Is the golden era for workers over?

Thursday, 12 January 2023

Last year widespread skills shortages put workers in the drivers seat to change career and ask for pay rises. But new data shows that the golden era for workers might be coming to an end.

The labour market may be at a turning point as businesses pull back on and workers hang on to their current jobs with a recession on the cards this year, experts say.

For most of last year employment experts said the labour market was in a golden era for workers and jobseekers.

Widespread skills shortages put workers in the drivers seat and helped to contribute to workers overall receiving the biggest annual pay rises in more than 20 years, according to Stats NZ.

But new data from job site Seek shows that the golden era for workers might be on the decline.

* Job ads remain at record high, but people are not applying

* Wages rises are setting new records as employers compete for workers

The total job losses include redundancies announced in November. (First published 06/01/23)

Seek country manager Rob Clark said job advertisement levels declined in December, while applications per job advert recorded the greatest monthly increase since March 2020.

Nationally job adverts in December fell 10% compared to the same month the previous year. But at the same time the number of applications per advert were up 14%.

The number of jobs advertised in Auckland and Wellington fell 14%, but the largest fall was in the Tasman region down 23%.

In the IT sector, which was by far last year’s highest paid industry, job adverts fell 22%. Engineering jobs advertised were also down 22%, and there were 20% fewer office and administrative jobs advertised.

Infometrics principal economist Brad Olsen said the drop in job application possibly reflected a turning point in the labour market.

“But the question is how much of this is being driven by people being unable to fill those jobs. If you are a business that has been listing a job for the past six months, are you going to keep listing it, or will you find a way to work it?” Olsen said.

Job listings being down reflected businesses pulling back on recruitment in what had been widely picked by economists to be a challenging year, he said.

“Even if they have work for a new role now, they might not have work in the mid-2023 period. They think if they can struggle through without, they may think they will be in a better position to weather the storm in 2023,” Olsen said.

While net migration was slowly beginning to tick upward, there was still a net outflow of 20- to 30-year-old workers, which would continue to impact on the labour market, he said.

“The labour market is still tight. But what we are seeing is that the push to grow the labour market is flattening off. The expectation from employers to hire more and more people is reducing.

“That doesn’t mean the jobs are reducing, but that urgency to grow the labour market is no longer there,” he said.

Dr Zoë Port, management lecturer at Massey University, said the data could signal a drop in business confidence in the lead up to a widely predicted recession.

“Rather than just doom and gloom for job hunters this could signal businesses could be more conservative with their hiring, perhaps wanting to wait it out and see how the economy fares over the coming months,” Port said.

But the data also pointed to a changing attitude from workers, and more intent from them to stay in their current roles, she said.

“It is common when a recession is looming for workers to switch into job preservation or job security mode. Maybe if we are seeing less turnover, it is because workers are doing that rather than looking for new opportunities,” she said.