Data from the New Zealand Institute of Economic Research indicate that youth unemployment and underutilisation figures in the country have climbed back to levels not recorded since the period surrounding the Global Financial Crisis. The consultancy, described as independent, published its findings on Friday, concluding that the high rate of youth unemployment in New Zealand stems from more than structural factors alone, and that a general economic upturn within the country would not, on its own, be sufficient to resolve it.
NZIER data show that joblessness among 15-to-19-year-olds reached 25.3% in the period following the Covid-19 pandemic, with the rate for those aged 20 to 24 sitting at 12%. Those rates now sit at a level comparable to the worst point of the GFC.
Youth joblessness presents a divided picture: those aged 15 to 19 face an unemployment rate running at roughly seven times the level recorded among workers 25 and older, while people in the 20-to-24 bracket carry a rate more than three times that same benchmark — yet across the broader labour force, the overall unemployment figure has held broadly steady. NZIER figures show that joblessness, underutilisation, and NEET rates among younger New Zealanders have reached levels that the institute described as warranting concern, whereas workers in older age brackets have maintained relatively stable employment footing over the same period.
Unemployment across New Zealand climbed to 5.6% through the June quarter, a level not recorded in over ten years, while workers aged under 25 bore a disproportionate share of the underutilisation increase measured across the twelve months to June 2026. The underutilisation rate is defined as a gauge of spare capacity across the workforce, capturing those workers who are available and willing to take on additional hours. Three groups fall within its scope: those without work, those who form the potential labour force, and those working fewer hours than they seek. Statistics NZ treats this measure as holding equal weight alongside the unemployment rate.
NZIER data point to a prolonged recovery that has left businesses hesitant to commit spending to new equipment or additional staff, a caution reinforced by unresolved uncertainty about how artificial intelligence will reshape workforce demand. Persistent gaps in how education and training connect to the labour market have left many young people's qualifications out of step with the roles employers need to fill, a structural mismatch that accelerating technological change has continued to widen.
NZIER principal economist Sarah Hogan noted that New Zealand's education and training system has historically been slow to keep pace with change, and that this lag carries greater consequences when technological shifts are moving at speed and in directions that leave both employers and workers uncertain about which skills will be needed in the years ahead. Hogan also noted that a combination of cyclical and structural pressures in the labour market calls for a policy response that pairs near-term employment support with a longer-range workforce strategy.
A tension between government policy and the conditions prevailing in the labour market has been evident, the NZIER report stated. The report also noted that workers entering the labour market with limited experience and shorter job tenure tend to bear a disproportionate share of the burden when economic conditions weaken, partly because the industries where younger workers cluster are among the first to contract during downturns.
High rates of joblessness, underutilisation, and NEET classification among young people point toward an expanding cohort spending extended stretches outside the workforce — time during which on-the-job experience, skill-building, earned income, and early savings remain largely inaccessible. The New Zealand Institute of Economic Research noted that youth unemployment has reached levels not previously recorded during an economy-wide contraction, and that the underuse of younger workers carries lasting costs to productivity, health, and financial stability across an entire generation.
Accounts opened under the KiwiSaver scheme during childhood accumulate investment returns across the full span of a person's working years, allowing growth to build on growth over that extended period.
NZIER senior economist Daniel Hamill indicated that young people may be navigating a confluence of pressures — among them a drawn-out recovery, uncertainty among businesses, policy settings that have not helped, longstanding structural weaknesses, the pace of technological change, and a growing dependence on temporary migrant workers in sectors where younger workers tend to cluster. Hamill indicated that no single factor fully accounts for the pattern, but rather a layered interplay of both cyclical and structural forces.
The NZIER has pointed to the absence of a widely shared problem as a plausible factor behind youth unemployment receiving less pre-election scrutiny than the issue might otherwise draw.
Statistics NZ's latest labour market data show a split across age groups, with workers aged 65 and over recording the fastest pace of employment growth even as younger cohorts face weaker conditions. Among workers in that age group, the jobless rate stood at 1.4% during the June 2026 quarter, down from 1.6% recorded twelve months earlier. The underutilisation rate among workers aged 65 and over held at 8.3% through the June 2026 quarter, unchanged from the same period a year earlier.
The NZIER called for a coordinated national workforce strategy to strengthen long-term economic resilience, arguing that labour market conditions affecting young people had reached a point where intervention — rather than waiting for natural correction — was warranted.
