Still waiting for the recovery?
The latest unemployment figures provide a fairly sobering trans-Tasman snapshot.
Australia’s unemployment rate has risen to 4.5%, its highest level in nearly five years. It is not the news Australians would have wanted, particularly when businesses and jobseekers have already been feeling the slowdown for some time.
Meanwhile, New Zealand’s unemployment rate has reached 5.6%—an 11-year high. Auckland and Wellington have been among the hardest-hit regions, with unemployment recently exceeding 6%.
Things are tough on both sides of the Tasman. Australia is starting from a stronger position, but that does not make the slowdown any easier for the people experiencing it.
Same direction, different starting points
Australia’s economy and labour market held up longer than many expected. Population growth and employment across health, education, government and other essential services helped keep people in work, even as interest rates rose and economic growth slowed.
New Zealand had a harder landing. Higher interest rates hit domestic spending, construction and property activity particularly hard. Public-sector cuts have had a major impact on Wellington, but the ripple effects have been felt across the country—from organisations reliant on government contracts and funding to the businesses supported by their spending. Auckland has also felt the slowdown across construction, retail, corporate and professional-services roles.
New Zealand is supposedly further along in the recovery cycle. Interest rates rose earlier, inflation began easing earlier and the Reserve Bank started cutting the OCR well ahead of Australia.
Yet our labour market is still taking its sweet time to catch up.
That is partly because employment tends to recover later than the wider economy. Businesses usually start by giving existing employees more hours, getting through backlogs and making better use of the people they already have. Hiring generally follows once there is enough work—and enough confidence—to justify adding someone new.
That confidence has been slow to return.
Are we waiting for the wrong recovery?
A recent NZ Herald article asked whether New Zealand is waiting for a recovery that may never arrive, at least not in the form we remember.
It is a fair question.
Past recoveries often came with some helpful tailwinds: falling interest rates, strong migration, rising house prices, construction booms and large infrastructure projects.
We cannot assume the same combination will turn up again.
Geopolitical tension, tariffs, changing supply chains, volatile fuel prices and weaker productivity may not be temporary disruptions we can wait out. They may simply be part of doing business now.
That does not mean there is no recovery. New Zealand GDP grew 0.8% in the March quarter, exports and commodity prices have provided support, and employment increased in the June quarter.
The problem is that the labour force grew faster. More people entered or returned to the job market, so unemployment rose even though more people were employed.
There are positives in the data. They are just uneven, and they have not yet produced the broad lift in hiring that employers, recruiters and jobseekers have been hoping for.
Perhaps we need to stop asking when things will go back to normal and start working out what progress looks like from here.
There will always be a reason to wait
New Zealand is heading into an election, which gives businesses another tempting reason to hold off making decisions.
What will happen in November? Will policies change? Should we wait until things are clearer?
But when has waiting to see what happens in an election year actually helped?
More often, decisions get pushed back, investment slows and everyone waits for someone else to move first. If enough businesses postpone hiring and growth plans because the economy feels uncertain, that caution helps create the slowdown they were worried about.
This is not an argument for ignoring the risks or pretending things are better than they are. The economy is difficult and some businesses genuinely do not have the capacity to invest or hire.
But perfect certainty is not coming. There will always be another election, international conflict, price shock or policy change on the horizon.
At some point, we have to adapt to the conditions in front of us and get on with things.
More applicants does not mean easier hiring
For employers, higher unemployment usually means more applications. It does not automatically mean every role will be easy to fill.
The strongest candidates still have choices. Technical skills, relevant experience and people who can deal with change without needing everything mapped out for them remain in demand.
Long recruitment processes can also work against employers. After waiting months for approval to hire, taking another six or eight weeks to make a decision can mean losing the person most capable of helping the business move forward.
For jobseekers, the market requires patience and some flexibility. Recruitment processes are slower and competition is higher. It may be necessary to look at different sectors, contract work or roles where existing skills can be applied in a slightly different way.
Temporary and contract hiring may become more important as the market begins to improve. It allows businesses to restart projects or bring in skills without committing immediately to permanent headcount. For jobseekers, it can provide current experience, new connections and a way into organisations that are not yet ready to recruit permanently.
A little trans-Tasman perspective
For Australia, the latest figures confirm what many employers, recruiters and candidates have already been feeling: the labour market is getting tougher.
There may be more available candidates and less hiring pressure, but there will also be more caution around headcount, longer approval processes and more people competing for each opportunity.
Still, some perspective may help. At 4.5%, Australia’s unemployment rate remains well below New Zealand’s 5.6%. Australia is feeling the pain, but so far the slowdown has not been as deep as it has been across the Tasman.
For New Zealand, the message is simple: hang in there, but do not sit around waiting to be rescued by a perfect recovery.
It may be slower, patchier and less exciting than we hoped. Businesses will need to work with the economy we have, not the one we wish would return.
That could mean hiring one critical person rather than building a whole team, using temporary or contract support to get a project moving, investing in the people already there or finally making a decision that has been sitting in the “wait and see” pile for six months.
If we can talk ourselves into a recession, we can certainly keep ourselves stuck by waiting for someone else to declare it over.
The numbers are not great. There is no point pretending otherwise. But these cycles do turn.
Until then, we keep at it.
