Amid a sharp downturn gripping the New Zealand economy and escalating attacks by the far-right National Party-led government on the jobs and living standards of the working class, a bitter social crisis is unfolding.

Growing discontent was highlighted last week with Statistics NZ revealing that a net 30,000 citizens quit New Zealand last year to move to Australia, the largest single year exodus since 2012. Tens of thousands more departed for other countries. In April and May 2025, more people left permanently than entered.

The economy has fallen back into recessionary territory over the last three months. Gross Domestic Product (GDP) growth was a meagre 0.8 percent in the March 2025 quarter on the back of a contraction of 1.1 percent over the full year. MacroBusiness in June described New Zealand as an “economic basket case.” The Purchasing Managers Index (PMI), a key measure of forthcoming business activity, now ranks among the worst in the developed world.

The working class is bearing the brunt of the downturn with a sharp drop in per capita national income. One statistician, posting on X under the handle MusicalChairs, noted that “we are having a second winter of misery in the labour market. The year-on-year trend is basically stuck at 100 job losses per day. It’s grim out there.”

In the first quarter of 2025, unemployment hit 5.1 percent, up from 3.4 percent in 2023, with the number of people in full-time jobs falling by 45,000 in the three months. Jobseeker Support claims for unemployed 18–24-year-olds have increased by 41 percent over two years. The latest IMF World Economic Outlook predicts NZ will have the highest rate of joblessness of all Asia-Pacific countries until 2027, surpassing COVID-19 pandemic peaks.

The percentage of people unemployed for between 6 months to 1year was 12.4 percent in 2023. It is now 23.9 percent, nearly double. Underemployment has risen by 26 percent in two years. Over a fifth of people working part-time, about 127,000, are struggling to find more work, despite looking for as long as five years in some cases.

Wages have taken a sharp hit. According to the Labour Cost Index 48 percent of workers got a pay rise below inflation (i.e. less than 2 percent) last year. Annual increases in weekly earnings to June were a meagre $22 for workers in the lowest quartile, $42 in the median quartile and $69 in the upper quartile.

The government is deliberately driving down wages for the lowest paid. The minimum wage increased in April by just 35 cents per hour to $23.50, a 1.5 percent increase, while inflation is presently running at 2.5 percent. In a brutal move, Finance Minister Nicola Willis expunged a requirement that government contractors pay at least the “Living Wage,” currently $28.95 per hour, for low-paid cleaning, catering and security guard services.

Living costs are soaring. A study by the Australian Edith Cowan University last year compared prices of a basket of supermarket staples across four countries including NZ, Australia, Ireland and the UK. New Zealand had by far the most expensive groceries, ranging from $A342 to $A409, while Australia’s were second at between $A324 and $A332. Bills for rates, insurance, energy and transport have all skyrocketed.

Household savings dropped by $392 million to negative $1.6 billion in the March 2025 quarter, as household spending increased more than disposable incomes. In a sign of growing desperation, record numbers of workers are making early withdrawals from their KiwiSaver retirement savings. In May, a monthly high of 9,420 people made withdrawals totaling $234,192,710 because of financial hardship, according to Inland Revenue.

Housing is an acute issue. A recent television episode of “The Hui,” a Māori-orientated journalism program, detailed an explosion of homelessness, not only in traditional working-class areas such as Rotorua and South Auckland, but in the more affluent suburbs of Auckland’s North Shore.

Matarora Smith, who runs a breakfast program for about 60 homeless people in south Auckland, bluntly told “The Hui,” “One of the street whānau (family) have passed away in South Auckland—froze to death.”

Jan Rutledge, of De Paul House, which provides support services in north Auckland, had seen a noticeable increase in homelessness. “We had a family come to us with two kids, mum and dad. They were staying in Glenfield Mall’s car park,” she said, opposite the local Work and Income office. Rutledge said: “Now that we’ve got no-cause evictions, a landlord can just come in and say, ‘that’s it.’ We’re seeing quite a lot of that.”

Head of the Lifewise charity, Haehaetu Barrett, told “The Hui” that homelessness is a “national crisis.” The government has drastically reduced the number of families in emergency housing even as the demand for public rentals escalates. The public housing agency Kāinga Ora rejected 1,569 families’ applications for emergency accommodation in the first three months of 2025 alone.

As of May, 19,089 people were waiting for a Kāinga Ora state home. Almost half were Māori. On average, people were on the waitlist for 233 days.

Barrett denied recent allegations by Rotorua Mayor Tania Tapsell and Police Minister Mark Mitchell that rough sleeping was a “lifestyle choice” among homeless people who they alleged spent what little money they had on drugs.

Barrett noted that the closing of emergency motel accommodation, which began under the previous Labour government, is forcing more families out of secure shelter. The last of the motels in Rotorua will be shut down by the end of the year, which Barrett said was “way too quick.” She declared; “They move them, but to where? And what support is in place?”

Government promises to tackle the housing supply have come to nothing. In Wellington, Kāinga Ora is selling off two pieces of real estate it had pledged to turn into 280 homes. The agency has just 42 new units in the pipeline for the capital city, while the social housing register there exceeds 640 families.

Kāinga Ora announced that it will halt over 200 housing developments nationwide and sell a fifth of the vacant land it owns, to ensure its housing projects “make commercial sense.” In February, Housing Minister Chris Bishop unveiled a “turnaround plan” for the embattled agency. It included selling off valuable state properties in wealthy areas, purportedly to fund homes in working class suburbs. The scheme excludes state tenants from living in “desirable” suburbs while opening the door to privatisation.

According to the March 2025 Quarterly Economic Monitor from Infometrics, general rental affordability is worsening as tenants spend more of their household income on rent. Average rent as a percentage of household income is running at 22.1 percent, up from 21.9 percent a year ago and well above the average 10-year low of 20.2 percent.

Homeowners continue to suffer from high interest rates on their mortgages. On July 9 the Reserve Bank (RBNZ) “paused” its 11-month rate-cutting programme and held the official cash rate (OCR) unchanged at 3.25 percent, down from 5.5 percent last August, declaring it needed “more clarity’ on inflation, the economy, and US trade policy.

The cost-of-living crisis confronting the working class is underpinned by a sharp escalation in social inequality. The country’s Rich List revealed last month that 119 individuals and families, including 18 billionaires, control a record $NZ102.1 billion, up from $95.55 billion in 2024 and equivalent to more than 40 percent of annual GDP. Their wealth derives almost entirely from parasitic activities such as financial investment and property speculation.

There is also a vast class divide among Māori. While ordinary Māori, who make up 18 percent of the population, remain among the most oppressed sections of the working class, tribal capitalist businesses are flourishing. In March, a report by the Ministry of Business, Innovation and Employment and Te Puni Kōkiri showed the “Māori economy” grew from $17 billion in 2018 to $32 billion in 2023. The powerful Tainui tribe, which settled land grievances with the government in 1995 for $170 million, now boasts a balance sheet of $1.9 billion.

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