Employment confidence faltering: Westpac

Tuesday, 23 June 2020

People are less confident about their job security and earning less, a new survey suggests.

Confidence about current job opportunities and job security have plunged in the wake of the Covid-19 outbreak.

Westpac McDermott Miller's quarterly confidence survey shows that optimism in New Zealand's employment market has fallen sharply, falling 12.9 points to 87.3 in June, compared to March.

Earnings growth had also slowed sharply which fitted with reports that many firms had reduced pay and hours for employees.

Westpac said the confidence reading was the lowest since the survey began in 2004 but a switch to online-based surveys last year had changed the balance of responses and comparisons should be made with caution.

* 12,000 headline-grabbing redundancies 'tip of the iceberg'

The biggest hit to the survey came from people’s perceptions about current job opportunities, which were down minus 31.3 points to 52.6.

That was slightly offset by a lift in perceptions of future opportunities, which were up 9.4 points to negative 16.8, less pessimistic than they were in March.

Tairawhiti (Gisborne and East Coast) logging has taken a hit, affecting workers' jobs and income, as a result of the coronavirus outbreak.

''That fits with the patterns we’ve seen in online job advertisements,'' said senior economist Michael Gordon.

''Hiring understandably plunged during the Level 4 lockdown, with advertisements down about 75 per cent on the same time last year.

''The trend has improved as the country has moved down the alert levels, though currently they’re still running about 20 per cent below last year.''

Workers were more downbeat about their earnings prospects, with the balance of workers reporting a rise in their past earnings down to its lowest level on record.

Actual earnings fell 15.2 points to 1.2, while expectations of higher pay in a year's time were down 10.4 points to 19.5.

People's perceptions of their job security also slumped nearly 17 points to minus-14.8.

Gordon said people's perceptions around earnings fitted with evidence that, in terms of businesses’ response to the crisis, pay cuts and/or reduced hours had played at least as much of a role as layoffs.

The job security question showed many workers were not clear what would happen when the wage subsidy scheme expired over the coming months, he said.

Employment confidence was down across most regions, with Auckland now the most downbeat region. Northland and Gisborne/Hawke’s Bay saw a small rise in confidence, mostly relating to past earnings.

Both Northland and Gisborne were big forestry regions which had suffered a hit early on in the Covid-19 crisis as China went into lockdown but had since picked up again.

The survey was carried out over the first half of June and had a sample size of 1,556 respondents.