No easy gains are left across the Tasman for the newish conservative National Party-led government, with a sharp rise in unemployment, an unwanted pay rise offered, and a surprise opinion poll showing a swing back to the Labour Party, seven months after it lost office.
The seasonally adjusted unemployment rate rose to 4.3% in the March quarter, up from 4.0% the previous quarter and 3.4% a year ago. The culprit: the hard-edged monetary policy stance of the country’s Reserve Bank and its 5.5% official cash rate.
The NZ unemployment rate is now clearly above Australia’s 3.8%, having risen by 0.9 percentage points over the past year.
Statistics NZ said the underutilisation rate – a broader measure of spare labour capacity than unemployment alone – was 11.2% in the March 2024 quarter. This compared with 10.7% last quarter and 9.1% last year.
At the same time, wage price inflation eased to 4.1% in the March quarter from 4.3% at the end of 2023 and the same quarter of 2023.
With consumer price inflation falling to 4% in the March quarter, there’s still a tiny bit of real wage growth left, but nowhere near as much as in the final three months of 2023 when the CPI was up 4.7%.
The rise in jobless numbers made for a tough reception to the news that there’s a pay rise on offer for all NZ politicians.
So, it's no wonder that MPs from all parties reacted cautiously to the news that they are set to get a pay rise from the country’s Remuneration Authority, which recommended they receive a 2.8% pay rise, backdated to last October.
National PM Christopher Luxon said he'll donate the extra cash to charity and also issued the usual political commentary that he’s not worried about the opinion poll, saying he is focused on the job at hand, not on polls, after the latest 1News Verian numbers showed Labour could form a government.
Former PM John Key offered supportive words for Luxon, saying the poll "just reflects that the economy is quite tough at the moment.”
The poll results do look like a voter thumbs down to some of the early decisions by the National Party-led government.
National still leads with 36%, down two points, with the ACT Party down one point to 7%. New Zealand First (Winston Peters’ party) dropped two points to 4%, below the margin needed to remain in Parliament. NZ political writers say that the coalition parties would not have the numbers to form a government based on those numbers. Labour was up two points to 30%, the Greens were up two to 14%, and Te Pti Mori was steady on 4%. Assuming Te Pti Mori retained an electorate seat, the Labour-led group would be able to form a government. Since the next election isn’t due until late 2026, the poll is meaningless except for showing that the volatility of the NZ electorate is not going away.
The poll was taken before the jobs data was issued on Wednesday. If jobless numbers continue to edge higher, it could very well come to dominate politics, business, and the country generally.
