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Data Analytics Empowers New Zealand’s Labour Sector

New Zealand decision-makers now have access to more frequent unemployment statistics thanks to a new tool driven by data analytics. The Unemployment Rate – Nowcast model, called UR-NOW, predicts the unemployment rate each month to supplement the official quarterly figures. The Chief Economist at the Ministry for Social Development, and the Principal Advisor at the Ministry of Social Development, made the tool and described its development in a working paper.

The official unemployment rate is based on Stats NZ’s Household Labour Force Survey over three months, so there is a natural delay of up to four months while that information is collected, analysed and published. It is an important economic and social indicator with implications for decision-making in many areas of the economy.

Many other OECD countries, including the United Kingdom, the United States of America, and Australia, run labour-force surveys that provide monthly estimates of unemployment. The speed and potential scale of the economic downturn in 2020 highlighted the importance of timely information about the labour market. For the most part, the slight lag in the official unemployment rate is not a big problem, because economic conditions are slow to evolve, said the Ministry.  But as the current recession shows, when the environment is changing rapidly and in ways that are difficult to forecast, being able to monitor real-time labour-market conditions is immensely beneficial, it added.

The UR-NOW tool uses constantly updated data about the receipt of benefits and the number of filled jobs to deliver a predicted monthly unemployment rate. Those predictions are intended to supplement rather than replace the existing survey-based figures. The regular survey results allow regular re-estimation and validation of the tool and provide an independent check on unusual results.

The Ministry said that the researchers have been encouraged by the initial interest from university academics and various government ministries who could use the tool in their monitoring, policy development and advisor capacity.

There is plenty of scope for future improvements to UR-NOW, including more frequent predictions, incorporating new administrative data from other sources, predictions of additional labour market indicators, and predictions of unemployment rates for specific population subgroups and geographical areas, added the Ministry. UR-NOW predictions will appear on this page of the Centre for Social Data Analytics at the Auckland University of Technology, usually at the end of the week after the month finishes.

Accordingly, as reported by OpenGov Asia, New Zealand has an established and clear data strategy and roadmap for the nation. The strategy and roadmap are intended to provide a shared direction and plan that organisations within and outside government can collectively work towards and align their efforts to generate maximum impact. It acknowledges that there is a need for greater alignment and coordination of effort across the system. The government understands that global data growth enables innovative data uses that are transforming the world and that In New Zealand is uniquely positioned to maximise the value of data.

The government agrees that it has a unique role to play in laying the groundwork for the future data system. The roadmap envisages a future where data is regarded as an essential part of New Zealand’s infrastructure and where data use is underpinned by public trust and confidence. As such, greater data use needs to be balanced with the protection of privacy rights and ethical use.

The strategy is designed to unlock the value of data for the benefit of New Zealanders. It will start by directing activity in focus areas to deliver the most impact:

  • Focus area 1: Invest in making the right data available at the right time
  • Focus area 2. Grow data capability and support good practice
  • Focus area 3. Build partnerships within and outside government
  • Focus area 4. Implement open and transparent practices

This strategy is an initiative designed to emphasise the value of data and information in the country.

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