Workers go backwards as unemployment hits 11-year high

Summarised by Centrist

New Zealand workers are losing ground as unemployment reaches its highest level in nearly 11 years and wage increases fall well short of inflation.

Salary and wage rates rose 2% in the year to June, while consumer prices increased 4.1%. Costs rose 4.3% for the lowest-spending 20% of households.

“Wages have simply not caught up with prices,” Kiwibank economists Alexandra Turcu and Elliott Lowe said.

The unemployment rate climbed from 5.4% to 5.6%, leaving 171,000 people out of work.

About 5,000 jobs were added during the quarter, but the workforce grew by 21,000. The underutilisation rate, which includes people wanting more work, reached a 12-year high of 13.8%.

Long-term unemployment also increased, with about 8,000 more people unemployed for at least a year than in June 2025. The proportion of 15 to 24-year-olds not in employment, education or training rose from 12.9% to 13.8%.

Only 54% of private-sector jobs received a wage increase over the past year, close to a four-year low. Public-sector wage rates rose just 1.7%.

Finance Minister Nicola Willis blamed higher costs and uncertainty for discouraging businesses from hiring.

“None of this is about quick fixes,” Willis said. “It’s about giving employers the confidence to say yes to that next hire, that next expansion, that next investment.”

Economists expect employment to improve later this year. However, the Reserve Bank is still expected to raise the official cash rate as it confronts inflation driven by the global fuel surge.

That leaves households caught between a weak labour market, falling real wages and the prospect of higher borrowing costs.

Read more at Interest and RNZ