wp-Christchurch beach
COVID-19 and the Economics of Wellbeing
Published in May 2020 newsletter

New Zealand’s success in flattening the COVID-19 infection curve and effectively eliminating community spread of the virus has placed us in a position to – slowly and carefully – restart the economy. With a few exceptions, most business and social activity can resume under “new normal” conditions of contact tracing, maintaining social distance and hospital-like levels of sanitising.

For the past few months, the Infometrics team has been fully occupied with modelling the effects of the pandemic on the national economy, and on the local economies and individual operations of our clients. These effects are dire – as indicated elsewhere, we are forecasting a contraction of 8% in the national economy and the loss of more than 250,000 jobs over the year to March 2021. Sectors such as hospitality and tourism will be particularly hard hit.

Having defined the likely scale of the economic and employment effects of the COVID-19 recession, our attention is now turning to the wellbeing impacts implicit in these numbers. Once again, these will be considerable. In the area of mental health alone, it takes neither a qualification in economics nor one in public health to realise the huge negative effects that 250,000 job losses will have on New Zealand’s population.

The Infometrics Wellbeing Framework was developed in 2019 to evaluate the wellbeing of New Zealand’s communities, and in time, to measure progress in the achievement of government’s wellbeing objectives, as defined by government’s Living Standards Framework. The Framework uses nine wellbeing domains, as illustrated below.


By our reckoning, the COVID-19 recession is likely to directly affect at least four of these domains – Health, Housing, Income and Consumption and Jobs and Earnings – with potential second order effects across several of the remaining domains.

Given the overwhelming need to focus on immediate economic interventions that can help reduce the direct effects of the looming recession, Budget 2020 cannot be categorised as a Wellbeing Budget, as was the case in 2019. However, it is encouraging to note that government has allocated almost $5.6 billion for the health sector, and a further $1.6 billion to government and non-government social services, to support education, employment and housing outcomes.

Equally significant is the Budget allocation of $186 million across the education sector, and the proposed acceleration of various aspects of the Reform of Vocational Education (RoVE) process announced in 2019, most notably the establishment of Regional Skills Leadership Groups (RSLGs) across the country.

In our engagement with our local government clients over the past two months, we have seen the emergence of a range of economic crisis response groups. Similar to the national-level response, many of these groups are focused on immediate economic interventions and the protection of as many local jobs as possible. However, we are encouraged by the scale of community support activities being planned and implemented, and by the inclusion in these groups of stakeholders drawn from community, youth, social welfare, business, iwi and various other organisations.

Earlier this week, we released an update of the Infometrics Community Profiles, which provide our regional clients with valuable insights into the current state of their communities across a range of social indicators.

We will also be investing in the further development of our Wellbeing Framework, so as to expand the number of indicators we measure. This will potentially include the introduction of a time series element into the Framework, to allow our regional clients to track the trajectory of these indicators within their communities.

On a tentatively positive note, we will also be looking at the possibility of some positive effects arising from the recession in certain wellbeing domains. We see some potential in this regard in the domain of Knowledge and Skills, as our economic modelling suggest an increased demand for tertiary and vocational education to upskill and reskill New Zealand’s workforce.

We also see the possibility of improvements in certain indicators in the Social Connections and Civic Engagement and Governance domains, as we realise the importance of depending on our communities, neighbours and whānau in the challenging times that lie ahead.

He waka eke noa.

Related Articles