Unemployment to hit pandemic-level highs in 2025

Unemployment in New Zealand is forecast to soar back to levels last seen in September 2020 and top those across the Asia-Pacific region in 2025, according to a new report by S&P Global.
The US ratings agency’s latest Asia-Pacific economic outlook has New Zealand’s unemployment rate forecast to rise from the 4.8 percent recorded in the quarter to September 2024 to 5.3 percent as a year average in 2025 – 0.1 percent higher than official forecasts by both Treasury and the Reserve Bank.
This places New Zealand’s forecast unemployment rate as the highest across the Asia-Pacific for 2025, equal with China and 0.9 points higher than Australia.
The Treasury revised down its forecast for the March 2025 year from 5.4 percent to 5.2 percent on Wednesday, as the Reserve Bank cut its benchmark official cash rate by 50 basis points to a two-year low of 4.25 percent. 
The grim forecasts come after the 160 workers at New Zealand’s biggest solar panel company, SolarZero, learned they’d all lost their jobs as the company was shut down with immediate effect.
SolarZero scheduler Ben Dunker and his partner Lisa are German, but have lived in Nelson for seven years. They are raising their three-year-old son Alfred in their own home; their mortgage payments are $950 a fortnight.
Ben’s job was their only income – and that ended on Tuesday when global investment firm Blackrock announced it was laying off all of SolarZero’s staff.  “I was in charge of a group of installers, and I was listening to that company update, thinking, ‘What can I tell my boys? What’s it going to be like for Christmas now?’”
His boss had given him a heads up, telling him: “Don’t bother coming in tomorrow”. “Get your CV ready,” she had told him. “It’s going to be bad news, or it’s going to be very bad news.”
He patched in for the 4pm meeting and was surprised to see it fronted by two people calling themselves “liquidators” – a term he’d never heard in Germany. It was they who gave staff the very bad news.
“I was really in shock after that. And I think I was the only one in that meeting that started saying hey, you guys can’t do that. Coming from Germany, we have, rules that they can’t just fire people like that. They have to give four weeks’ notice.”
Unemployment was last as high as S&P Global’s 2025 forecast in September 2020, several months after the first nationwide lockdown when the number of unemployed people rose by 37,000 to reach 151,000. 
Vishrut Rana, Asia-Pacific senior economist at S&P Global, says New Zealand’s economy is expected to stabilise going forward, but the labour market reacts with a substantial lag.
“We have just started to see deterioration of the labour market and it will get worse before it gets better,” he says.
Rana notes that unemployment measurements differ between countries but says New Zealand is recording low labour market activity in comparison to similarly high-income east Asian economies.
High levels of employment in industries such as agriculture, in which informal working arrangements are common, means New Zealand’s unemployment rate rises and falls quickly when conditions improve or deteriorate, he says.
Stats NZ’s monthly Employment Indicators data, released on Thursday, says there are more than 35,500 fewer jobs in New Zealand than there were a year ago. 
Younger New Zealanders had been hit hardest with more than 30,000 jobs having disappeared in the 15-29 age bracket. In Wellington, where the coalition Government’s commitment to cut public sector spending has manifested in widespread job cuts, 2.2 percent or 5,706 jobs have disappeared. 
Ministry of Social Development data on Jobseeker Support recipients showed the number of working-age people receiving the benefit had increased 6.3 percent year-on-year, from 181,509 in the quarter ending September 2023 to 204,072 for the same quarter in 2024.
This group was made up of people considered ‘work ready’ and those who had been signed off work with a health condition or disability. The number of benefit recipients in the latter group had increased 14.3 percent year-on-year.
Treasury’s chief economic adviser Dominick Stephens says broader economic forecasting is for a return to growth, which is expected to bring unemployment down in time.
“The Treasury recognises that falling economic activity and rising unemployment has had a real impact on New Zealanders’ living standards. New Zealand has experienced a period of economic adjustment following high inflation,” he says.
“The rise in unemployment, while painful, has actually been less than the Treasury originally anticipated, showing that New Zealand’s labour market is flexible and responsive.”
Ben Dunker has applied for 23 jobs over the past five days and says he will do “whatever it takes” to make his next mortgage payment.
His final pay cheque, last week, went to rates and groceries. The company is not paying out costs, or expenses, or annual leave, or redundancy.
He’s in a better position than some of his workmates, whose visas are conditional on their jobs at SolarZero. Dunker has residency, and an application in for citizenship.
But of course, he’s dismayed.
“I’m angry and shocked I really believe in New Zealand. I really believe it’s a great country. I love living and working here, and this won’t change it.
“But I’m shocked, not just that an American company comes in and does this stunt, but also that New Zealanders’ way of dealing with it is so very nice.
“This is really a very polite country. Maybe that’s one of those reasons why Blackrock thought they could do it in New Zealand – because you know, try that in a country like Spain or somewhere, and you’d get lynched for that.”