New Zealand Institute of Economic Research (Inc)
Media Release, 9 October 2026
For immediate release
A new NZIER Public Good Insight warns that New Zealand’s youth unemployment problem is likely to be driven only partly by structural factors, so economic recovery alone may not fix it.
Since COVID, unemployment among 15- to 19-year-olds has risen to 25.3 percent and among 20- to 24-year-olds it has risen to 12 percent – rates similar to those at the peak of the Global Financial Crisis. But the overall unemployment rate has remained relatively stable. While young New Zealanders are experiencing crisis-level unemployment, underutilisation, and NEET (not in employment, education or training), older workers have held steady.
Policy decisions during and after COVID and subsequently in response to high rates of inflation have played an important role. The current government has prioritised fiscal restraint over fiscal support. Policies focused on strengthening incentives to work overlook the shortage of genuine employment opportunities and reduce access to employment support.
Additionally, while the government expects economic recovery to improve labour market conditions, the Insight suggests the solution may not be so straightforward. Ongoing technological change and the emergence of AI, which have added another layer of uncertainty, are also likely to be impacting young people's employment opportunities. Critically, AI uncertainty can affect both employers and young people. Employers may be putting hiring on hold, especially for the workers they expect are most replaceable by AI, and young people are likely to be questioning the value of investment in education and training. "The education and training sector has always been slow to adapt", says Sarah Hogan, Principal Economist, "but the impacts of that are worse when technology is moving very fast and in ways that make it unclear what skills employers and workers will need in the near future".
The Insight also examines the use of migrants on temporary work visas. The number and share of migrants filling low-skill jobs had been increasing before COVID, and the government has eased restrictions, allowing employers to bring in migrants for low-skill minimum wage jobs even though advice from officials indicates that a wage premium is needed to minimise the displacement of young New Zealanders.
The transition from education and training into work has always been challenging, and New Zealand has a poor track record of matching skills to jobs. This has resulted in a growing reliance on temporary migrant workers. Two gateway industries for young people – Construction and Retail, Food & Accommodation have significantly shifted the composition of their workforce in a way that has favoured migrants on temporary work visas over young New Zealanders, raising questions about the appropriateness of policy settings.
"Many young people may be locked out in a perfect storm", says Daniel Hamill, Senior Economist. "We can't be certain about the role of each individual factor, but there appears to be a complex combination of cyclical and structural risks at work, including a sluggish recovery, business uncertainty, unhelpful policy responses, pre-existing structural problems, accelerating technological change, and increasing reliance on temporary migrant workers in some sectors where young people are also concentrated."
Given the likely role of structural factors, the crisis may persist to some extent even during an economic recovery. Young people currently in the labour market need greater support, and the government needs a workforce strategy fit for the future.
For further information, please contact:
Daniel Hamill
Senior Economist
daniel.hamill@nzier.org.nz | 027 300 0662