Friday, September 10, 2010
Vital Statistics
23 Aug 2007
Labour force participation rates to begin to edge down
Kel Sanderson
The same change in sentiment that is driving the increase in Kiwi departures is likely to also reduce enthusiasm for more people to move into the labour force. Many forecasters, official and otherwise are saying the economy is going into a tough time. If so, we would expect labour force participation rates to begin to edge down.
Nevertheless, there are still healthy employment increases across a number of sectors, and the total increase in the year to March 2007 was over 36,000. This is greater than the annual natural increase in the working age population. As such, not only is employment rising, but the participation rate is also continuing to rise. The main increases in employment continue to be in construction, supported by the hospitality industry, some wood processing and the social services. The various branches of business and finance services have become a little patchy in recent quarters.
The present rate of increase in labour demand and supply is about 2% per year compared with the 3% to 3.5% in 2004 and 2005. We expect labour demand and supply to continue increasing. This is in contrast to the Reserve Bank, who forecast a zero increase in employment in the year to March 2009. However, aware of the declared intention to hold back the level of activity in the economy, we are forecasting employment growth over the next year in the 1.5% to 2% range, before moving back to 2.5% over the remainder of the forecast horizon.
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