In the right place at the right time
But the COVID recession proved very different. While these industries (and total GDP) all took a massive hit in mid-2020, they have already bounced straight back up to above pre-COVID levels (figure 9, bottom panel).
This likely reflects the sector-specific nature of the COVID-19 shock (as well as the rapid fiscal and monetary policy response).
Services industries, particularly those that rely heavily on international tourism, have borne the brunt of the impact of the border closure, while others, once fiscal policy filled the initial lockdown hole, have picked up where they left off, only with lower interest rates.
Some sectors have had an outright tailwind. There was a big substitution towards purchasing goods – particularly durables – during COVID (as opposed to splashing out on overseas holidays).
That provided a big boost to goods-producing industries. And record-low mortgage rates and the suspension of LVR restrictions saw the housing market go gangbusters, with a surge in building consents indicating a strong pipeline of construction work that still needs to be cleared.
So overall the biggest three industries for Māori employment have actually weathered the COVID storm much better than in previous cycles – and this goes a long way to explaining why Māori have experienced a comparatively small and temporary rise in unemployment.
So putting all the pieces together, it looks like a key part of the puzzle for explaining the resilience of Māori labour market outcomes during COVID has been the industry composition of employment.
While construction, manufacturing, and retail trade and accommodation have typically been quite severely impacted by recessions, the sector-specific nature of COVID meant that these industries were to some extent sheltered from the ravages of recession.
The robustness of Māori employment outcomes (and indeed the labour market as a whole) during COVID is genuine good news. But unfortunately, Māori unemployment is still structurally much higher than average, and there is nothing in these results to suggest that the next recession won’t revert back to the cyclical patterns of the past.
Although the RBNZ does monitor Māori and Pasifika unemployment when thinking about the overall performance of the labour market, they can’t resolve structural issues with cyclical stimulus. These inequities are deeply ingrained in New Zealand’s labour market, and require targeted policy responses to address.