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Unemployment count changes 'to meet international standards'

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Fuseworks Media
Fuseworks Media

Changes to how the unemployed are counted when they look for work online were made to meet international standards, Statistics NZ said today. This week there has been some misunderstanding of the changes, which were first announced on 29 June 2016.

The international standard for measuring unemployment is that to be counted as unemployed, people have to be without a paid job, available for work, and to have either been actively seeking work in the past four weeks, or had a new job to start within the next four weeks.

This is the definition of unemployed used in the Household Labour Force Survey (HLFS) since it began in 1985. It is the definition still in place. The phrase ‘actively seeking work' is critical in this definition.

To be actively seeking work a person must, in the four weeks prior, have used job search methods other than reading job advertisements in the newspaper or on the internet, or receiving electronic notifications about jobs. Examples of actively seeking work are writing, phoning, emailing, or applying in person to an employer or a private employment agency.

It could also include:

- contacting Work and Income New Zealand about a job

- placing an advertisement to find a job

- posting a CV or profile on a professional or social networking website

- contacting friends or relatives about a job

- taking steps to set up a business

- contacting a careers advisor or vocational guidance officer.

All of these are considered ‘actively’ looking for work. If people are doing any of these activities and are not in work, they are counted as unemployed. If they do nothing but look at job ads in the paper or online, they are not counted as unemployed. This is to avoid including people in the figures who are simply scanning job ads for interest.

The issue we have corrected during the HLFS redevelopment was that our previous system, which was designed when the internet didn’t exist, classified people who had only looked at job ads in the newspaper as ‘not actively seeking’. At the same time, it classified those who had only looked at job ads on the internet as ‘actively seeking’. This inconsistency needed to be corrected.

The reclassification reduced the number of people counted as unemployed. We reclassified data back to 2007 and published the new data series on 29 June, allowing clear comparisons over time. We assessed that the break in the time series at the beginning of 2007 was not significant enough to warrant going back further. See Household Labour Force Survey - Revisions to labour market estimates.

There are 131,000 people officially counted as unemployed, according to June 2016 quarter figures released on 17 August.

People looking at job ads counted in new underutilisation measures

The people no longer counted as officially unemployed do not simply disappear from the figures - they are counted elsewhere.

In the June 2016 quarter Labour Market Statistics release we introduced measures of underutilisation. The International Labour Organisation (ILO) recommends underutilisation measures be produced by all countries and treated with the same importance as the unemployment rate.

Underutilisation indicates the potential labour supply and includes:

- people who are employed and want to work more hours (underemployed)

- those who want a job but are not currently actively looking or available to start work

- the officially unemployed.

Statistics NZ’s June quarter release showed there were 342,000 people underutilised in the June quarter - an underutilisation rate of 12.7 percent.

Of the 93,100 underutilised people who were classified as ‘available potential jobseekers’ - ie not actively seeking, but available and wanting a job - around one-fifth were looking at job advertisements to find work. The remainder had not looked for work in any way.

It is important to be able to identify and monitor the available potential jobseekers to understand why they are not actively seeking work. This will enable policymakers to consider how to address this. This would not be possible if these people were included in the unemployed category with the active jobseekers.

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