Employment confidence in New Zealand takes a hit

Published 4 July 2024 | 2 min read

New Zealanders have taken a much dimmer view of the labour market over the last three months, with job cuts and economic uncertainty leading to a significant drop in employment confidence. The latest Westpac-McDermott Miller Employment Confidence Index reveals that employment confidence is at its lowest levels since late 2020. For employers, managers, and HR professionals across the country, this shift in sentiment poses both challenges and opportunities that must be navigated with care.

Why employment confidence matters

Employment confidence is a crucial indicator of economic health and labour market stability. When confidence is low, employees are less likely to feel secure in their jobs, which can lead to decreased productivity, higher turnover, and reduced morale. For employers, low confidence can mean a more difficult recruitment process and a potential increase in costs related to training and employee retention.

Understanding the significance of restoring employment confidence is essential for several reasons:

• Economic stability: High employment confidence contributes to overall economic stability and growth.
• Workplace morale: Confident employees are more engaged and productive.
• Talent acquisition: A positive labour market perception attracts top talent and reduces hiring costs.
• Employee retention: Job security enhances loyalty and reduces turnover rates.

Current state of employment confidence

The latest data paints a sobering picture of the current labour market in New Zealand. Here are some key statistics:

• The Westpac-McDermott Miller Employment Confidence Index fell in the June quarter to the lowest levels since late 2020.
• Job ads fell by 5% in May, marking the fourth consecutive month of decline, with volumes 30% lower year-on-year.
• Regional job ad declines were most pronounced in Marlborough (-46%) and Wellington (-42%).
• Applications per job ad remained steady in April but are now 69% higher than the same time last year, indicating increased competition for fewer roles.
• Specific sectors such as Construction and Engineering saw significant drops in job ads, with a 12% month-on-month decline in Engineering roles.
  
  

Future benefits amidst the gloom

While the current data may seem discouraging, there are potential benefits associated with these trends. Employers who navigate these challenges effectively can position themselves advantageously when the market rebounds:

1. Improved Talent Pools

High competition for jobs means employers have access to a broader and potentially more qualified pool of candidates. Anticipate future needs and align recruitment and retention strategies accordingly to ensure stability. 

2. Innovation and Efficiency

Economic pressures often drive businesses to innovate and improve operational efficiency, leading to long-term benefits. Provide opportunities for professional development and upskilling to enhance job security and employee satisfaction.

3. Stronger Employee Relations

Proactive measures to boost employee morale and job security can strengthen employer-employee relationships. Keep employees informed about company performance and job security measures. Acknowledge and reward employees' hard work and contributions, fostering a positive workplace culture.