Although we've heard for years now and continue to be told that there is an IT skills shortage, job ads for the tech sector nationwide dropped the most in the March quarter this year, falling by 37.4%, according to a report from the Ministry of Business, Innovation and Employment (MBIE). Manufacturing and hospitality jobs were the second and third hardest hit, dropping 35.6% and 35.4% respectively.
Across the 10 regions in the MBIE report, the story is the same, with IT vacancies in many areas vanishing in large numbers.
The employment situation for techies has changed quite dramatically and quickly. Overseas companies have shed staff in large numbers over the last year or so, and the latest figures suggest New Zealand is following that trend. Interest.co.nz asked recruiter Robert Half what is going on, and the company's director Ronil Singh provided some answers for us.
"The main reason why IT job ads have dropped the most is because we are coming off an IT jobs boom," Singh said.
"At the moment, funding from investors has slowed down for start-up software development companies which is making it hard to scale up with more hires," he said.
"The current economic climate is forcing a lot of businesses to review what is ‘business-critical’ spend, which means projects are being delayed (not cancelled) and it’s harder to make a business case for additional headcount if it is not deemed necessary," he added.
This may seem at odds with New Zealand public sector spending on IT remaining significant at $1 billion a year, as noted by consultants KPMG.
That money is to maintain the status quo, "itself a costly endeavour," KPMG wrote. An estimated $12.5 billion spend over the next five years on IT is being suggested to meet demand for digital services from increasingly tech-savvy citizens, a possibly unaffordable amount that is rapidly outpacing available funding.
Increasing demand notwithstanding, government IT work opportunities are falling away and branching out on your own isn't going to make up for it. IT channel news publication Reseller News reported that government spending on contractors and consultants is falling fast.
Spending on contractors and consultants was the lowest share of the total workforce expenditure since Public Service Commission records began in 2018, down to 8.5%, Reseller News reported.
There is also the spectre of the much hyped artificial intelligence (AI) technology which is said to be able to replace some IT jobs, but hasn't had much of an impact on the IT jobs market, Robert Half noted.
"No, we haven't seen GenAI [generative artificial intelligence that can produce text, images, audio and video] contribute to the job ads slowdown," Singh said.
"It is relatively new and is not having that sort of an impact yet on the hiring market," he added.
Research published earlier this month by Australia's assistant minister for employment, Andrew Leigh, bears out what Singh said, with AI skills not being sought after attributes by hirers.
The IT sector is still seeing a skills shortage, but hiring is becoming more strategic, Singh said.
"When businesses are faced with headwinds, this time is spent planning on how to be more efficient and productive and looking at how they can invest in the right tools and technology to give themselves a competitive edge," Singh added.
"Tech talent is needed for these business changes, so this time of planning allows businesses to hit the ground running when circumstances ease up," he concluded.
As a result of the demand-drop off, IT worker salaries have plateaued over the last 12 months, which is expected to continue this year. On average, salaries have increased a mere 0.6%, with only infrastructure and engineering workers getting an inflation-busting 9.5% pay rise.
Roles that are in demand still include senior software developers, automation testers, systems engineers, help desk support officers, and business analysts, Robert Half's salary guide for 2024 suggests.
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.