Well, spring is nearly here…will a new season bring a brighter economic outlook and a more buoyant employment market?

Since the Reserve Bank has lowered the OCR and the bank’s followed suit by decreasing their rates, it has created a more positive tone in conversations. However, we believe a market turnaround will be a slow recovery versus a bounce back. “Survive until 2025” is a phrase that has been uttered by many a leader.

Reports state that the economy has edged out of a recession driven by service industries and energy production, however economists warn we aren’t out of the woods just yet. Annual inflation is currently sitting at 3.3% according to Stats NZ in July. According to SEEK for the first time since January, job ads rose by 3% m/m and applications per job ad were up 7% m/m in the July quarter. This is a good sign that we are slowly moving towards a more stable hiring market however there are still a lot of candidates searching for opportunities.

Much has been reported about the impact of the change in government on Wellington and the public sector, however it must be noted it has had rippling effects across Auckland and the private sector as well. Therefore, what are the impacts that we’ve seen on the ground?

• Longer hiring cycles
• Cautious spending and austerity measures
• Implementing rate cards
• Negotiating rate reductions upon extensions or even at offer stage
• Retrenchment of teams
• Increased approvals/signs offs
• Longer notice periods for contractors
• Implementing 9-day fortnights
• Negotiation with supplier’s commercial terms

One of the many unfortunate results of our economic situation is a much reported “brain drain”. According to Stats NZ, there was a provisional net migration loss of 55,300 New Zealand citizens in the June 2024 year. The net migration loss of New Zealand citizens in the June 2024 year was made up of 24,900 migrant arrivals and 80,200 migrant departures. For every migrant arrival of a New Zealand citizen there were just over three migrant departures.

Typically, when we lose Kiwi’s on the good old fashioned overseas experience, we normally do get them back when they decide they want a more “Kiwi lifestyle”. However, it’s not quite the same when we lose Kiwi’s to Australia. So - how will the government plan on enticing them back? And given all we’ve said about the economic climate and the reality for public and private sector organisations, how will businesses retain our best and brightest? We’ve got a few recommendations below.

Now when you consider all of this and that markets move in cycles, one can’t help but think if spending / investment / project decisions are building up when they push go, will they all push go together? And when this happens, what will be the impact? Could we see another post-COVID hiring market? Will it be exasperated with our increased net migration?

Will organisation’s be even more impacted based on how they approached their employees and hiring during this time? These are questions that businesses and the government must be considering.