As NZ unemployment rises, Kiwis are making their way across the Tasman
Unemployment in New Zealand is expected to be higher than 5 per cent by the end of the year. (Flickr: Eric Carlson)
The job losses in New Zealand are piling up as the government slashes the public service, major media companies close and cut programming and employers in food manufacturing and fashion shut down.
Unemployment is rising and economists predict it will hit 5 per cent across Aotearoa by the end of this year, and as Kiwis go in search of opportunity, they're likely to head to Australia.
While the cost of living is high in both countries, wages have long been higher on this side of the Tasman.
New Zealand has dropped into a technical recession twice over the past 18 months as it struggles through its post-COVID recovery.
Like Australia, the country was dealing with rising inflation when the central bank started to increase the official cash rate.
Since then, New Zealanders have been battling high prices, high interest rates as well as a general downturn.
Now, that is baring out in the unemployment rate with more job losses to come.
After a high of more than 7 per cent at the end of 2022, inflation is still around 4 per cent and economists warn, there is a way to go before conditions in the country ease.
Job losses and increased competition
The New Zealand budget is at the end of the month. It'll be the first full budget from the new right-bloc Coalition government and a raft of public service cuts have already been flagged.
A running tally of the announced public service jobs to go puts the number somewhere near 4,000.
The losses are likely to be across more than 30 agencies after the finance minister issued a directive for spending cuts of up to 7.5 per cent across the board.
As Stats NZ released the country's official unemployment rate for the first quarter of the year, it was asking staff to apply for voluntary redundancies.
Principal economist at Infometrics Brad Olsen said the public sector losses were yet to take effect.
"We are going to see those show up in the unemployment numbers later on in the year," he said.
"We've been tracking them and we've counted about 3,800 net losses. Around a third of those are current vacant roles, but that still leaves a substantial number losing their roles as we get through to the middle of 2024."
That's while Warner Bros Discovery has announced one of the country's two major news broadcasters, Newshub, will be shut down.
A version of the evening news bulletin will be saved, but it's estimated 200 staff will still lose their jobs.
And TVNZ, the state-owned broadcaster, will shed nearly 70 jobs.
There are other losses too, with a food manufacturer, fashion brand Kate Sylvester, and the New Zealand arm of Godfreys all announcing they will close in recent months.
Consultancies have cut entire teams, with sentiment in Wellington particularly depressed.
The job market has been contracting for a while, with Seek New Zealand data showing the number of job advertisements has been steadily declining since 2022.
Mr Olsen said the increase in New Zealand's unemployment rate was being "driven by two key trends".
"One of them is there are more people in the population that aren't getting work and there's also the start of job losses actually starting to come through in the economy," he said.
"The expectation from most forecasters, including ourselves, is for the unemployment rate to increase to 5 per cent by the end of the year."
While the job market has been tightening, New Zealand has seen a jump in net migration, meaning more workers are coming into the country vying for the positions that do exist.
Record number of Kiwis leave NZ
Like so many countries, New Zealand experienced a sharp drop in arrivals during the peak of the COVID-19 pandemic and that led to a shortage of workers.
But since early 2022, the number of migrant arrivals has jumped and put pressure on the labour market.
"It's one of the most simple equations we've got at the moment," Mr Olsen said.
"We've got near record population growth. Last year [saw] the fastest New Zealand population growth since World War II.
"There's a lot more people coming and looking for jobs, over the last year though job ads have fallen 30 per cent and are now 17 per cent below pre pandemic levels.
"So a lot more people struggling or competing for much more limited roles."
[Migration chart - net migration non-NZ citizens]
New Zealand-based ANZ economist said that while the unemployment rate has been driven up by having more people looking for work, the impact of job losses was now also biting.
"There's just been more people in the country chasing fewer jobs rather than a substantial hit to labour demand or widespread job losses like we saw in the GFC, for example," he said.
"That is very likely to change moving forward."
The most recent release of migration data reveals some new dynamics.
It shows the high number of arrivals, but also the number of New Zealand citizens leaving.
Not since migration statistics have been collected has New Zealand seen so many of its own citizens move offshore than in the past year.
A release from Stats NZ said the year to March 2024 saw two annual records.
More than 78,000 Kiwis left New Zealand, exceeding the previous record set in 2012.
With fewer than 26,000 New Zealanders returning home, the country saw a net loss of 52,500 citizens — setting a new annual record.
For every one New Zealander returning home, three have left.
"This is the first time the annual net migration loss of New Zealand citizens has exceeded 50,000," Stats NZ population indicators manager Tehseen Islam said.
"That equates to 1,000 more New Zealand citizens departing long-term than arriving long-term each week."
Mr Islam said of the 78,200 New Zealanders who move abroad in the past year, "just over half of these migrant departures went to Australia".
[Migration chart - net migration of NZ citizens]
The post-pandemic exodus is believed to be partly driven by how tough it is to get a job, but also how unlikely New Zealanders are to get a pay rise.
"Businesses are expecting to offer lower wage settlements or lower wage increases than what inflation expectations are, so based on that consumers or households or employees are going backwards in New Zealand," Mr Russell said.
"Australia's wages, not in terms of how fast they grow, but just where they are in level terms are much higher than in New Zealand.
"So that's one of the drivers of the pull."
Kiwis moving to Australia
For Kiwis making the move to Australia, there is now a four-year pathway to citizenship.
Both countries are in the midst of cost-of-living crises, but the appeal of higher wages in Australia and a chance at citizenship has seen the number of Kiwis making the move increase.
In the latest available data tracking arrivals into Australia, 2022-23 saw the greatest number of New Zealanders migrate across the Tasman in 10 years.
In the five years before the pandemic, the average number of Kiwis relocating to Australia was 33,000 per year, according to Australian Bureau of Statistics data.
In 2022-23, 41,000 New Zealanders made the move.
The last time the rate of Kiwis moving to Australia was higher was 2012-13 and at that time New Zealand was experiencing unemployment at a rate of nearly 7 per cent.
[Migration chart - NZers moving to Australia]
Mr Olsen said in the quarter to September 2023, a look at the flow between Australia and New Zealand showed in those three months alone there was a net loss of 6,000 people from Aotearoa.
Meaning each month, Australia gained an additional 2,000 New Zealanders.
"Those are some of the worst numbers that we've seen in terms of people moving from New Zealand to Australia since around 2013 when there was a prolonged period after the GFC, after the Christchurch earthquakes, after the Australian mining boom."
NZ economy facing 'crunch time'
Economists predict New Zealanders will need to withstand the tough economic conditions for some time yet.
The Reserve Bank of New Zealand started to hike the cash rate in October 2021, while the Reserve Bank of Australia followed in May 2022.
In New Zealand, the cash rate now sits at 5.5 per cent with any cuts unlikely to happen this year.
Getting inflation back down into the target zone is taking a little longer than expected.
And the general downturn is being felt at a time when the government is also pulling back on spending.
Mr Russell said it had "become clear in the past couple of months that the economy has deteriorated pretty significantly".
"The labour market has proven to be very resilient through that period," he said.
"And so, even though households ... have been hit very hard by what was the most aggressive tightening cycle in history in New Zealand, they were largely able to weather that because the labour market outcomes were still very strong."
Mr Russel said that was now changing, and "it's getting to the tougher end of the inflation fight".
"It is crunch time."