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.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.