Labour Market Update - The Big R and difficult hiring

We’re nearly over the finish line for 2022. With just a few weeks of December left, thoughts are turning towards holidays and Christmas shopping and some planning for next year.

But there’s been plenty happening in the last few months so we thought we’d do one last market update for 2022 and look a little ahead to what might be likely in 2023.

The Big R - are we headed for recession next year?

The big news is still whether New Zealand is heading for a recession. 

After months of debate about the likelihood of a recession, Reserve Bank governor Adrian Orr has admitted that he is engineering one to limit rising inflation and interest rates, as the Reserve Bank hiked the Official Cash Rate to its highest level in more than a decade.

There have been several recessions over the past few years, but this one is forecast to potentially last a year which could have serious impacts on the economy.

If you work in the charity sector this could have a knock on effect with more people potentially needing services like food banks, but fewer people with spare income to donate. There may also be less funding to go around for salaries, something we’ve already started to see.

However, the Government is slightly more optimistic with Finance Minister Grant Robertson saying the recession would be shallow. The Treasury’s newly released half-year economic and fiscal update forecasts that unemployment will peak earlier but at a lower level (around 5.5%) than the Reserve Bank has forecast, and that house prices will begin to bounce back from the middle of next year.

The labour market is still tight so hiring is hard

If you’ve been struggling to recruit recently you’re not alone. With record low unemployment and wages growing it’s a workers market and it’s hard to find the right candidates.

Jarrod Kerr, Kiwibank’s Chief Economist, described the labour market as “tight as a drum” highlighting the fact that many employers are struggling to recruit. He points to the strong growth in the youth employment market, rising four percentage points, which suggests employers are increasingly taking on younger, less experienced workers because they cannot find experienced candidates.

If you are recruiting you might find you need to widen your pool and be willing to think about hiring on values even if someone doesn’t necessarily tick all the technical skills boxes.

Flexible working and employee benefits are big draws

Since the pandemic lockdowns forced many to work from home, the debate about returning to the office v working from home for all or at least part of the time has been raging.

The UK has just passed a bill giving workers the legal right to request flexible working from day one of their employment, including options for working from home, job-sharing, flexitime and compressed or staggered hours.

Parental leave has also been in the spotlight this quarter with big name companies in New Zealand including Contact Energy, Spark and Vodafone, announcing improved parental leave schemes.

With low unemployment, extra benefits are  becoming key in a labour market where attracting the right candidate might take more than just a decent salary.

Quiet firing

We’ve had quiet quitting and now quiet firing is in the spotlight. In case you haven’t heard of it, quiet firing is when managers create work conditions that encourage an employee to quit rather than firing them. That might be not giving them a promotion or pay rise, heaping extra work on them or creating difficult rules at work.

With plenty of people probably thinking about switching jobs due to this, early 2023 could be a good time for recruiters in the for purpose sector to hire people looking to start a new chapter in their career at an organisation where their values align more with their work and the right organisational culture. In fact, our job seekers are telling us that they haven’t stopped their search pre-Christmas - those actively seeking new roles are looking right now. 

Is innovation the key to success?

It might seem like next year will be another year of struggle, but not all experts are predicting doom and gloom. Some like Simplicity Chief Executive Sam Stubbs are a lot more upbeat.

With a little outside the box thinking and flexibility, positive outcomes are definitely possible. Just like this collaboration between Zespri, the Bay of Plenty based kiwifruit company and the University of Waikato’s engineering department.

If successful, the e-bin designed to reduce the strain of picking fruit designed by the university’s engineering students would open up kiwifruit picking jobs to a whole new group of people. In an industry which has an acute labour shortage amid the low unemployment rates, this kind of innovation could be the difference between success and failure.

If you are in the for purpose world you are probably already used to thinking outside the box, so 2023 could be your chance to shine and innovate.