NZIER: NZ Youth Employment Reaches Crisis Levels

Youth Unemployment Reaches Crisis Levels in New Zealand

New Zealand’s youth unemployment rate has reached crisis levels, with 25.3% of 15- to 19-year-olds and 12% of 20- to 24-year-olds out of work, according to an update released by the NZ Institute of Economic Research (NZIER). Economists warn that standard economic recovery measures will fail to fix the issue due to structural shifts and the rapid acceleration of artificial intelligence.

While the overall unemployment rate in New Zealand has remained relatively stable at 5.2%—the highest level since 2020—young workers face displacement. Figures from Stats NZ indicate that 171,000 people are now out of work across the country, climbing from 164,000 in prior counts.

Post-Covid Policies Contribute to Youth Employment Deficit

Senior economist David Hamill and principal economist Sarah Hogan noted that young people are experiencing severe underutilisation alongside high rates of being not in employment, education, or training. The NZIER analysis points directly to post-Covid policy decisions as a contributing factor. The current government has prioritized fiscal restraint over support, deploying policies focused on strengthening work incentives while overlooking a fundamental shortage of job opportunities.

According to Hamill and Hogan, pushing young people off benefits will only succeed if actual employment positions exist for them to fill. Additional reporting from RNZ highlights that young people have always faced higher exposure to economic downturns due to limited experience. However, the current landscape diverges from past cycles because the 15- to 19-year unemployment rate sits near historical highs while overall employment rates remain well below 1990s levels.

AI and Technological Change Compound Youth Unemployment Risks

Technological disruption compounds the current fiscal problem. The emergence of AI introduces uncertainty for both employers and job seekers.

It was noted that these youth unemployment rates mirror figures seen at the peak of the global financial crisis. Yet, because the wider economy lacks a shared employment crisis, the issue has largely avoided intense pre-election attention. NZIER describes the situation as a complex combination of cyclical and structural risks, including a sluggish business recovery, unhelpful policy responses, and accelerating technological change.

Migrant Labor Displaces Young Workers in Key Sectors

Compounding the labor lockout, sectors where young workers are typically concentrated—such as construction, retail, food, and accommodation—have increasingly relied on temporary migrant workers. It was noted that wage premiums were needed to protect young domestic workers from displacement.

The Reserve Bank of New Zealand has indicated it is actively monitoring artificial intelligence as a factor influencing youth unemployment rates. As structural pressures mount, economists stress that standard macroeconomic growth will not automatically resolve the crisis, signaling a need for a targeted workforce strategy fit for the future.