Economic and Labour Market Update
July 2010
1. Introduction
The ‘age of austerity’ is increasingly being used to describe the current global state of economics and political response. The effect of the global recession is being translated into new government policy throughout the world. Although there were signs of global economic recovery in many countries, the optimistic sentiment is waning. Governments are fearing the newly-coined state of ‘greekanomics’, indicative of the new economic (dis)order that politicians are trying to avoid. The last week of June was marked by falling stock prices due to the release of weaker than expected economic data internationally. This was largely due to the European Central Bank withdrawing some liquidity from the market, effectively tightening monetary policy. Talk of a double-dip recession pervades the economic media. New Zealanders, conscious of the inter-connected system of global markets, are more than aware of the international nervousness and the changing macro climate. Against this backdrop, the implications of and reverberations from the May budget are being thought through. Within Auckland a further introspection is taking place as institutional change becomes a reality with the inception of the Auckland Council drawing nearer. This regional economic monitor emphasises the climate of economic uncertainty that Auckland faces as global forces combine with local structural reorganisation to lead the region into more economic unknowns.
2. Fiscal change
The New Zealand budget delivered in May could be described as being grounded in neoclassical economic theory, reminiscent of its predecessors of the eighties and early nineties. It seems the intention was to switch investment from the rental property market to more productive industries, while at the same time controlling consumption levels, through an increase in GST. In theory, both measures should increase savings (or reduce debt) and free up investment for more productive sectors of the economy, namely those that return export dollars. This is a long-term strategy, as the institutions and behaviour of individuals need to adapt to the changing context. To continue the theory, this should free up and stimulate investment in the economy (broadly defined), if opportunities and channels to productive investment open up. A further analysis of capital markets is required to assess where best to invest money in the changing economy. Fiscal change has redistributive effects, but is not necessarily place specific. That is not to say that fiscal changes are place-neutral, as there may be concentrations of effects in certain areas, depending on the magnitude of effects on various groups of people. It is within households and businesses that such effects are felt, and effects are largely dependent on socio-economic factors. The current socio-economic state of households varies across the Auckland region. With the announcement in March 2010 of the new ward and board boundaries by the Local Government Commission, recent work at the ARC has focused on the structure and make up of the wards and boards, using existing data sources. There has been close scrutiny of the governance changes and the following section makes use of the ARC’s available economic data corresponding to the new boundaries.
3. New Auckland Governance
Governance structures are a discrete area of study within the new institutional economic school of thought, and changing governance structures has economic consequences.1 The study of markets, firms, networks and communities are used for analysing economic outcomes. Thus the new structures within Auckland’s Local Government reorganisation provide interesting case study material for an analysis of governance change. The Commission determined that the region would have 13 wards and 21 local boards – the boundaries of each ward coinciding with the boundaries of one or more local boards (figure 1).
Figure 1. Local boards in the urban area of Auckland region
Note: Due to scale, Rodney, Franklin, Waiheke and Great Barrier are not fully visible, or labelled.With respect to population size, Howick is the largest local board (estimated resident population of 113,058 in 2006 – 8.7% of the regional population, while the smallest is Great Barrier Island (894, or 0.1%). In terms of land area, Rodney in the north of the region is the largest local board.
The age composition of a local area has implications for service and social infrastructure provision. There is wide variety with age structure across the local board areas, but a general pattern of younger populations in the south and older in the north is discernible. Within the local board areas, the youngest median ages are found in the south of the urban area: Mangere-Otahuhu (median age 27.4 years); Otara-Papatoetoe (28.7 years); and Manurewa (28.8 years), while the three local board areas with the oldest median age are in the north of the region: Hibiscus and Bays (39.6 years); Rodney (39.1 years); and Devonport-Takapuna (38.3 years).
When looking at age groups (cohorts), some interesting data emerges:
| • | Almost a third (30%) of the population of Mangere-Otahuhu were children. |
| • | Almost a third of all children in the region live in the three local board areas of Mangere-Otahuhu, Otara-Papatoetoe and Howick (30.3% compared with 25.4% overall). |
| • | The majority of the population of Waitemata (84.1%) is of working age, reflecting the area’s proximity to the region’s largest employment centre, the Central Business District. |
| • | Hibiscus and Bays has the largest number of residents aged 65 years and over. |
Figure 2: Proportion of regional employee counts and business units (2009)
Statistics New Zealand Business Directory data shows that at February 2009, almost a quarter of Auckland’s regional employment was located in the Waitemata local board area (142,793 employees or 23% of the regional count). Perhaps it is not surprising, as this is where the CBD is located. Other local board areas that function as large employment centres are Maungakiekie-Tamaki (76,766 employees, or 12.4% - which includes the Penrose industrial area) and Howick (40,599 employees or 6.5% - which includes East Tamaki).
Overall, the manufacturing industry is the largest employer in the region, at 76,175 employees or 12.3% of the regional count, followed by the professional, scientific and technical services industry (62,727 employees or 10.1% of the regional total).2 There are clear locational differences across these main employment sectors:
| • | Manufacturing is located in several large well established centres predominantly to the south and west – almost a fifth of employment in manufacturing is located in Maungakiekie-Tamaki (18.4% of all those employed in manufacturing work here), followed by Howick (14.3%) and Whau (8.4%). |
| • | Almost half (47.7%) of the 62,727 employees who work in professional, scientific and technical services are located in Waitemata local board area, and a further 9.8% work in Albert-Eden. |
At February 2009, the Auckland region had 161,104 business units - 31.4% of all units in New Zealand. The Auckland region has both large scale employers as well as many sole or smaller enterprises, and many business units are self employed persons with no employees (approximately two thirds).3 Again, Waitemata has the highest number of business units (25,581 or 15.9% of all units in the region), see Figure 2.
Table 1: Labour Force Participation (of those aged 15 years and over) percentages in 2006
| Employed Full-time | Employed Part-time | Unemployed | Not in the Labour Force | |
| Albert - Eden | 52.4 | 14.2 | 4.0 | 29.5 |
| Devonport - Takapuna | 50.6 | 15.3 | 2.5 | 31.6 |
| Franklin | 55.4 | 15.2 | 2.7 | 26.7 |
| Great Barrier | 38.4 | 19.7 | 4.4 | 37.6 |
| Henderson - Massey | 51.0 | 12.7 | 4.3 | 32.0 |
| Hibiscus and Bays | 49.4 | 16.0 | 2.6 | 32.0 |
| Howick | 51.3 | 14.6 | 3.2 | 30.9 |
| Kaipatiki | 53.6 | 14.3 | 3.5 | 28.5 |
| Mangere - Otahuhu | 45.1 | 10.0 | 6.1 | 38.7 |
| Manurewa | 50.4 | 10.8 | 5.3 | 33.5 |
| Maungakiekie - Tamaki | 52.9 | 11.2 | 4.1 | 31.9 |
| Orakei | 52.0 | 15.1 | 2.4 | 30.5 |
| Otara - Papatoetoe | 46.1 | 10.6 | 5.9 | 37.4 |
| Papakura | 50.4 | 12.0 | 5.0 | 32.7 |
| Puketapapa | 45.6 | 13.8 | 4.4 | 36.2 |
| Rodney | 52.5 | 17.0 | 2.3 | 28.5 |
| Upper Harbour | 52.5 | 15.2 | 2.9 | 29.4 |
| Waiheke | 45.2 | 17.6 | 3.4 | 33.7 |
| Waitakere Ranges | 55.4 | 15.1 | 3.3 | 26.1 |
| Waitemata | 56.9 | 13.1 | 4.3 | 25.7 |
| Whau | 47.4 | 12.8 | 4.6 | 35.3 |
| Total | 51.1 | 13.7 | 3.8 | 31.4 |
Employment Status
The majority of those employed full or part time are paid employees - 79.3% across the region in 2006. The two island communities (Waiheke and Great Barrier) and the two non-urban areas of Rodney and Franklin had the lowest proportions of paid employees, with corresponding high proportions of self employment (with no employees).
Within the urban mainland area, Orakei had the highest proportion of usual residents who were employers – 10% of all employed. Mangere-Otahuhu and Otara-Papatoetoe had the lowest, at 2.5% and 2.6%.
Labour Force Participation
At the 2006 census, just over half (51.1%) of the regional population aged 15 years and over were employed full time and a further 13.7% were employed part time. Almost a third (31.4%) were not in the labour force and the remaining 3.8% were unemployed. Although these figures have changed significantly since 2006 with the recession, a breakdown by board level of the census data gives an indication of the employment and unemployment hot-spots back then.4
| • | Waitemata had the highest proportion (56.4%) of those employed full time, followed by Waitakere Ranges and Franklin (both 55.4%). |
| • | Waiheke and Great Barrier had the highest proportions of adult population who were in part time work (19.7% and 17.6% respectively). Relatively high proportions of part time workers were also concentrated in local board areas to the north – Rodney (17%), Hibiscus and Bays (16%), Devonport-Takapuna (15.3%) and Upper Harbour (15.2%). |
| • | Areas to the south had relatively high proportions of unemployed – notably Mangere-Otahuhu (6.1%) and Otara-Papatoetoe (5.9%), followed by Manurewa and Papakura (5.3% and 5.0%). Henderson-Massey had the greatest number of unemployed, at 2,997. |
Income
Median household incomes (as reported at Census) ranged widely from $22,501 in Great Barrier to $88,741 in Orakei. Residents in Orakei and Waitemata local board areas reported the highest median household and personal incomes in 2006. Waitemata reported the third highest median incomes, while Devonport-Takapuna had the third highest median personal income (30,555).
Table 2: Median personal and household income ($) (Census 2006)
| Median household income | Percentage above/below median HH income | Median personal income | Percentage above/below median personal income | |
| Albert - Eden | 69,661 | 10% | 28,402 | 6% |
| Devonport - Takapuna | 68,745 | 8% | 30,555 | 14% |
| Franklin | 66,372 | 5% | 29,177 | 9% |
| Great Barrier | 22,501 | -65% | 16,334 | -39% |
| Henderson - Massey | 55,733 | -12% | 24,826 | -7% |
| Hibiscus and Bays | 64,757 | 2% | 28,219 | 5% |
| Howick | 71,281 | 12% | 27,469 | 3% |
| Kaipatiki | 64,083 | 1% | 27,730 | 3% |
| Mangere - Otahuhu | 51,387 | -19% | 19,879 | -26% |
| Manurewa | 58,790 | -7% | 24,633 | -8% |
| Maungakiekie - Tamaki | 56,868 | -10% | 26,371 | -2% |
| Orakei | 88,741 | 40% | 36,583 | 37% |
| Otara - Papatoetoe | 50,338 | -21% | 20,730 | -23% |
| Papakura | 55,773 | -12% | 25,876 | -3% |
| Puketapapa | 58,274 | -8% | 21,517 | -20% |
| Rodney | 59,149 | -7% | 26,977 | 1% |
| Upper Harbour | 75,281 | 19% | 29,499 | 10% |
| Waiheke | 38,725 | -39% | 23,308 | -13% |
| Waitakere Ranges | 65,774 | 4% | 29,940 | 12% |
| Waitemata | 73,691 | 16% | 34,259 | 28% |
| Whau | 52,317 | -17% | 22,069 | -18% |
| Total region | 63,387 | 26,798 |
NZ Deprivation Index
Auckland is home to both the most and the least deprived neighbourhoods in New Zealand. There are some households and communities in the Auckland region, particularly to the west and south of the urban area, that do not enjoy the same levels of opportunity and wellbeing as households in other areas, particularly to the north. The New Zealand Deprivation Index provides an indication of relative advantage that extends beyond just investigating income. It is a combination of a range of socio-economic variables and is measured at the household level.5
Across the local boards, the differences are quite stark. For example, a staggering 85.8% of households in Mangere-Otahuhu were living in areas that were rated 8, 9 or 10 on the NZ Deprivation Index, compared with 1.4% of those in Upper Harbour.
Figure 3: Proportion of households in areas rated deciles 8, 9 or 10 on the NZ Deprivation Index (2006)
4. Conclusion
The ability to generate and analyse economic data at the most appropriate level is important for an effective policy response. This report has used existing Statistics New Zealand data held by the ARC at meshblock level to explore the socio-economic conditions in the wards of the new Auckland Council. Subsidiarity, as an organising principle of handling issues by the smallest or least centralised competent authority, is applicable to the newly formed boards and wards in the Auckland Council. That does not detract from the holistic perspective of analysing the region as a functioning system, not in isolation but as part of the national and indeed global economic system. Political governance is changing in Auckland, and as a result, economic governance will be altered. The region awaits how this will manifest over the coming years, and debate will continue on how best to make use of future investment in the region. This is a further uncertainty for the region along with the uncertain macro and international economic climates.
Prepared by Dr. Catherine Murray, Social and Economic Research and Monitoring Team, Auckland Regional Council.
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