Mike's Minute: Are we at peak employment?

Author
Mike Hosking,
Publish Date
Wed, 4 Aug 2021, 10:03AM

Mike's Minute: Are we at peak employment?

Author
Mike Hosking,
Publish Date
Wed, 4 Aug 2021, 10:03AM

Good news, bad news day for us if the numbers projected turn out to be real. Statistics New Zealand releases our employment numbers today.

The good news is, most agree, it should fall. They think to 4.4 percent from 4.7 percent.

Wage inflation is also out. That should be up. If we aren't earning more in an environment where finding skills is a nightmare, then something is structurally wrong with the way we do business.

4.4 percent is good, by the way, but not as good as it has been. In that, lies the problem.

It's generally accepted that about 3-ish percent jobless is what they call full employment. In other words, if you want a job, there is one to be had.

I would argue we have that now, even at around 4.5 percent. Mainly because it's become abundantly clear that the number of job ads are through the roof, hiring is a major, and everyone going tells the same story, they can't find people to do the work required.

That is part of the bad news side of the equation. If you're looking to hire but can't, the work doesn’t get done, the growth doesn’t happen, and we reach peak growth. In other words, this is as good as it gets. To be frank, when you look at our growth numbers and those elsewhere around the world right now, we are not flash.

The bad news part of this is previously, if we couldn’t get local labour, we brought it in.

And in that has been one of the more bizarre ideological debates of our times, the Government's plan to pay locals more, versus businesses plan to watch that not happen, because it's fairy land stuff, and to continue to plead for border help.

The RSE worker call this week is a final submission, I think, from the Government that they got it wrong.

But that doesn’t solve the issue for every other industry. The fact we can have a number of unemployed over 4 percent and still have labour issues gives you an insight into a major disconnect here.

Welfare is too easy, attitudes are too lax, and we have reached bedrock when it comes to enthusiasm for getting out of bed and contributing to the wider world.

It's a classic Covid problem in a country locked away from the rest of the planet. You can only go so far on borrowed money and local help. Once you reach the limit, the answer you once had for growth is now beyond a border you can't access.

And that is an economic crime.