The job market remains tight.
Westpac senior economist Michael Gordon says if there has been any cooling in the employment market it has been very gradual, with none of the “lurches” we’ve seen in gross domestic product data.
Statistics NZ’s recently released February employment indicators continued on January’s positive note, with seasonally-adjusted filled jobs rising 0.4%, or by about 8400 jobs compared with January.
In the first month of the year, filled jobs rose 0.8% after hitting negative territory in December.
Gordon says the job numbers in the employment indicator have been fairly steady with about 2% annual growth.
He says it's an indicator to keep an eye on to track how the New Zealand economy is faring as the data is drawn from tax returns, making it a valuable data source similar to the US’ non-farm payroll data which is avidly watched there.
New Zealand’s unemployment rate remains low, coming in at 3.4% in the December quarter of 2022.
“These are still lower [unemployment] readings than we've had in almost any other point in the last few decades. Talking to businesses, it still seems like the biggest problem that they're facing, or their biggest worry, is labour shortages and that difficulty finding workers and also cost pressures, which wages will be a part of. I think, if anything is changing, there's maybe a little less confidence about being able to fully pass on costs, but the cost element is still very much there,” Gordon says.
Gordon says with borders closed for an extended period, New Zealand employers had a fixed pool of talent to fish in, particularly because unemployment rates were so low for those in their peak career years of 25-to-55 years old.
That has resulted in growing numbers of both those at the beginning and the end of their careers joining or rejoining the workforce.
The Stats NZ February data shows that by age group, the largest changes in the number of filled jobs compared with February 2022 were in the 15-19 year old age group and the 65-plus age group.
More than 7,600 jobs were filled by people aged 65 and up in February this year compared with 2022.
“Where do you get the growth potential? It is in the young, who tend to have fairly low participation. And there's also encouraging people to stay on at a later age. That has been a trend over time, but I think we’ve probably been even more reliant on it in the last few years,” Gordon says.
New Zealand’s economic juggernaut, primary industries, was not among the winners in February, with filled jobs dropping 1.7% or by almost 1800 jobs compared with January.
Looking at the regions, Otago had the strongest result, reporting filled jobs rose 3.9% on February 2022, while Canterbury continued the south’s good run, adding more than 10,000 filled roles.
Auckland also had a positive result, with Stats NZ data showing more than 20,000 jobs filled compared with February 2022.
Strong salary growth
Data released on Thursday morning from online jobs market Seek shows the growth in salaries posted on the site for the quarter ending February 2023 was the second-fastest on record.
Seek’s advertised salary index found the largest salary increases came for jobs with the lowest salaries, with advertised salaries increasing 15.7%.
It said strong demand for workers in customer-facing roles such as hospitality and tourism had pushed up salaries particularly for lower-paid roles. And the Stats NZ data also pointed to strength in these sectors, with the number of filled jobs rising 8.5%, or by more than 12,000 roles, in February 2023 compared with the same month last year.
Jobs at the top end saw an increase in advertised salaries of 5.3%, Seek said.
The industry that saw the highest salary growth was advertising, arts and media, with an increase of 11%.
Salary growth lags cost of living
Seek said while advertised salaries were growing at close to their fastest pace on record they’re still lagging the cost of living.
Overall, advertised salaries rose 4.4% in the year to the February quarter 2023. Seek has been publishing its salary data since 2016.
The fastest growth in salaries advertised on the site in New Zealand came in November 2021 when they rose by 4.6%.
It’s yet another sign the New Zealand economy is holding up relatively well in the face of global inflation and after two heavily-disrupted Covid years.
But it’s putting pressure on employers.
An Employers and Manufacturers Association survey released in March found 90% of businesses were struggling to fill vacancies, and nearly a third have had roles in the market for more than six months.
Only 12% of respondents did not have any current vacancies, the EMA survey of 543 responses found.
The EMA says the survey results confirm just how bad things really are for businesses trying to find staff.
Business NZ said earlier this month that New Zealand’s need for workers will outstrip supply by a quarter of a million people by 2048.
A future of workplace report found that without policy changes our tightest-ever labour market will get tighter.
Business NZ says we are in a global war for talent, and New Zealand’s labour shortage is the most intense in the OECD.
It would like to see more immigration, and increasing participation and employment of Māori, Pasifika, women, and older people, to help close the workforce gap.
Gordon says he doesn’t see immigration as a “silver bullet” to workforce tightness, because every person that comes into the country is also going to create demand.
He says the answer to the complaints about employers’ saying they have too much work and not enough staff is exactly what the Reserve Bank is working on by hiking rates, and hopefully squashing that demand and resulting inflation.
27 Comments
This is great news. Something to celebrate. Very low unemployment and wage pressure + housing prices dropping is great for workers.
The conditions are in favour of workers for once, who would have thought that? A shortage of workers improves worker conditions, big think.
Wrong for two fundamental reasons:
- Wage pressures possibly mean wage increases, but they do not necessarily translate into greater marketable value of labour. Real wage increases are really only possible in the short term. And given that we're in a technological age, the value of labour is constrained.
- Falling house prices impacts on spending behavior, which constrains the value of labour, revenue and profits. Ultimately this can turn into a vicious downward spiral with each factor feeding off each other.
Wage pressure means Labour is capturing more of the generated value of their work instead of it going to Capital.
This assumes the only inputs are labour and capital. There's a huge amount of non labour related costs out there all rising, so relatively speaking, the value of the labour is relatively worse off - because your pay rise is paying for everyone else's pay rise, PLUS higher fuel, energy, material and other costs.
It's just a better position than being a non-worker in this environment. The only real winners are 18-24 year Olds and that's only because most other segments are getting smashed.
If I look at the stats our unemployment rate is still significantly higher than the US - or is that comparing apples and oranges
I dont regard an unemployment rate over 3% as being low, especially given the other benefit levels which are available - time to adjust the eligibility criteria so its time limited
I just read TA's weekly missive where he covers this labour shortage in some more detail. And makes it quite clear that NZ employers have had at least 20 years warning & chosen to keep their heads in the sand relying on the massive Govt (Labour & National) faciliated increase in net immigration over that period to avoid the investing in capital & labour productivity.
Chickens...roost etc
Not what I see in the business sector and certainly not in our key export sectors of primary production where productivity has improved year on year for way more than 20 years driven by capital and labour improvements
Even in the likes of the construction sector chippies dont use hammers anymore its 100% battery electric for everything
Govt depts and service delivery agencies are a different story though - Health is only just phasing out fax machines, trains still have drivers on them, civil aviation still has towers at each airport - the dragging us down list is long
We have, in the last 2 years, created an economy where it is far easier and more profitable for workers to change jobs to earn more, instead of loyalty being rewarded and businesses investing in their workers to build them up and add value to them. When there's plenty of labour available and a worker is easily replaced, business is less incentivised to invest in their workers as they can get more. Hopefully we will shift back to where employers fight to keep their workers, appreciate them more, and voluntarily work to upskill them in order to breed loyalty. Naturally in the labour force there will be the outliers who expect the world and don't want to work for it, but on the large front, we are creatures of habit and prefer to stay where we are.
Another factor has to be women exiting the workforce to have children or to care for children during the lockdowns/WFH. Not sure about the rest of you, but my family expanded significantly from the Lockdowns.
The combination of higher wages for skilled professionals, the unbelievable expense of childcare and the mini baby boom from covid seems to have impacted the workforce significantly too.
'The industry that saw the highest salary growth was advertising, arts and media, with an increase of 11%.'
Where does the funding for these roles come from? I suspect many of these roles are Local Government/Public Sector roles.
Why would you choose an entry level Manufacturing role for $40k when you could get some entry level Communications/Arts/Media Administrative or Policy type role in the Public Sector for Local Government for $80k.
It's compelling that the Media area commands these high salaries given today's news regarding Today FM.
Not to mention the $327M allocated to public media in the 2022 Budget. Along with the tens of millions spent on Covid advertising. The vaccine campaign alone was $35M. Let alone the rest for explaining the constantly changing Level/Alert/traffic light system. The Govt is by far the biggest media buyer in NZ. Outfits like Stuff went from being broke one day to raking it in.
Tova et al probably thought they were on the Jacinda gravy train for life.
It is worth looking under the hood of this data. What you see is significant job losses in tourism, hospo, retail etc when COVID hit in early 2020, and then major job increases in health and care, public sector, construction, and professional services (and finance!) Then as the economy opens up (and heats up), people unsurprisingly don't go back to the crap jobs they used to do, so the less desirable industries start to increase their wages until they tempt a few more people back.
As others have noted - this is how the economy is *supposed to work* - it is healthy for employers to be competing for workers by offering them enough to make the job they are offering attractive relative to other jobs. That is the market working. For too long, people have been forced into crap jobs because they are the only jobs available - and that has allowed employers to take the p*ss on pay, treatment, conditions etc.
I assume this contributes to inflation you have staff transfer from the Private Sector Productive Industry (i.e. Manufacturing), to these higher paying, taxpayer or local Government funded roles (i.e. Communications/Media roles in Government).
It's not an example of the 'free market' economy operating when the Private Sector industries are competing with funding from, for instance, the PIJF or Public Sector/Local Government (Taxpayers/Ratepayers).
To entice them back to have to offer more for the 'crap' roles as you describe it - contributing to a wage/price spiral. More money chasing proportionally less goods.
Would be interesting to see the stats from Seek on the number of applicants per role.
I'm seeing a lot of jobs in my area where the adverts are simply timing out, and the number of applicants has more than tripled in the last 6 months - but that's only anecdotal evidence. But it appears the balance is shifting to employers either a) being picky, or b) not actually able to fill the role (two at least I know simply had to cancel the position due to adverse market conditions).
This is eerily familiar territory...
And yet a 30% increase in the number of people on JobSeeker and the Sole Parent Benefit under Labour. It should now be clear that Labour have made being on welfare an enticing lifestyle choice, even in the face of a 44% increase in the minimum wage and record low unemployment everywhere.
And yet real unemployment as per MSD. 11.2% real unemployment, about 349,000 in receipt of a benefit. Whichever way you slice and dice the numbers. The economy isn't producing decent permanent jobs or wages. Also, opening the floodgates for temporary seasonal workers and immigrants makes things worse.
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