs to uphold her promise of extending the flexi-wage scheme. Ardern said the extension would be implemented prior to Christmas but confirmed on Wednesday it is still in the works. 

"Very shortly it will be in front of all of you," Ardern told reporters. "But some of the design features are important. We need to make sure it reaches those hardest hit by COVID."

The scheme was introduced in 2012 by former National Party Social Development Minister Paula Bennett. Ardern promised during the election campaign last year to boost it by $311 million, aiming to get 40,000 Kiwis back in work.  

Upston would also like the Government to implement JobStart, National's job policy that would immediately help businesses by giving them a grant of $10,000 for each new person they employ. 

Upston said Sepuloni has agreed to meet her next week to be briefed on the policy. 

"I have offered the invitation to brief them and Minister Sepuloni has agreed to meet and that's happening next week."

Prime Minister Jacinda Ardern speaking to the media in Ruapekapeka.
Prime Minister Jacinda Ardern speaking to the media in Ruapekapeka. Photo credit: Newshub

Upston was reluctant to say the Government is on track to deliver a strong economic recovery for New Zealand, despite the drop in unemployment. 

"I think it's too soon to say," she said. "It shows that policies like the wage subsidy which we clearly supported did help keep some Kiwis in jobs so that is good news. But as I said, the Government's own priority project which was the extension of the flexi-wage, they promised before Christmas."

ACT leader David Seymour said the strong job data shows how "nimble" the employment market is. 

"Whole industries have been decimated but people have found new jobs. It shows why we should oppose more restrictive labour laws. However, we should also be watching out for increasing inflation expectations and interest rates rising as a result."

ASB Bank analysts described the employment market as "astonishingly strong" in New Zealand, as other nations struggle with the pandemic. 

Analysts are now asking: Has unemployment already peaked in New Zealand?

New Zealand's 4.9 percent unemployment rate compares with 6.8 percent in Australia and the United States, and 8.7 percent in Canada. The OECD average is 6.9 percent.

"I'm incredibly heartened to see that efforts and policies that we've implemented in our COVID response have meant the unemployment rate has gone down. That makes us the envy of so many countries," Ardern said. 

"However, there are particular groups we do want to target because they are hardest hit. That's why we're using things like flexi-wage to be really targeted in reaching those who have been hardest hit by COVID."