OCR Hike Puts Squeeze on Fragile Job Market

The Reserve Bank of New Zealand's decision to raise the Official Cash Rate (OCR) has been met with criticism from the New Zealand Council of Trade Unions. The OCR hike, which takes it to 2.75 percent, is expected to worsen an already fragile job market.

New Zealand has been experiencing a prolonged economic downturn, with high unemployment and underutilization rates. According to the NZCTU, there are currently 171,000 people unemployed in New Zealand, the highest number since the early 1990s. Additionally, 440,000 people are underutilized, meaning they want more work than they can get.

NZCTU President Sandra Grey stated that 'the OCR hike today is not what this country needs'. She argued that raising the OCR again repeats a mistake made in 2023-24, when it was kept too high for too long. This decision has pushed unemployment rates higher and has had far-reaching consequences.

'Unemployment can have lifelong financial consequences for individuals, whānau, and communities affected,' Grey said. 'It can mean lower lifetime earnings and can lock some people out of the labour market for good.' The NZCTU is calling for a more sophisticated approach to managing inflation that doesn't rely on putting people out of work.