Big pay rises and Boomerang Employees

2022 continues to be a tough one. Uncertainty around the economy, cost of living rises for everyone, difficulty in finding and attracting the right talent for employers, and almost everyone is feeling a bit (or a lot) tired, stretched and generally over it. 

But there is some good news, including the boomerang effect, higher salaries, and a positive side of the “quiet quitting” phenomenon. Here is our latest market update to hear more about things happening in the economy, recruitment and more and how these might impact your recruiting process.

Economy + Recruitment: Powershift, boomerang employees and exiting the war on talent

Economist Shamubeel Euqub recently hosted a Beyond Recruitment Economic & Labour Report.

In this, he outlined that the cost of living has risen 26 percent since 2021. 95% of respondents to the Economic & Labour Report survey said it’s harder to find suitable talent now than prior to the pandemic (86% in 2021 and 27% in 2020). 83% of respondents said it’s trickier to retain staff now than it was in 2021. And that’s the same story we hear when we talk to many of our employers and recruiters at Do Good Jobs too.

On the other hand, a “power shift” back to employers is on the way - economic uncertainty, housing nervousness, and the rising cost of living may lead employees to choose stability in certainty in their existing role rather than jumping for a higher salary. 

We are also seeing a “Boomerang” effect where people are realising that the grass is not always greener and their previous employer had some advantages that they may not have fully appreciated. 

Recruiters are now starting to see that some candidates may have realistic expectations of what employers can provide, and businesses are now cutting costs, recalibrating, and looking internally where there is a talent shortage, rather than remaining in the “war for talent”.

More than ever, employers would be wise to focus on how they can retain their good employees. For example, hybrid working is no longer viewed as a benefit - it’s expected. Employers should also consider whether the traditional 9-5 model is still needed.  In our recent Do Good Jobs LinkedIn poll we asked, “Should organisations ditch the 9-5 and move to the same as school hours? - 79% said yes. The top benefits identified in our recent annual Do Good Jobs Job Seeker Survey were flexible working, remote-friendly and additional annual leave. What benefits do you bring to the table? Make sure these are front and centre in any recruiting. 

Westpac Economists believe NZ is hitting the wall in terms of employment growth. In the June 2022 quarter, these was zero employment growth for the third quarter in a row, accompanied by a further drop in the labour force participation rate. “While there is a great deal of hiring going on, employers are tending to attract people from the existing pool of workers, with no net growth in the number of jobs. Instead, all of the heat in the labour market is coming through increase in pay rates." 

The “R” word - are we going into a Recession?

Well, there is a lot of uncertainty.

Economist Cameron Bagrie said New Zealand has taken “two steps forward and two steps backward” after GDP rose 3% in the fourth quarter of 2021. There has been stagnancy in the market because of lack of supply to meet demand. Bagrie believes this flat year will continue for another 12 months. “If we see growth going backwards and the labour market still as strong as an ox, well to me, that’s not going to be what’s called a real recession, Bagrie said. “We need to see the labour market start to loosen up, which means, unfortunately, the unemployment rate start to rise.”

Salary: Biggest payrises in 20 years… 

The NZ Herald reported that $90k is the new $70k. Stuff recently reported that, based on Stats NZ data, workers got the biggest payrise in 20 years. But dig a bit deeper and you will see that this is based on median weekly earnings and particularly for women, driven in part by working longer hours. So at least some of this increase is people working harder and longer just to stay afloat.

With the cost of living skyrocketing, theLiving Wage Movement Aotearoa New Zealand is good news for many, with the Living Wage increased to $23.65 on 1 September. According to SEEK, advertised salaries grew by 4.1% in the year to July 2022.

On the other hand, this is a real challenge for many cash strapped not-for-profits and for-purpose organisations.  In the charity space, we are seeing some great initiatives from funders to address these increasing costs. Te Rourou, Vodafone Aotearoa Foundation, recently took action by providing a one-off, 10% support payment to all of its community partners, in the hope it would help organisations retain staff, cover increasing costs and meet their goals. It also issued the challenge to other philanthropic organisations to follow suit - and it’s started a ripple.”

Pru Etcheverry, ONZM, Director of Advocacy Answers New Zealand, urges us to place more value on the not for profit sector - it has a lot to offer society and businesses could learn a lot. Often expectations on not-for-profit organisations’ operating costs are not realistic. 

On Quiet Quitting 

Unless you’ve been in isolation for the last few months, you will have seen a lot about Quiet Quitting - employees doing the bare minimum and collecting their salary. 

But let’s see this as employees resetting their boundaries. The struggle to juggle has been even more prominent in our lives over the last 3 years, and has had a real impact on many people’s mental wellbeing. Having strong, clear boundaries and being able to prioritise what is important will help to address excessive workload and reduce the likelihood of burnout. 

With a skills and labour shortage, many employees have an opportunity to set or reset the terms on which they are engaged. Here’s how to spot the subtle signs of Quiet Quitting, before it’s too late.