Quickfisk: Youth Unemployment

17:44 Jun 10, 2013 27

Somehow I got entangled in a Twitter three-way between Hooton, Rob Hosking and #heyclint over youth unemployment figures today, and my 2 Degree 3G was crapping out on me again, so I was in the Twitter-equivalent of a vegetative state, watching them fight around me.

I haven't been following this, so I don't really know what HORRIBLE RIGHTWING LIES Hooton has been telling, but Rob brought out this graph which piqued my curiosity.

The chart on the right really does seem to show that youth unemployment - although well above OECD average - is going down. Does it?

Spoiler: No.

In the spirit of quickfisking, I'll just get to the point. Here is the unemployment rate for youth (the blue line) vs adults (the red line). Note that the 25-54 age group is the "prime" working age used by OECD for its youth/adult ratio.

First off: It's pretty hard to see the good news in this. I don't blame National for the GFC, but it's impossible to look at this and suggest that National has made a dent in the problem. Unemployment is as bad as it's been since the GFC hit.

So how does this gel with a decreasing youth/adult unemployment ratio? It's just simple arithmetics. Since its lowest point in 2007, adult unemployment went from 2.6% to 5.3% - a 104% increase. Youth unemployment went from 10% in 2007 to 17.3% - a mere 73% increase.

The upshot is that the youth/adult unemployment ratio is closing because adult unemployment has risen faster than youth unemployment, which hasn't fallen at all. It is nothing to gloat about.

Here is the data.

27 responses to this post

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Che Tibby, 19:19 Jun 10, 2013

so why no mention of the NEET rate? surely it's an important measure to include in any analysis for this age group?

the back of an envelope • Since Nov 2006 • 2042 posts Report
Jean Hughes, in reply to Che Tibby, 20:01 Jun 10, 2013

Agreed - and all the more alarming for the futures of us all.

Mangere • Since Nov 2006 • 89 posts Report
Rob Hosking, 21:51 Jun 10, 2013

I think the origin of the argument was something Hooten had said on radio which I didn't hear, but was something about NZ's youth unemployment being comparatively good.
Its not as good as it was, but the OECD report released last week says that long term youth unemployment is among the lowest in the OECD and it may have been this Matthew was referring to. I'm guessing. I didn't hear the broadcast but it seemed to get #heyclint excited.
That's long term unemployment. Short term its not as good. I think the figures you're using includes both.
NZ young people move around among jobs more than in most countries - one reason seems to be we have a higher mix of people doing part time work, part time study. I suspect the great Kiwi OE also plays a part: if you're 20, expect to go overseas in a year or two, you're probably more inclined to jump around a bit to earn a bit extra in the short term.
The NEET measure Che asks about is interesting: we're around the middle of the pack,but this is a deterioration. To quote that OECD report a bit more:
in all countries NEET mainly affects older youth. But even though
NZ long-term youth unemployment is among the lowest in the OECD, its NEET rate is close to the OECD average... This may reflect that NZ unemployment
rates include full-time students who are also seeking part-time work, so are a less useful measure than NEET in capturing youth inactivity.
Also, NZ NEET rates have risen more over the past decade than in the OECD on average .
I should add that overall unemployment in NZ is, at 6.2%. below the OECD average of 8.1%. Still way too high, and no cause for gloating, but in the current context, also no cause for sackcloth and ashes.
NZ does have some very large, long term and rather intractable labour market problems, but the big difficulties are less around unemployment and more around skills, productivity, & the "long tail" (horrible term) of functionally illiterate and innumerate employees, as well of course as the issue of simply encouraging people to stay in the country.

South Roseneath • Since Nov 2006 • 830 posts Report
John Holley, 22:33 Jun 10, 2013

It was on National Radio this morning.
He was claiming (while attacking Helen Kelly) that the 90 day trial law had significantly cut the youth unemployment rate.
Based on the ratios etc., I guess it shows that the 90 day trial law has increased unemployment among adults as employers seem to prefer cheaper labour (go figure).

Auckland • Since Nov 2006 • 143 posts Report
Brent Jackson, 22:43 Jun 10, 2013

Nice fisk.
I find graphs like that (not your one) particularly annoying, in that they appear to be deliberately misleading. The graph on the left, a reduction is bad (though it takes a while to work that out becuase the graphs have similar shapes), and the graph on the right is portrayed as though a reduction is good. But when you delve into it, it's actually neutral - a reducing ratio may be (relatively) good for young adults, but it is bad for older adults. For society as a whole it could well be better to have an increasing ratio, as young adults are less likely to have dependents.

Auckland • Since Nov 2006 • 620 posts Report
Sacha, in reply to Rob Hosking, 22:44 Jun 10, 2013

productivity
Any links/data about share of business productivity gains that was paid to workers compared with business owners over last decade or three? I remember reading it's not pretty but don't recall where the source was. Might be OECD or something?

Ak • Since May 2008 • 19745 posts Report
Keith Ng, in reply to Rob Hosking, 23:16 Jun 10, 2013

Che/Rob: Yes, NEET is important, but it's a sign of much wider disengagement, rather than a predominantly labour market issue. Also, NEET data only goes to 2011. (Not really sure why - it's just derived from the HLFS...)
Rob: Deeply uncomfortable with the focus on OECD rankings/comparisons. True, we're not having a Euromeltdown. And true, we're doing well when compared with countries that are part of the Euromeltdown. But that doesn't mean we're *actually* doing well, and it doesn't mean that current policies are effective or successful - it just means Europe is having a shit time.
The points about long-term unemployment is interesting - I'll look into that further. I know we have a very high rate of part-time work, but my understanding was that the spike happened during the Working for Families era, when a lot of stay-at-home parents reentered the workforce (incidentally, dragging average wages down). I don't know how part-timeness affects youth unemployment.
But I think my central point remains - the unemployment rate, for youth or otherwise, hasn't significantly changed since the GFC.

Auckland • Since Nov 2006 • 543 posts Report
Keith Ng, in reply to John Holley, 23:18 Jun 10, 2013

He was claiming (while attacking Helen Kelly) that the 90 day trial law had significantly cut the youth unemployment rate.
Oh. That's easy then. That's fucking bullshit.
Wish I hadn't bothered making all them graphs now.

Auckland • Since Nov 2006 • 543 posts Report
Keith Ng, in reply to Brent Jackson, 23:23 Jun 10, 2013

a reducing ratio may be (relatively) good for young adults, but it is bad for older adults.
Yeah - that's a particularly odd measure. It's definitely useful for distinguishing between youth-specific unemployment problems and general unemployment problems, but it definitely needs a lot of context or it's misleading.
You're right about the "higher = good" next to "higher = bad" thing as well. I actually got it wrong on my first read, and it took a week while for it to click in my head. I don't think it's deliberate though - I think it's just how old-school data nerds roll.

Auckland • Since Nov 2006 • 543 posts Report
Kumara Republic, 23:30 Jun 10, 2013

It seems to illustrate the 2-speed economy that we - and Australia - are in now. All well and good if you have a specialist degree in an area known to have shortages of know-how, but the low-skilled and first-timers aren't quite so lucky. And long-term job growth can't be achieved by weakening conditions - are we trying to catch up with Australia and raise our wages, or are we trying to be "Australia's Mexico"? To be both is about as possible as dividing by 0.
Brian Gaynor hit the bullseye in his latest NZ Herald piece on global youth unemployment.

The southernmost capital … • Since Nov 2006 • 5446 posts Report
Kumara Republic, 00:05 Jun 11, 2013

I should also add that in the Gaynor piece, while our youth unemployment rates are nothing to be proud of, those in the PIIGS nations appear to have eclipsed those of the Great Depression.

The southernmost capital … • Since Nov 2006 • 5446 posts Report
Matthew Hooton, 07:33 Jun 11, 2013

Go to http://stats.oecd.org/Index.aspx?DatasetCode=STLABOUR
Look at unemployment rates by age and gender and look at the 15-24 age group, all persons. At 15.1% in Q1 2013, we’re now below the OECD average and falling.
Go also to http://m.stats.govt.nz/~/media/Statistics/Browse%20for%20stats/HouseholdLabourForceSurvey/HOTPMar13qtr/HouseholdLabourForceSurveyMar13qtrHOTP.pdf
See in particular:
Youth labour market improves
In the year to March 2013, there was a large fall in unemployment for people aged 15–24 years (down 10,500). This fall can be largely attributed to a decrease in unemployed 20–24-year-olds (down 11,200). This was an atypical fall in unemployment, as the number of people
unemployed for this age group usually increases during March quarters. The unemployment rate for people aged 20–24 years fell 4.1 percentage points to 10.9 percent – the lowest rate since the September 2009 quarter.
The employment rate for 20–24-year-olds rose over the year to March 2013. There was also an increase in the number of people aged 15–24 years not in the labour force over the year. Behind this was a rise in the number of young people outside the labour force who are studying (up 25,000). The number of both 15–19-year-olds and 20–24-year-olds in study rose – up 16,200 and 8,800 respectively.
NEET rate declines
In seasonally adjusted terms, the NEET (not in employment, education or training) rate for youth (aged 15–24 years) decreased 1.5 percentage points, to 12.5 percent in the March 2013 quarter. This is the lowest youth NEET rate since the September 2011 quarter. The NEET rate for people aged 20–24 years fell 2.4 percentage points to 15.9 percent.
The female youth NEET rate decreased for the first time since September 2011 – down 1.2 percentage points to 16.2 percent. The male NEET rate also fell 2.0 percentage points, to 8.9 percent, after being relatively flat for the last three quarters.
These must also be HORRIBlE RIGHTWING LIES from Statistics New Zealand and the OECD.

Auckland • Since Aug 2007 • 195 posts Report
Rob Hosking, in reply to Sacha, 09:03 Jun 11, 2013

Haven't heard of that one...and I'd imagine it'd be quite difficult to collate that sort of comparison, partly because of the many and varied ownership structures, partly because even if you got it its the sort of aggregate figure which would hide a lot of complexities.
You have though piqued my curiousity....

South Roseneath • Since Nov 2006 • 830 posts Report
B Jones, 09:35 Jun 11, 2013

Excuse my ignorance, but I'm not sure what NEET figures add here. As far as I can tell (and the very different rates for males and females Matthew cites gives a hint of it), it includes young full-time parents as well as those out of paid work or training for other reasons. There are different economics at play for starting young families.

Wellington • Since Nov 2006 • 976 posts Report
Andrew C, 09:41 Jun 11, 2013

@Keith: I am probably an idiot here - but why is the unemployment data rate in your chart not look like 100% - <the employment_rate from figure 2.1A>?

Auckland • Since May 2008 • 169 posts Report
Andrew C, in reply to Matthew Hooton, 09:50 Jun 11, 2013

Look at unemployment rates by age and gender
I exported the employment rate on the link you posted:
Employment rate, Aged 15-24, All persons
Q2-2010 50%
Q3-2010 50%
Q4-2010 50%
Q1-2011 50%
Q2-2011 50%
Q3-2011 50%
Q4-2011 49%
Q1-2012 50%
Q2-2012 51%
Q3-2012 50%
Q4-2012 47%
Q1-2013 50%

Auckland • Since May 2008 • 169 posts Report
Matthew Hooton, in reply to B Jones, 09:51 Jun 11, 2013

I have quoted both. Keith Ng and Clint Smith criticised me on Twitter for using NEET instead of unemployment whereas Che Tibby and Jean Hughes think NEET is more meaningful than unemployment. Whichever is the better measure, both are heading in the right direction.

Auckland • Since Aug 2007 • 195 posts Report
Matthew Hooton, in reply to Andrew C, 09:59 Jun 11, 2013

So? Most 15-18 year olds and beyond are in school or tertiary education. We are talking unemployment. Look down the page. Go to unemployment rates by age and gender.

Auckland • Since Aug 2007 • 195 posts Report
Rob Hosking, in reply to B Jones, 11:24 Jun 11, 2013

Excuse my ignorance, but I’m not sure what NEET figures add here. As far as I can tell (and the very different rates for males and females Matthew cites gives a hint of it), it includes young full-time parents as well as those out of paid work or training for other reasons. There are different economics at play for starting young families
There are. Oddly enough, NZ only recently brought caregivers under the umbrella of the NEET figures, and the only reason we seem to have done so was to bring us into line with other countries.
One of the points of NEET is to give a broader indication of social deprivation than just unemployment data, but also to provide an indication of transition issues between unemployment, training and work.
The broader point being it is important to look at all the employment data in toto, rather than seize upon one data series as "the" indicator.
We're a bit too inclined to do that in our economic debates, I feel - and not just about the labour market.

South Roseneath • Since Nov 2006 • 830 posts Report
Kumara Republic, 11:37 Jun 11, 2013

And the stats on under-employment and the working poor have traditionally been met with the response, "insufficient data". Even a generation ago, such concepts would have been inconceivable.

The southernmost capital … • Since Nov 2006 • 5446 posts Report
Keith Ng, in reply to Matthew Hooton, 13:34 Jun 11, 2013

These must also be HORRIBlE RIGHTWING LIES from Statistics New Zealand and the OECD.
Jokes! Just being facetious. For the record, I'm actually pro youth rates, and on the fence about 90-days in principle, but just see no evidence it's working.
Look at unemployment rates by age and gender and look at the 15-24 age group, all persons. At 15.1% in Q1 2013, we’re now below the OECD average and falling.
Are we talking about the same 90-days trial period? The one from 3-4 years ago? Because if youth unemployment hasn't moved for three years, and it just dropped for one quarter, it's astounding that you'd credit it - any of it, even as a contributing factor - to the 90-days trial. (Did you? Or is that just a HORRIBLE SOCIALIST LIE?)
Also, it's a single data point. If we get two more quarters <16%, I will happily concede that youth unemployment is decreasing (still won't credit it to 90-days, for reasons above). Seriously - put it in your diary, I will eat my metaphorical hat and do it with a smile.
In the year to March 2013, there was a large fall in unemployment for people aged 15–24 years (down 10,500). This fall can be largely attributed to a decrease in unemployed 20–24-year-olds (down 11,200). This was an atypical fall in unemployment, as the number of people unemployed for this age group usually increases during March quarters.
And in the previous quarter, we had the highest youth unemployment rate since the 90s, and that was in a December quarter, which usually isn't the peak. Was that a sign that things were going very badly? This is why you don't look at single data points in isolation.
My hunch is that the temporary shift in the peak has messed with the OECD's seasonal adjustments, which is why they're reporting a much larger faller than StatsNZ. Just a hunch though.
Behind this was a rise in the number of young people outside the labour force who are studying (up 25,000). The number of both 15–19-year-olds and 20–24-year-olds in study rose – up 16,200 and 8,800 respectively.
Correspondingly, you can see the *decrease* in the employment rates. More youth studying is definitely not a bad thing, but it's also not a sign of the labour market doing well, nor a sign that policies like 90-days trial are working.
NEET rate declines
Still not convinced that NEET is the right measure for measuring the success of 90-days trial. But FWIW, they behaved in the same way as youth unemployment - spiked in December, came back down in March, no long-term decline that we can see (yet).

Auckland • Since Nov 2006 • 543 posts Report
Keith Ng, in reply to Matthew Hooton, 13:39 Jun 11, 2013

Also, I think this is why I did the graph. Here I am faffing about whether the Q1 dip is real, or whether it's a bloody artefact of the seasonal adjustment techniques caused by the the Q4 spikes, when really, none of this is consequential.
The graph shows, clear as day, that youth unemployment went through the roof post GFC and hasn't budged since. If this decline turns out to be real 6 months down the line, it will show that as well.

Auckland • Since Nov 2006 • 543 posts Report
Che Tibby, in reply to Keith Ng, 15:17 Jun 11, 2013

Yes, NEET is important, but it's a sign of much wider disengagement, rather than a predominantly labour market issue. Also, NEET data only goes to 2011. (Not really sure why - it's just derived from the HLFS...)
i think the literature is split on that. it's a labour market issue because your NEETs are quite clearly not seeking work or education in a demography that should be.
and i think HLFS only just started including it in 2011. you can derive it if you need to.
and yeah, drawing a link between NEET rates and 90 day periods would likely be drawing a long bow. but... the remainder of the data in the HLFS might let you know if it is correlated. i'd imagine the question is access.

the back of an envelope • Since Nov 2006 • 2042 posts Report
Andrew R2, in reply to Matthew Hooton, 20:47 Jun 11, 2013

None of this shows that the 90 day employment rule is working though.

Russell • Since May 2011 • 7 posts Report
Ieuan Wickham, in reply to Keith Ng, 22:20 Jun 11, 2013

Keith, under no circumstances should you eat your hat. As you point out, the data clearly show that the youth unemployment rate bounces up and down within a range, but the long term trend for the last 9 quarters (at least) is basically flat.
I don't think it's reasonable for someone to infer from the 2013Q1 figures that youth unemployment has turned the corner and is being significantly reduced, unless they're prepared to simultaneously infer the converse from the 2012Q4 figure. To take either figure on its own would be to commit one of the cardinal sins of the information age - cherry picking.
We don't have a trend until we have a trend, and we don't have a trend with one datum. If subsequent data comes in that shows that the 2013Q1 point was part of a long-term trend, well and good. Then it's a fact. Until then it's an outlier (if that).

Auckland • Since Jun 2013 • 5 posts Report