This year’s pressures have struck very large businesses, those with more than 1,000 staff, the hardest and they are more than twice as likely to make redundancies to reduce costs than large (201-1,000 staff) and SMEs (1-200 staff), according to a new report.
Beyond Recruitment’s annual Economic and Labour Report for 2023/24 provides data into the current state of New Zealand’s workforce, highlighting key findings that are shaping the country’s employment landscape. It provides insights into New Zealand’s workforce and highlights both the challenges and opportunities facing businesses in the current economic climate, a statement from the company says.
In a year marked by significant challenges related to increasing cost, the report sees a change in responses from previous years.
“Inflation, unseen at these levels since the 1990s, has put upward pressure on business costs. As a result, most organisations (36%) are reducing costs, but SMEs are far less likely to be making redundancies. Of respondents most likely to be making staff cuts, SMEs (9%) and large organisations (18%) are significantly behind very large organisations (24%), Beyond Recruitment says.
‘Lack of available talent’ has typically been the top issue surveyed as preventing success in New Zealand, with over 70% of respondents choosing this response two years in a row. While still the largest issue for businesses, in 2023, only 48% of respondents selected this response.
Other problems are beginning to outpace finding and retaining people
Liza Viz, CEO of Beyond Recruitment says the firm’s Economic and Labour Report equips employers and policymakers “with valuable data to make informed decisions and adapt to the evolving needs of the workforce. This year it indicates that other problems are beginning to outpace simply finding and retaining people. Cost of living and operational performance are being talked about by CEOs and boards alike. Finding people is now less important than the combination of affording good employees and making those employees more efficient.”
Of organisations polled, ‘increased cost of living’ came in second at 40% (up 2 points from 2022 and 28 points from 2021), and ‘current level of operational performance’ rose 11 points to 27%.
“The data indicates that major corporations are encountering fiscal pressures, especially in managing personnel-related expenses that smaller enterprises often sidestep, Viz says.
“The financial weight of property and office, travel and other costs, staff benefits, and larger salaries significantly inflate the cost of doing business. Unlike SMEs, large firms frequently bear the brunt of regulations, compliance and administrative structures. It’s hard to change direction in a large organisation, but those in charge are seeing the writing on the wall – that’s why big businesses are re-imagining their human resource strategies.”
Retaining employees has become less challenging
The report notes that retaining employees has become less challenging this year, with those finding it harder dropping from 83% to 48%. Respondents also expressed increased satisfaction with the quality and suitability of local talent entering the job market (29% last year compared to 43% this year).
“One of the biggest surprises in the 2023/24 Beyond Recruitment Economic and Labour Report is in the number of organisations finding recruitment easier than in previous years. This year the report found respondents answering ‘significantly easier’ (2%) to the question on whether it’s easier or harder right now to find good talent compared to the past. The answer ‘somewhat easier’, rose a whopping 23 points to 24%,” the company says.
Viz notes that while those finding it significantly easier to find talent “only saw a 2% bump, it’s still a step in the right direction. We haven’t seen a step in that direction for some time, and we’re not quite yet at pre-pandemic levels, but a market where finding good talent is becoming easier is change worth celebrating.”
Economist, Shamubeel Eaqub, commented on the report’s findings, saying, the 2024 labour market outlook, for most businesses, “is likely to be a year of consolidation and normalisation. Rather than expansion, the focus will be on retention, efficiency through training and new technologies, and improving culture in the workplace”.
Viz also believes that businesses will put a renewed focus on culture.
“Hybrid working has had an impact, it is making it harder for businesses to develop consistent cultures – there’s little space for new employees to learn by osmosis and serendipity. Smart businesses will look to combat that.”
The Economic and Labour Report 2023/24 unveils several other insights:
- Barriers to Success: Finding talent remains a top concern for businesses, but there is a glimmer of hope as this barrier has decreased from over 70% to 48% this year.
- Projected Growth: Business optimism has dipped somewhat, with only 44% of respondents expecting growth in the next 12 months, down from 59%.
- Pay Increases: Average pay rises have decreased slightly from 3-5% to 3-4%, despite a 6% inflation rate.
- Non-cash Benefits: Hybrid work options, flexible work hours, and company-paid training remain the most popular non-cash benefits.
- Flexible Working: Covid continues to shape flexible working practices, impacting 75% of New Zealand organisations.
- Covid Aftermath & Long Covid: Nearly a quarter of Kiwi organisations have been impacted by long Covid and only 70% of them had a plan in place for such an eventuality.
- Artificial Intelligence: AI has had a minimal impact on jobs in New Zealand, with only 7% indicating any significant impact.
The 2023/24 Beyond Recruitment Economic & Labour Report collates the responses of over 500 New Zealand employment leaders.
