Labour Market Update - We’ve made it through a turbulent year

We’re now on the last stretch to Christmas, and hopefully, most of you are looking forward to a well-deserved and relaxing break. This is the perfect opportunity to reflect on the final portion of the year and look ahead to the next one.

Coalition government finally confirmed

Of course, the big event from the last quarter is that we now have a confirmed government in place, which at least provides a degree of certainty. However, given how long it took for coalition negotiations to be completed, there’s little time for much to be enacted before the Christmas break.

In the employment space, Fair Pay Agreements are set to go, and 90-day trials will be expanded to all businesses under the new leadership. While these two changes are unlikely to have an immediate impact on the for-purpose sector, it is worth keeping an eye on these and other potential changes to employment legislation.

What might have an impact are some of the policy decisions being made more widely, like scrapping the smoke-free legislation and the Clean Car discount, which could have knock-on effects for organisations working in the health and sustainability sectors. Concessions to ACT as part of the coalition have also caused waves with suggestions of large reductions in public sector workers. That could particularly affect workers in Wellington, where many of our public sector and government agencies are based.

Job ads are still down

It feels like a broken record to be saying this for another market update, but jobs ads are down again. Ads fell 6% in October and are now lower than at the beginning of the pandemic. And again, applications are up month on month.

From a peak a couple of years ago of hiring and wage increases, the pendulum is now swinging back to an employer’s market - salary growth has slowed right down and competition for jobs is greater.

And with a number of large companies in New Zealand, like One NZ just this month, laying off staff, that competition is likely to grow further.

It’s becoming easier to find the right talent

This increased competition for jobs and a bigger pool of jobseekers seems to be translating into it being easier to find the right talent. Beyond Recruitment’s recent employer survey which surveyed 500 employment leaders, found that more businesses were reporting ease of finding employees.

A lack of available talent was still an issue but only 48% of people cited it as an issue compared to 83% the previous year.

Satisfaction with the suitability and quality of candidates had increased, with 43% of respondents saying satisfaction had increased. Anecdotally though, we are hearing that organisations are still getting a number of unsuitable applicants, for example, those without the right to work in New Zealand, so it’s still important to be clear in your job ad and screen all applications carefully.

Looking forward - there are still challenges to navigate

It’s been another turbulent quarter with the election creating uncertainty, in fact, it’s been another turbulent year with the threat of recession and the aftermath of the Covid pandemic.

In general, business confidence seems to be increasing, and many are optimistic about the prospects for 2024. But there will still be challenges and for-purpose organisations will need to navigate.

Here are a few of the areas that might come into focus in the coming months.

On-going effects of the Covid pandemic

While the Covid pandemic is largely behind us, there are still some areas that continue to affect us.

Long Covid poses a new issue when it comes to employee health and well-being. The Beyond Recruitment survey asked this question for the first time this year and found that nearly a quarter of respondents had seen business affected by Long Covid and 70% said they were not prepared for any impact. Employees with Long Covid may need long periods of sick leave and managed returns to work, so this is definitely something worth considering as you are planning for 2024.

Migration levels continue to fluctuate post-Covid. The latest figures show a large net migration with people coming from a range of countries. That could make recruitment easier for organisations which have traditionally relied on foreign workers. But it does bring pressure on infrastructure and housing. Prime Minister Chris Luxon has already signalled that he does not think the current levels are sustainable, so it’s an area where we may see policies change to curb numbers.

On the flip side, the stats also show a decent number of Kiwis leaving the country, especially to for Australia. This may put pressure on organisations to retain top talent in the face of better offers from overseas.

Offering benefits to retain staff

While retention challenges currently seem to be decreasing, those migration figures do show that there are still opportunities for jobseekers, so organisations do still need to be attractive to current employees. Things like hybrid working are still favoured by new candidates and existing staff members. Now is a great time to invest in the people you have so that if it becomes a candidates market again, you aren’t stuck in a struggle to recruit new staff. Remember, it’s easier and more cost-effective to keep the people you have than to constantly recruit and train new staff.

A focus on sustainability

A recent report from the Sustainable Business Network - Sustainability in Aotearoa New Zealand’s Corporates - found that businesses are putting a renewed focus on sustainability, and not just because it’s the right thing to do. For some businesses, a sustainability focus is seen as a competitive advantage, especially as more customers and employees are demanding more. A recent survey by Frog Recruitment found that while 60% of respondents said that sustainability wasn’t a top priority when considering a new employer (typical issues like job security, work/life balance and growth opportunities were more important), more than two-thirds said their employer wasn’t doing enough to protect the environment. Younger employees (and remember that Millennials and Gen Z will make up the majority of the workforce in a few years) placed particular emphasis on good environmental credentials.

For-purpose organisations may be ahead of the curve here as many already focus on sustainable practices and reducing the environmental impact of doing business. While the commercial or public relations angle might not be why you developed sustainable practices, there is still a benefit in making these policies and practices clear as part of your organisation profile when advertising, as it could help attract better candidates.

AI is here to stay

AI is becoming a bigger player in our lives generally and in recruitment. We’re seeing a number of AI-based recruitment companies springing up, offering services for both employers and applicants.

There’s no doubt that AI can be a useful tool when used wisely. But organisations and applicants should both be wary of potential damage to reputations if they let AI run away with their processes, whether it’s using robots to create cover letters and fire off applications or leaving the recruitment process entirely to an AI screening system. 

Meaningful and sustainable Christmas present

So that brings us to the end of our last update for the year. Let’s look forward to a restorative Christmas break and new momentum in 2024. Before we go - if you are still hunting for the perfect Christmas gift, we’ve got a couple of suggestions for you.

The Mental Health Foundation of New Zealand is screening 18 films from its recent Aotearoa Mental Health film festival. Buy a ticket here and you can watch the screenings any time before the end of January.

Plus our GOOD gift guide features lots of fab Kiwi businesses who have great products and do great work behind the scenes in New Zealand and across the globe.