Labour Market Update - Has the market descended into winter gloom?

Temperatures have dropped, Matariki is on the horizon, and the days are definitely getting shorter. It must be mid-winter, and so, at the end of the second quarter, it’s time for our regular labour market update.

The recession is finally here

First things first - we can’t really start this update without discussing the fact that the recession that everyone has been talking about for months is actually here. The experts say it’s only a “technical recession,” but it still feels like times are tough.

That’s having an impact on the economy in a number of ways - the cost of living is up, margins are tight, layoffs are becoming more common, and confidence is down.

In recent months we’ve seen several big companies including Xero and NZ Post announcing layoffs, as well as Auckland Council and several universities. Unemployment is still low currently but is forecast to rise over the coming months.

These things are combining to reduce confidence. The Westpac McDermott Miller Employment Confidence index for the June quarter showed that, overall, people were still positive but confidence was dropping. The figure for the quarter was 105.6 (any number over 100 is a positive result), but it was 3.9 points down on the previous quarter and at its lowest since 2021. Concerns about job availability and lack of growth in household earnings were two big drivers.

Jobs ads are down and applications are up - more applicants for you, but are they the ones that you want?

According to Seek, job ads were down 5% month on month and more than 20% lower than the same time last year. Ad numbers declined in the 3 major cities - Auckland, Wellington and Christchurch, and most other places around the country.

On the other hand, application numbers are soaring - up 13% month on month and higher than pre-Covid levels.

Theoretically, this should be a good thing - more applicants equals more choice. But on the downside, you might just end up with a lot of applications that clearly aren’t going to work out which just means more time spent sifting through CVs.

How do you combat this?

• Make sure your advert is clear on its requirements to avoid confusion.

• Ask for a cover letter to be included - this is a great way of weeding out people who are applying in bulk and also gives a good insight into potential candidates.

• Advertise on a reputable job board or work with a reputable recruitment agency.

• Consider investing in an applicant tracking system to filter candidates that obviously don’t match your criteria.

BUT - don’t be afraid to progress an application of someone who doesn’t quite tick all your boxes. Sometimes people don’t meet every single criteria but can quickly learn or bring other strengths that are worth the trade-off. In a time when people are looking to shift roles or maybe even move careers, there may be candidates in this situation. Soft skills might trump hard skills.

Boo! Is there a ghost in your applicant list?

The recruitment experts over at Talent Propeller shone a light into a dark corner in June and found some ghosts - ghost applicants, that is. Ghost applicants appear when a job board automatically puts forward applications for a position from its jobseeker database, even though the people submitted might not be interested in the role. It makes the job board look great, but it’s no help to an employer.

So it’s worth reiterating that you should do your homework when you select a job board, and maybe don’t be blinded by a company that tells you they’ll get you hundreds of applications for your role. At Do Good Jobs, one of our mantras is quality over quantity. Our focus is on making sure our jobseekers are motivated and applying for all the right reasons and are quality candidates ready to make an impact.

Your salary budget needs to increase!

Despite an increase in job seekers, many industries are still suffering from skills shortages and that means working hard to attract and retain top talent.

The Hays Salary Guide for the 23/24 Financial Year found that 95% of employers were looking to increase salaries. That means to keep up you might need to increase your salary budget this year.

But, the Seek Advertised Salary Guide, shows salaries have been rising, but that rates may be peaking. Although rates are still rising slightly they have declined since May 2022, and rises in white-collar professions like communications and HR have been slow. Some of the growth can also be attributed to wage growth in lower-income sectors like hospitality which have been affected by staff shortages and the government’s minimum wage increases.

It’s a tricky time to navigate with plenty of competing thoughts. Increased competition among jobseekers may mean people are willing to take lower offers in order to secure a job, but the increased cost of living means people will be looking for a salary that enables them to keep up with inflation and other day-to-day costs. Our DIY Salary Setting guide can help you work out where you should sit in comparison to the market.

In tough times, your network can lift you up

It feels like there’s a lot of winter gloom in this market update. So to finish, a reminder that if things feel tough, leaning on your network and making sure your team is connected and can lean on each other is key to navigating difficult times.

This came out clearly in our recent Souper event with HR and for-purpose leaders in Wellington. The opportunity to connect, recharge and share ideas was uplifting and gave us all renewed energy to make impact.

Find out more about running a soup event at your organisation here.