Total labour force

IBISWorld forecasts the total labour force to remain stable at 3.04 million people in 2025-26. In the first half of the year, the average size of the labour force trailed 2024-25 figures by 0.5%. However, a quarterly jump of 0.6% (approx. 19,000 people) in Q4 2025, driven by a 60-basis point increase in the labour force participation rate among women, is set to cause the size of the labour force to return back to 2024-25 figures over the second half of the year.

Despite data suggesting a stabilisation in the size of the New Zealand labour force in 2025-26, it has continued to trend upwards over the past five-year period. Rising participation rates among individuals aged 55 years or above have boosted labour force numbers. As life expectancies have increased, people have been forced to work and save more to maintain the same desired standard of living in their later years, driving up labour force participation among older citizens. Better health among older workers, technological change reducing the manual intensity of some work and improving longevity have also supported the rising participation of these older individuals.

Generally, labour force growth is also closely correlated with population growth. Trends in net migration of working-age individuals strongly affect the size of the national workforce. Net migration dropped sharply into negative territory during the pandemic years, limiting labour force growth. However, growth in the construction sector drew local residents into the workforce, helping to offset the sharp decrease in migrant workers.

A strong return to positive net migration across 2022-23 and 2023-24 coincided with an increase in the growth rate of the total labour force. In 2023-24, New Zealand's total labour force witnessed a strong increase of 3.4%, driven by record levels of net migration, which peaked at a 12-month moving average of 136,000 in October 2023. Many of these migrant workers leveraged the leniency in the Accredited Employer Work Visa (AEWV) to obtain working rights in New Zealand. The labour force participation rate also reached an all-time high of 72.4% in June 2023, driven by strong net migration and high cost-of-living pressures that forced New Zealand citizens to participate more frequently. However, tightened regulations to the AEWV were introduced in June 2024, rectifying leniency in the legislation stemming from pandemic workforce shortages, driving net migration down from over 100,000 people in 2023-24 to less than 22,000 people in 2024-25. This trend translated to a sharp slowdown in the labour force growth rate, reaching only 0.3% in 2024-25. Overall, IBISWorld forecasts the total labour force to increase at a compound annual rate of 1.3% over the five years through 2025-26.