Jobs rise here to stay, says Government

By VERNON SMALL deputy political editor

A sharp rise in the number of new jobs throughout the economy - except in the struggling construction industry - could keep unemployment below 6 per cent for the next two years, says the Government.

Unemployment fell to 5.6 per cent at the end of 2000, Statistic New Zealand figures issued yesterday show.

This is a bigger drop than the Government predicted, and takes unemployment significantly under the OECD average.

It is at its lowest since June 1988, when it was 5.2 per cent.

Private analysts and Government forecasters had expected a rate of about 6 per cent.

Australia's unemployment rate is 6.6 per cent, and the average of the 24 OECD countries is 6.4.

Employment Minister Steve Maharey said: "We are seeing pretty much across the economy an improvement in job prospects."

Officials had warned that the slowing of the United States economy and the impact of fluctuating petrol prices could hurt the labour market in the March quarter.

"But all things being equal, we should be around this figure by the end of the year," said Mr Maharey.

"So going into the election [next year] we could still be in the 5 per cent bracket. That's the advice we have got."

In all, 36,000 more people had jobs than a year earlier, and the number of unemployed was down 11,000.

The total number of unemployed at the end of last year was 108,000 - the lowest since 1995.

Job growth in the last quarter of 2000 was strongest in the service sector, especially business and financial services, and in the wholesale and retail sectors.

But it was very weak in the construction industry.

Auckland, the lower North island and Canterbury improved most. The lowest unemployment rate, of 4.7 per cent, was in Wellington and in the west and north of the South Island.

Northland had the longest dole queues, with 8.7 per cent unemployed.

Maori unemployment was 13 per cent - down from 14.2 per cent in September and 19.5 per cent a year ago.

The rate for Pacific people was 11.4 per cent (11.3 per cent in September), and for Pakeha/European people it was down to 4 per cent from 4.2 per cent.

Economists said the stronger-than-expected figures showed that the economy picked up a head of steam in the latter half of last year, and it was unlikely the Reserve Bank would significantly change its view on interest rates.

The slowing world economy and interest rate cuts in the United States and Australia offset the signs of stronger domestic growth.

Mr Maharey said he was hoping for further improvements, although a modern economy would always have some unemployment as people switched jobs and retrained.

"You would want to think you could go lower than this. But we are not just interested in the raw figures. We want to know these are the right kinds of jobs to build a good economy."

He said the Government's policies "seemed to be doing the job," aided by growing regional optimism and improved business confidence.

But National's employment spokesman, Bob Simcock, said the upturn was the result of strong growth, good world demand for our commodities and a low dollar.

"We don't see anything this Government has done, or any policy position it has taken, that sustainably increases the ability of New Zealand to generate jobs."