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New Zealand's labour market

New Zealand's labour market has produced positive outcomes for New Zealanders. Relatively light regulation of individuals and firms has helped to provide people with opportunities to access jobs suited to their abilities and for businesses to adapt to a number of global changes. These include changing markets for our exports and imports, changing consumer demand, technological changes and increasing competition from emerging economies.

Low levels of regulation have been beneficial overall, however as the labour market continues to evolve and change the impacts may also change. Regulatory flexibility has contributed to relatively high re-employment rates for displaced workers, and low levels of long-term unemployment. Less than one percent of the population is unemployed for a year or more, well below the OECD average of 2.3 percent. New Zealand's labour force participation is fifth highest among OECD countries and New Zealand's unemployment rate is in the bottom third (see Figure 3.1). However, further work is required to understand how regulatory flexibility impacts New Zealand's ability to sustain and build both human and social capital, particularly as the nature of work continues to evolve.

Figure 3.1 – Unemployment and labour force participation (2015)
Figure 3.1 – Unemployment and labour force participation (2015)   .
Source:  OECD.

Note: As per the OECD definition, this figure refers to the working age population as people aged between 15 to 64. This differs from the Statistics New Zealand definition of those aged 15 and older.

Changes to the nature of work and business are inevitable. As knowledge continues to develop and diffuse among societies (e.g. through the proliferation of the internet and smartphones), and the capabilities of technology expand and become cheaper, labour market functions and roles will continue to evolve.[53] This is expected to result in work opportunities with greater flexibility for workers, such as freelancing using online platforms and a greater prevalence of self-employment, part-time work, fixed term contracts and other flexible working arrangements. However, some forms of flexible working arrangements (such as zero-hour contracts) may provide less job security or may involve "informal" arrangements that do not recognise the rights and entitlements of workers under existing labour market regulation. To ensure that regulation remains fit for purpose, governments should continue to assess the prevalence of these ongoing trends and the implications for labour market regulations, and be ready to respond.


  • [53] See, for example, Chartered Accountants Australia and New Zealand (2015) future[inc] A Plan for Australia and New Zealand's Prosperity – Disruptive Technologies Risks, Opportunities – Can New Zealand Make the Most of Them?; and OECD (2016) New Markets and New Jobs.
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