The number one problem facing business at present if finding staff to employ. The number two problem is finding skilled staff to employ. It is little wonder that the unemployment rate is staying so low and that this is fuelling wage inflation. But is this a good or a bad thing for the economy at the moment?
Ruth Dyson has come out with a statement suggesting that this is a major achievement:
"This caps off an amazing triple achievement for New Zealand of record employment, record labour force participation and record low unemployment – in a wider environment of historically low levels of unemployment. It also complements the Labour Cost Index’s record 3.4 per cent increase in wage and salary rates for 2007 - the highest annual increase since the series began in 1992.
“These results continue to show that high unemployment is a thing of the past. Thanks to initiatives like Working New Zealand, the Labour-led government is supporting more and more people into real jobs.”
The Hive does welcome low unemploymant, but wonders whether the current statistics are reflecting failure in policy more than success in policy. Might this not be a symptom of low productivity growth and an immigration policy that is failing to meet the needs of the economy?
And what will the impact of this news be - positive or negative? As the NZ Herald notes in its article linked above, the short term impact on the NZ dollar has been to increase its value. and there is the fact that continuing strong employment growth and record wage growth, will be seen as inflationary by the Reserve Bank. Would it be a good thing is this statistic caused the Reserve Bank to push the button on a further interest rate increase? We hope not.
