News this week of how hard it was for some Gen Z New Zealanders to find paid work made grim reading. They were stories of young, qualified people handing out dozens of CVs, applying for hundreds of jobs, and receiving little more than silence in return. 

Of course, at today’s youth wage rates, employers prefer to hire people with work experience. But to get work experience a young person has to get a job. 

The youth unemployment rate in Auckland was 18% in March, up from 9% in March 2023. This was for 15-24 year-olds. For those aged 25-64 it was only 5% in March, up from 2.6% in March 2023. 

It is not just New Zealand, but New Zealand’s case is stark. In March this year the youth unemployment rate in Australia was 10%. For the 38 mainly rich member countries of the Paris-based OECD the average was 11%, hardly higher than in March 2023. 

The news stories this week made it clear that Gen Z is not the problem. Those being interviewed were qualified, motivated, and eager to contribute.  

They are being locked out of the workforce by a combination of economic headwinds due to fiscal extravagance, low productivity (due to low investment per worker and too much red tape), and barriers to youth employment.  

Governments could do much over time to reduce those barriers, if enough voters were willing. Some of those with jobs would strongly oppose reducing one barrier. 

Boosts to the minimum wage are fine for those who remain in paid work, but they make people out of work less affordable for employers. That handicaps those with the least skills and/or the least work experience. 

New Zealand boosted its minimum wage from 88% of Australia’s in 2017 to 99% in 2023 according to latest OECD statistics. New Zealand’s minimum wage is among the highest in the OECD relative to median income.  

Another barrier is the “Wellington-knows best” mess the previous government made of technical education. Countries with strong vocational systems tend to have better youth employment outcomes. Building that is a long-haul job. 

Those who care about an 18% youth unemployment rate in Auckland should care about making youth employment more affordable for employers. MBIE’s next minimum wage review should test whether the youth ‘Starting Out’ wage does enough to mitigate the harms that minimum wages impose on those who are starting out.