Friday, July 14, 2017

Marginally Attached Workers in New Zealand

Discouraged workers are those who have actively searched for jobs in the past 12 months but believe that there are no jobs for them. OECD publishes data on what they call marginally attached workers. They are defined Marginally attached are persons aged 15 and over, neither employed, nor actively looking for work, but are willing/desire to work and are available for taking a job during the survey reference week. Additionally, when this applies, they have looked for work during the past 12 months. This measure is broader in scope than the discouraged worker data-set and may be used to produce alternative measures of labor underutilization.” 

The figure below plots New Zealand, Australia (shorter sample), and the United States OECD data as a percent of working age population (15-64) from 2000. New Zealand and Australia are on the primary axis and the U.S. is on the secondary axis. The picture is rather dramatic and alarming. The trend is rising in New Zealand and falling in Australia and the United States. We have nearly 300,000 marginally attached workers in New Zealand. Given the relatively smaller size of New Zealand labor market, that amount to more than 10 percent of the working age population. The number of workers in the U.S. is really a small relative to the size of the working age population. On average, Australia’s rate of marginally attached workers is more than 10 times as large as that of the U.S. New Zealand’s is more than three times as large as Australia’s.[1]

These workers could have been unemployed for a long time; or do not have the updated skills needed to get a job; or have suffered from sort of discrimination. These people would take a job if it were offered. Usually the number of such workers falls during the recovery as in the case of the U.S. and Australia in the figure below. Surprisingly, the number increased in New Zealand. Discouraged workers do not include those who have dropped out of the labor force because they went back to school, disables, and women who are on maternity leave.

New Zealand's labor statistics appear healthy, except for this strange statistic. The upward trend is alarming because there might be thousands of highly skilled and productive workers who are discounted for other reasons. I did not find any papers on the subject in New Zealand Ministry of Business, Innovation, and Employment.


[1] New Zealand sample is 2000-2014, Australia and the U.S. 2007-2014.

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