Despite a softening in our economy in the second half of this year, New Zealand continues to be in a positive situation overall, relative to most of the OECD. This in turn has had positive flow-on effects into our labour markets.
The Economic Outlook
We tend to hear of the less than ideal performance of the dairy sector fairly regularly in the media, which is no surprise given our dependence on its contribution to GDP growth. This downturn tends to cause us to think the job market across the board will go into decline. The reality is that the downstream effects of this are largely contained to dairy-supporting sectors of the market in terms of a stalling in job growth and worker demands.
There are a number of sectors compensating for the less than ideal performance of dairy. Commercial and domestic construction continues to soar in New Zealand – even with Canterbury showing signs of slowing post-earthquake rebuild. Auckland’s demands continue to grow whilst adjoining regions expand and other centres such as Wellington are showing positive growth. In addition, other export and manufacturing led markets are benefiting from the drop in the NZ dollar. Tourism is our stand out performer, with a number of our tourists staying longer and spending more. Economists are now largely forecasting continued positive flow on through 2016.
In terms of the labour market and jobs, we have reached a record high in the number of people employed in New Zealand, exceeding 2.36 million. Whilst caution continues in the market, many sectors are forecasting headcount growth. Hospitality, construction and professional services are all leading the way with their stated growth intentions. Offsetting this is strong population growth – largely due to migration. In fact, unprecedented numbers have entered New Zealand throughout 2015. The main impact of this has been subdued wage inflation rather than a slowing in demand for workers. In particular, professional services workers and the services sector have become and remain the forecasted growth engine for jobs in New Zealand.
Forecast for 2016
So, what does all this really mean for employers and workers in New Zealand as we head into 2016? First and foremost, expect little to change. There will be a continued strong demand for workers in the New Zealand job market. Obviously the construction sector will be a large part of this – particularly in Auckland and Canterbury – but growth and opportunity should also be steady in other main centres. Professional service workers will be where we will see ongoing demand. ICT, Finance, Legal and highly specialist technical skills will be in demand. In these roles, and in executive positions, is where wage growth will most likely take place during 2016.
For employers, the ability to secure in demand skilled resources will intensify. The capability and capacity to deliver has surfaced as a key issue facing many organisations during the second half of 2015, particularly with the demands for skills across digital, data and mobility – not just in technology, but in business strategy, customer behaviour and engagement – and how these skills are used as business growth and efficiency enablers. Across the broader workforce wage pressure and employee benefit demands are likely be significant issues in the coming years and employee loyalty will wane as New Zealand employees seek financial improvements after sustained subdued wage inflation.
Our advice is to bring these discussions to the executive table under a workforce planning. Review your attraction, recruitment and retention strategies. Are they working and will they deliver on your hiring intentions? Ensure your managers are running timely and respectful processes with your candidates, and that there is a clear and consistent understanding of your employment value proposition. Lastly, developing management and leadership capability is important as our workforce continues to diversify and becomes increasingly fickle and complex.
We will be launching our 2016 Economic Labour Market Report with Shamubeel Equab in June, with an update in September.