2021 saw a period of economic recovery across the globe and New Zealand fared better than most amid the pandemic. There are two large issues challenging businesses now, however, and these are the talent and skills shortage along with the economic climate making it tougher for businesses to thrive.
In our latest webinar, the Beyond Recruitment Economic and Labour Report 2022/23 was introduced by our CE, Liza Viz, with support and commentary from Economist Shamubeel Eaqub. The webinar talks about the current state of the economy, the barriers to success for businesses and the trends shaping the New Zealand labour market.
Below is a summary of the key takeaways from our webinar that will give you some insight into the colliding factors because of the pandemic.
The Economic Outlook
The last three years have been the most unusual given the uncertainty with the pandemic in 2020 and the recovery from that in 2021. In 2022, we are seeing something entirely different with record high inflation and interest rates affecting businesses and residences.
We know that the economy isn’t as strong as it was and that there have been big increases (26%) in the costs of living that are impacting livelihoods – people are concerned about what’s coming next. There is hope that the reopening of the borders will help the economy going forward, but as yet the current immigration policies are still tough and haven’t reflected that.
The economy is currently slowing down, within investments and hiring.
We are currently seeing record labour shortages and are dealing with the toughest labour market since the 1960s.
All of the previously low-interest rates and government fiscal injections that people enjoyed are being reversed with rising rates and political uncertainty being the new normal.
The impact of the war between Ukraine and Russia has pushed up the costs of food and fuel and with China still pursuing zero COVID, shipping costs are still going to be high.
Economic slowing may lead to businesses closing their doors, with some sectors more vulnerable than others.
A Challenging Labour Market
The pandemic taught employers and their teams that there were more possibilities and options when it comes to the way people work – and that still continues. In this new normal post-pandemic, flexible work is still popular and is now included as part of employee engagement programmes. This has been transformative for most businesses are trying to entice people into work during record talent shortages.
However, the market itself is still a huge challenge and finding and retaining people is harder – 95% of talent sourcing is actually tougher now than pre-pandemic. On top of this, pay rises have increased and are now at 3-5% as opposed to 1-2% in 2021. It’s important that employers plan for what could come next as these disruptions may not go away just yet.
Business confidence is currently static – suggesting that New Zealand employers feel that the difficulties are temporary.
83% of respondents to our survey found that retention is much harder, which poses a problem when our economic report reflects that employers need to focus on retention as a priority.
Employers are asking employees to spread their workload to cope with COVID-related absenteeism and they are feeling an above-average impact because of this.
Skilled labour shortages have driven an aggressive candidate market, culminating in a frenzied war for talent.
There is a trend in huge offers to employees, which is increasing the rate of multi and counteroffers and these are usually beyond the realm of affordability.
Things are Changing Quickly
There is a lot for businesses to overcome right now and things are changing quickly. In light of the economic uncertainty, recessionary talk, housing nervousness and the cost of living rising, there is caution in the market. Businesses will be tightening their belts and cutting costs, and employers have mobilised to work with talent and skills shortages by recalibrating their business operations.
The year ahead will be tough, but there are options! Businesses can ride the wave of change and may not have to close their doors. They can do this by fine-tuning their structures, taking a look at their capabilities and utilising the help of temps to fill employment gaps.
Candidates who moved for money are boomeranging back to their original employers, saying that money wasn’t the right motivation.
The caution surrounding skills shortages extends to hiring freezes, redundancies and restructures.
Employers need to focus on retention and flexible policies to keep the talent they have.
Outsourcing and automation are cited to be important to keep businesses running during the talent shortage.
This is just a glimpse of what was covered in the webinar – we encourage you to click below and view the recording and presentation slides to get a full picture of the economic insights.
For a comprehensive look into how New Zealand businesses are adjusting to the current talent shortages, as well as the notable trends around salaries/rates within specific industries and occupations, click the button below to download your exclusive copy of our Beyond Recruitment Economic & Labour Report 2022/23.
If you have any questions regarding the webinar or report or would like to find out how we can support you and your business during this time, please don’t hesitate to reach out.