Extra 30,000 workers needed to sustain economic growth, experts say

8.30am

New Zealand will have to find up to 30,000 workers a year to sustain its current level of economic growth, says Business and Economic Research Ltd (BERL) economist Ganesh Nana.

An extra 50,000 to 60,000 workers a year were needed to maintain economic growth, of which about 30,000 would come from annual net natural increase.

The remaining 20,000 to 30,000 workers would have to be sourced by finding jobs for the unemployed and people from overseas, which included people returning to New Zealand and new migrants.

Some people would also have to work for longer.

Dr Nana said the "family friendly" 2004 Budget would be successful in the short term if it encouraged more people back in to the workforce.

"In the long term it will succeed if it enables people to have and afford families, to grow the future population of kiwis," Dr Nana said in a statement.

"The danger is that this increase will encourage the Reserve Bank to further increase interest rates. Stalemate!"

Dr Nana's comments were part of a BERL forecast, which examined the nation's current economic environment and its outlook.

Dr Nana said Gross Domestic Product (GDP) was forecast to remain strong, with the 3.0 per cent increase in March being followed by yearly increases of 2.8 per cent, 2.9 per cent and 3.2 per cent by 2007.

"The New Zealand economy continues to grow at a robust pace, with a host of indicators pointing to an on-going expansion across the country."

These included increases in export volume growth and on-going growth on the domestic front through increases in construction, investment and consumption.

Signs that the world economy had "turned the corner" and improved sentiment in the farming sector could now be added to the list of domestic factors contributing to sustained growth.

As for the New Zealand dollar, "... we forecast that the $/A$U cross rate will scale further heights, averaging about A93c in March 2005."

It would fall over the course of 2005 and 2006, while the kiwi-US dollar cross would remain at its current levels before it started to "depreciate mildly" once it was evident US interest rates were on the rise.

Dr Nana also said hawkish comments by Reserve Bank governor Alan Bollard at the June 10 monetary policy statement led him to believe the official cash rate would reach 6.5 per cent by March 2005.

- NZPA