When something seems too good to be true, it usually is. New Zealand's apparently record-low unemployment figures are a classic case.

Before Christmas, Statistics New Zealand reported joblessness at the end of the September quarter of 3.4%, the lowest equal rate on record. This result would put a smile on the face of any Minister of Finance. Given the ravages of Covid-19, Grant Robertson could be forgiven for thinking he was an economic magician.

After an arduous year, the low unemployment numbers received plenty of media coverage. Good news was in short supply in 2021. But, aside from a column by Mike Yardley in Stuff this week, the dramatic rise in the number of working-age Kiwis receiving Jobseeker support has attracted rather less attention.

At the end of the September quarter, 112,056 “work-ready” New Zealanders were on Jobseeker support. This was close to twice the number five years earlier in September 2016, just before Robertson picked up the Finance reins. At that time, the official unemployment rate stood at 5%,

Why has the unemployment rate fallen to record lows under Robertson's watch, but the number of work-ready Kiwis receiving the dole nearly doubled?

Yardley suggests the answer lies in how Statistics New Zealand measures unemployment. Those not looking for work do not count as unemployed (even if they are receiving an unemployment benefit).

That can really matter when labour markets are weak and discouraged workers are dropping out of the labour force. But that is not what is happening now. We have had a strong labour market and increasing benefit numbers.

Why, then, is Work and Income New Zealand not ensuring those receiving an unemployment benefit are looking for work?

The likely answer is the Government's 2018 direction to WINZ to ease up on sanctions faced by Jobseeker recipients not actively seeking employment. In the first year following the policy change, the number of sanctions imposed plunged to 8,500 from 14,500 the previous year. 

Labour's intentions in easing sanctions were undoubtedly benevolent. Yet the human costs to those who drift into long-term unemployment by remaining on Jobseeker support are too serious to ignore. The well-being benefits of work are undisputed.

The Government might like to pretend unemployment is at record lows. However, when the increased number of working-age Kiwis receiving the Jobseeker benefit is taken into account, the unemployment rate is closer to 6% than 3.4%.

Instead of relying on a statistical mirage, the Government must reduce the number of working-age Kiwis on Jobseeker support.

The right policy settings will benefit workplaces suffering from labour shortages, taxpayers bearing the burden of rising welfare costs and, most importantly, the beneficiaries themselves.