The Government says a leap in the population is behind unemployment levels reaching their highest level since 1999.

The Household Labour Force Survey said the number of unemployed people rose to 168,000 during the December 2009 quarter, taking the unemployment rate to 7.3%, its highest level since June 1999. The jump in the unemployment rate was largely due to an increase in the number of people entering the labour force but who were unable to find work. The number of unemployed 15 to 24-year-olds rose by 6.4 percentage points to 18.4%.

The unemployment rate for Maori reached 15.4% during the quarter compared with 4.6% for European. Social Development Minister Paula Bennett pointed to an increase of 14,500 people in the working age population.

"There are simply more people joining the workforce, which is outstripping job growth," Ms Bennett said.

"Net migration is part of this picture. New Zealanders are coming home and staying home, choosing to ride out a global recession in New Zealand."

Ms Bennett said the number of those in work dropped by 2000, a marked improvement on the previous quarter which saw a decrease of 16,000 people in work.

The result is higher than that forecast by Treasury, Reserve Bank and the Labour Department.

"As most economists will tell you, employment almost always lags behind economic growth, but we're not out of the woods yet and every job that's lost has a significant impact on workers and their families.

"Having said that, New Zealand has fared better than many other countries. We are still well below the OECD average of 8.6% unemployment," Ms Bennett said.

"Work and Income's focus on job matching has meant about a third of those applying for a benefit over the last three months didn't end up needing one." The number of job vacancies listed with Work and Income remained high and the Job Ops and Community Max schemes have had an impact on keeping young New Zealanders in work, she said.

"Through Job Ops and Community Max, more than 5000 young people have found work. That's 5000 young people participating in the workforce and the community, instead of being on a benefit," Ms Bennett said.

The number of people receiving the unemployment benefit rose by 3%, last month to 68,369. The forecast for the end of January was 70,000.

The increase over the same period last year was 12%.

"It's an indicator that we are nearing an inevitable turning point, but we still have a way to go before benefit numbers return to pre-recession levels."

The number of those who went off the unemployment benefit and into work last month was 3851, the largest positive movement in the month of January since 2005.

(Source - Otago Daily Times)