This in order to stay employed and earn more during the pandemic
The New Zealand labour market has been resilient and flexible during the COVID-19 pandemic, with workers moving between industries to stay employed and get paid more, an analytical note by the Reserve Bank of New Zealand has revealed.
During 2020 and 2021, the number of jobs in the health and building industries surged by about 15,950 and 17,650, respectively. In contrast, employment in high-contact and tourism-related industries, such as hotels, restaurants, and the arts, plunged by about 33,250, due to COVID-related restrictions and the closed border.
When the pandemic broke out in 2020, economists generally expected an increase in skill mismatches and higher structural unemployment in New Zealand, especially considering that labour flows into the economy were restricted by stringent border controls.
Research outlined in the analytical note found that unlike past economic shocks, the COVID-19 pandemic saw high levels of workers shifting industries, especially since 2021. This churn in the labour market came along with income growth, which has important implications for inflation dynamics.
“This is a somewhat surprising finding, suggesting that skills are generally more transferable between industries than would have been assumed,” authors Guanyu Zheng and Marea Sing said. “We confirm that these between-industry job-to-job transitions are positively correlated with income growth at the aggregate level.”
RBNZ said the findings stressed how administrative tax data can be used to understand key relationships and developments in the NZ labour market, in order to achieve its inflation and employment objectives.
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