One in four New Zealand teenagers looking for work cannot find a job, and independent economic think tank NZIER says an improving economy will not be enough to fix it.
In a paper released on Friday 9 October, the New Zealand Institute of Economic Research said the unemployment rate for 15 to 19-year-olds reached 25.3 per cent in the year to June 2026. For 20 to 24-year-olds it was 12 per cent. For everyone aged 25 and over it was just 3.5 per cent.
That means a teenager in the labour force is roughly seven times as likely to be out of work as an older adult. The paper, Locked out in a perfect storm? What’s behind the youth employment crisis?, was written by principal economist Sarah Hogan and senior economist Daniel Hamill as part of NZIER’s self-funded public good programme.
What makes this downturn unusual, the authors argue, is that young people are carrying it almost alone. In the early 1990s the teenage jobless rate also topped 20 per cent, but so did unemployment for everyone else. Today the teenage rate is close to its historical highs while the rate for older workers has stayed low and steady.
“Youth unemployment has reached a crisis level without an economy-wide unemployment crisis,” the paper says. NZIER suggests the lack of a shared problem is one reason the issue has not drawn the attention it normally would in an election campaign.
The wider measures are worse. Counting people who have some work but want more, underutilisation among 15 to 24-year-olds was 37.1 per cent, and 53.8 per cent among 15 to 19-year-olds, against 13.4 per cent across the whole workforce. The share of 20 to 24-year-olds not in employment, education or training has climbed from about 13 per cent in 2023 to about 17 per cent, approaching levels last seen after the global financial crisis.
Stats NZ data on people starting new jobs shows the same story from another angle. Between June 2023 and June 2025, new job starts for 15 to 19-year-olds fell 32.1 per cent, compared with 22 per cent for workers aged 25 and over.
The losses are concentrated in the industries where most young people get their first job. Retail, food and accommodation provides 35 per cent of all jobs held by young people, and youth employment there has fallen 13 per cent since 2023. Professional and administrative work is down 16 per cent and construction 10 per cent.
NZIER points to several causes acting at once. Businesses have spent two years in what the institute’s own business surveys describe as weak activity and cautious hiring, and firms facing uncertainty tend to defer hiring just as they defer buying equipment. Older staff can stay put and ride it out. School leavers trying to get a foot in the door cannot.
Technology has also been eating away at traditional first jobs for a decade, the paper says, from supermarket self-checkouts to ordering screens in fast-food outlets. Artificial intelligence adds a new layer. NZIER cites US payroll research from Stanford University showing employment of 22 to 25-year-olds in the jobs most exposed to AI was 19 per cent below where it would otherwise have been, mostly because firms hired fewer young people rather than laying anyone off.
“An important point is that AI does not need to be widely adopted to hurt young workers,” the authors write. If employers do not know which skills they will need in two or three years, they wait. And if young people cannot tell which skills will be valued, it becomes harder to judge whether a three-year course is worth the money.
The paper notes the Reserve Bank raised a similar concern in its September Monetary Policy Statement, warning that “growth in activity may not flow through into additional employment as expected, particularly if businesses are relatively more focused on efficiency and technology investment in the short run”.
Immigration settings are the most pointed part of the analysis. When the Accredited Employer Work Visa was introduced in 2022 it carried a median wage threshold designed to encourage employers to hire and train locals first. In March 2025 that threshold was removed altogether, even though a Cabinet paper from the Ministry of Business, Innovation and Employment had advised keeping a floor 10 per cent above the minimum wage to reduce the risk of displacing local workers.
“Employers have since been able to hire migrants at the minimum wage,” the paper says. Monthly arrivals on the visa rose from 1,103 in December 2024 to 3,195 by January 2026. Between 2022 and 2026, more than 38,000 visa holders were employed in the lowest-skill jobs, including 9,835 builder’s labourers, 2,040 fast food cooks and 1,688 kitchen hands.
NZIER found that retail, food and accommodation sharply increased its employment of migrants on work visas while sharply cutting its employment of young people. Construction held its migrant workforce roughly steady while employing significantly fewer young people. Many visa holders arrive with two years of experience or a qualification, which can make them a stronger candidate for an entry-level role than a school leaver with neither.
The institute is careful not to overstate the link. “The flow of migrant workers cannot simply be shut off on the grounds that it will make a difference to youth employment,” the paper says, because the causal relationship is too uncertain and the costs of a blunt response would be too high.
The paper is also critical of the Government’s response so far. From November, single 18 and 19-year-olds will only qualify for Jobseeker Support if their parents’ combined income is no more than $67,225, or if they cannot rely on their parents, according to Work and Income. NZIER notes the Ministry of Social Development’s own regulatory impact statement found the costs of that change were likely to significantly outweigh the benefits for young people and their families.
“Incentives only work if there are opportunities. And little has been done to create those,” the authors write. They point out that the number of people supported by Apprenticeship Boost fell from 25,725 in the 2024 financial year to 17,355 in 2025 after the scheme was limited to first-year apprentices. The paper does credit the Government with 1,000 extra Youth Guarantee places and a doubling of Trades Academy places in Budget 2026, and says slowing minimum wage increases has likely helped limit the harm from earlier rises above inflation.
Speaking to RNZ, Hamill said “Many young people may be locked out in a perfect storm.” Hogan told RNZ that “The education and training sector has always been slow to adapt.”
The cost does not stop when the economy turns. Research cited in the paper found early unemployment can leave a wage scar of 13 to 21 per cent that is still visible at age 42, and a 2016 AUT study estimated the short-run cost of each young person not in work or study at almost $22,000 in lost output and public spending. Young people who miss out on early work also miss years of KiwiSaver contributions that compound over a lifetime.
NZIER is calling for stronger immediate help to get currently unemployed young people into work, and a longer-term plan. “New Zealand needs a coherent workforce strategy to improve long-term economic resilience,” the paper concludes.
Are you a young person struggling to land a first job, or an employer weighing who to hire? Tell us what you are seeing in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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