Labour Market Update - When the Going Gets Tough….

With the labour market continuing to be volatile, we thought it was time for another update for our Do Good Employers. We know that the current market is tough, and these updates are intended to inform and not discourage you. Do Good Jobs believes that the For-Purpose sector has lots of opportunities to attract top talent, at a time when people are gravitating toward meaningful work. Keeping up with the labour market and salary inflation data is crucial to being able to compete in the current market, which is why it’s so important you stay on the pulse. Here’s what you need to know in June 2022…..

Unemployment will drop further to 3%

As Grant Robinson announced the budget in late May, he also forecasted a drop in unemployment to an all-time low of 3% and predicted that wage growth would overtake inflation from early 2023. This is a clear indication that the market will not only continue to be tight but that salaries will be dragged up by candidate shortages and wage expectations.

The Squeezed Middle - $70k and struggling

The term ‘squeezed middle’ has exploded into the mainstream over the past month, with the budget delivering a one-off payment to all those who earned below 70k last year- putting a line in the sand of who is ‘squeezed’ enough to receive this emergency payment.

A salary of 70k has been considered appropriate for mid-level employees in the For-Purpose world, but rapidly rising wage inflation tied to cost-of-living has turned this assumption on its head. Earlier in the year economists warned employers to build in pay rises for middle earners, who would expect pay rises in tandem with the minimum wage increase.

A plethora of guides to requesting a pay rise due to the cost of living have popped up over the past six months, proving this issue is front of mind. The latest figures suggest that salaries have risen by 33% in some sectors as a response to the ‘war for talent.’

Over the ditch, OEs and over the cost of living

Employers struggling with the talent drought have long been awaiting the border opening to provide relief, but it’s unlikely to be a silver bullet. In the past 12 months, we’ve seen 7,300 more people leave than enter New Zealand, so we’re starting with a deficit.

Australian employers are dealing with their own labour market woes and are eying up kiwi workers as an easy win. Higher pay, 10% superannuation, a similar or lower cost of living and a more diverse range of opportunities are set to tempt 24,000 to 58,000 kiwis across the ditch in the next year. Kiwis have been taking to social media to compare Aus/NZ pay rates with one recent ditch jumper saying "work here in Melbourne is abundant; pay is better… it's just cheaper to live." The For-Purpose sector is in no way immune to this, with Aussie employers reaching out to Do Good Jobs.

Many have plans for heading further afield, with commentators predicting an exodus of workers heading on delayed OEs. Young people interviewed for a Stuff.co.nz article cited boredom, inability to access the housing market and (you guessed it) poor pay as reasons for taking the leap. Fears of a new brain drain have set in as many of those planning to leave are the best and brightest, such as researchers and post-graduate students keen to head overseas for better networking and professional opportunities.

Millennial and GenZ Exodus 

The population of under 30s in New Zealand has already begun to drop, causing a panic that we are set to lose our millennial and Gen Z workforce. Infometrics principal economist Brad Olsen has warned of the consequence of losing so much fresh talent:

"It means that the economy just isn't able to function to the same level that it used to. We just won't have the workforce to support the level of production and economic activity that New Zealand has become accustomed to having," he said.

The Guardian recently published an article about New Zealand’s Young Professionals leaving in droves that highlighted the fact that while OEs have long been a kiwi right of passage, three years of overdue OEs taken at once have the potential to deliver a huge blow to the market. Anyone familiar with the importance of Generational Diversity for a healthy workplace will find this news worrying.

If you want to experience the Great Resignation in real-time, jump on LinkedIn

Because of my role, and also my nerdy interests, I spend at least an hour a day on LinkedIn. Some have questioned whether the Great Resignation is happening in New Zealand, but I’m sure a quick scroll in their LinkedIn feed would change their minds! My feed is overwhelmed with the chirpy little banners that announce someone has a new position, it feels like everyone in New Zealand is hopping jobs. This might be set to change however….

When the Great Resignation meets the Big Scare

The Great Resignation has been underway globally for a period of years now, but it’s running into the Big Scare. With the pandemic continuing to cause chaos, cost of living crises’ hitting every country, the war in Ukraine, new threats like the Monkey Pox outbreak cropping up weekly, and rumblings about a recession - candidates are understandably cautious.

In New Zealand, 51% of people found the thought of looking for a new role overwhelming and candidates are reluctant to take risks on things like fixed-term contracts. We’re now moving into an environment where candidates are verrrryyyy picky about what they say yes to.

Feeling overwhelmed? 

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