Labour Market Update - Downward trends continue

As we reach the mid-point of the year, it’s time to look back over the second quarter of 2024. With cold temperatures, rainy days and economic and consumer confidence still lacking it feels like it’s been a tough few months. But as we celebrate Matariki, the Māori New Year, we can start looking ahead to longer days and summer perhaps bringing some optimism with it.

But first, let’s take a look at what’s been happening in the last few months.

Crunching the Budget numbers

The big news from the last quarter was the new coalition government’s first Budget from Finance Minister Nicola Willis. We covered off the main points in our LinkedIn newsletter that week (head over to our LinkedIn page and subscribe to Purposeful Pulse if you haven’t already). But in case you missed it, here’s a quick rundown of funding that may be of interest to the for-purpose and impact sector.

• In education money was provided for more teachers and early childhood education but the sector has been somewhat overshadowed by the discussions around Ka Ora, Ka Ako, the healthy school lunches programme. It will continue - for now - but changes are in the offing.

• The Fees Free first-year scheme for tertiary students is also being scrapped, being replaced with funding for the final year.

• The Health Budget included $9.7million to establish a National Mental Health and Addiction Community Sector Innovation Fund and a $24million boost for mental health counselling services through Gumboot Friday. 

• Primary and hospital care was also given a boost but free prescriptions have been scrapped for most people. The Budget also did not deliver National’s promise on funding for cancer drugs, but that has since been announced.

• Funding for the environment and climate change was mixed. Some schemes like developing a public network of electric vehicle charging infrastructure and the Warmer Kiwi Homes programme are surviving, and there has been a funding injection for flood protection. But funding in other areas is being cut.

The Social Investment Agency

The thing that could have the most impact in the coming years, was, in fact, announced just before the main Budget. That is the creation of a new standalone Social Investment Agency formed out of the existing Social Wellbeing Agency. The new agency which comes into being at the beginning of July will lead the Government’s social investment programme, and will be responsible for:

• Setting the standards for social investment practice to ensure there is consistency across government agencies and contracted providers

• Advising on and facilitating the creation of the necessary data and evidence infrastructure for social investment

• Working with other agencies to apply the social investment approach

• Leading an ongoing review of social sector spending to measure outcomes

The agency will also be responsible for managing a new Social Investment Fund which will commission outcomes for vulnerable Kiwis. This fund will begin investing in 2025.

The concept of social investment includes using data and evidence to understand needs, setting clear and measurable goals and regularly measuring the effectiveness of services. It also focuses on enabling local providers such as community and iwi groups and NGOs to deliver services tailored to their local communities.

This could be beneficial for on-the-ground groups but time will tell what impact it may have.

If you want more detail on anything budget-related including documents with all the figures you can find them here.

Economic conditions are still hard

The economy offered some shoots of new growth this month with recently released figures for the year to March showing that GDP grew by 0.2%, technically moving the country out of recession. But most experts haven’t found much to celebrate in that growth, saying the economy was still weak.

Consumer confidence isn’t much better with the Westpac McDermott Miller Consumer Confidence Index falling in June and reversing any previous gains. Households are being affected by the high cost of living and inflation rates, and many are cutting back on spending. 

What does that mean for your organisation? If you rely on donations, you might have been finding it harder to convince people to part with their money. You may need to get creative with your fundraising campaigns or look for other funding sources. It also means that you need to carefully consider salaries if you are looking to recruit as potential candidates will be looking for salaries that will cover their increased expenses.

Job ads still down

Across most of the country, the number of job ads being posted is still down month on month. Year on year, ads are down between 30-40%.

At Do Good Jobs, we’re seeing similar trends to other job boards, with ad postings down year on year. We did see an uptick in listings in May compared to April but June has been slow again.

And applications still up

While vacancy numbers are down, applications are still soaring, with ANZ data showing applications per ad are up around 250% since 2019. At Do Good Jobs, our average application numbers are up more than 60% year on year.

While organisations might be happy that they have more candidates to choose from, it’s made for a difficult time for job seekers who are at times competing against hundreds of other applicants.

Data shows that young people are also bearing the brunt of difficult labour market conditions with the number of young people not in education, employment or training (NEETs)  sitting at more than 80,000 according to figures in May.

What does this mean for your organisation? More applicants can be a good thing but it can also be time-consuming to sift through so many applicants especially if many of them aren’t right for the role. We’ve got some tips on how to find the right candidates here.

It’s also important to remember that jobseekers are human, and deserve to be respected during the application process, even if that’s tricky with large numbers of applicants. Our colleagues at McLaren Recruitment have some advice for managing large applicant numbers and you can also read our tips on giving appropriate feedback to candidates

And if you are thinking about recruiting, don’t be afraid to give diverse candidates a chance. Hiring from a diverse age range has plenty of benefits for your business.

Public sector layoffs in jeopardy?

Finally a note on a developing story from this quarter which has seen the Public Service Association (PSA) challenge the Ministry of Education on how it has handled layoffs during the recent public sector cuts.

The PSA is arguing that the Ministry has not done enough to offer affected employees other roles and the matter is now before the Employment Relations Authority. Any redundancies and other changes have been paused while the matter is heard.

It’s a reminder that no matter how big or small your organisation, layoffs and other HR issues need to be handled with care.

And that’s a wrap on the first half of the year. We’ll be back with our next update at the end of the third quarter when hopefully we might have brighter news to share.