The numbers are stark for one group in particular: New Zealanders aged 15 to 24. In the March quarter, 14.4 percent of them were not in employment, education, or training. The category has a name — NEETs.
That figure is the highest outside of a single Covid quarter since 2009. Labour’s party congress this weekend produced a policy aimed directly at that group.
The party revived a Covid-era apprenticeship subsidy, extending a $500 monthly payment for employers from one year to two years. It also broadened eligibility. The original scheme launched in 2020.
Its funding was set to expire in 2024. The coalition government kept the programme alive but reduced its scope.
Labour now wants to expand it again. The target: 27,000 people in subsidised apprenticeships by the end of the decade. The economics behind the move are cold.
A decade-old study estimated NEETs collectively missed out on $1.3 billion in earnings. Over one to three years, they cost the Crown about $1 billion. The per capita cost of each NEET was about $22,000.
Adjusted for inflation, that number climbs to $31,000. Labour’s calculation is straightforward.
If a policy costing $12,000 shifts one young person into the labour market, that is a good investment. The social investment case rests on evidence that young unemployed people often become long-term unemployed adults. Employers face a different reality.
They complain about skilled labour shortages. They resist paying to fill those shortages themselves.
They understandably love the scheme, according to analysis. The policy revives both the best and worst of the Covid years. For a young person in that 14.4 percent, the stakes are high.
Being a NEET is not a temporary lull for many. It becomes a trap. The longer someone stays out of work or training, the harder it is to get back in.
The subsidy is a direct attempt to break that cycle before it hardens. The $500 monthly payment goes to employers, not to the apprentice directly.
That design matters. It lowers the risk for a business to take on someone with no recent work history. It covers part of the wage cost.
It gives the employer a financial reason to train someone who might otherwise be passed over. Critics have pointed out the scheme’s flaws.
It can subsidise hiring that would have happened anyway. It can reward employers for doing what they should already be doing. But Labour’s argument is that the current situation demands action, not purity.
The NEET rate is at a 15-year high. The clock is ticking for the young people caught in it. The policy targets a structural problem.
New Zealand has a persistent group of young people disconnected from the economy. They are not in school.
They are not working. They are not training. They are falling behind in earnings, skills, and experience.
The gap widens every quarter they stay out. Labour’s announcement did not come with a full cost estimate for the expanded scheme.
The party is betting that the long-term savings — reduced welfare costs, higher tax revenue, lower social spending — will outweigh the upfront expense. The per capita cost of each NEET, at $31,000 adjusted for inflation, gives them a benchmark. A $12,000 subsidy that works is a bargain by comparison.
The policy also reflects a political calculation. Labour is arguing that New Zealand is broken and that the current government is not fixing it. The party is offering a concrete intervention, one that has been tested before.
The coalition government kept the programme alive but cut its scope. Labour wants to go further.
For the 27,000 young people Labour hopes to reach, the policy could mean a start. A job. A qualification.
A way out of the NEET category. For those who remain outside it, the cost — to themselves, to the Crown, to the economy — keeps mounting.
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