Reflections on the Employment Market and Business Confidence
There appears to be mixed messages about the state of the employment market and business confidence. Likewise, amongst our networks we are seeing a variety of market conditions and responses, largely dependent on industry and organisational size. However, the consistent aspect appears to be a heightened level of caution based on the uncertainty of New Zealand’s economy, and the impacts of recession conditions.
What do the statistics tell us?
The Employment Market
According to Rob Clark, Seek NZ Country Manager (Reported in HRD) job advertisement volumes fell five percent month-on-month in May 2023 due to "small decreases" in large industries of Manufacturing, Transport & Logistics (-7%) and Trades & Services (-6%). He said that the biggest month-on-month losses in job advertisements were in the industries of Consulting & Strategy (-20%), Human Resources & Recruitment (-10%), as well as Hospitality & Tourism (-10%). The biggest growth was recorded in the industries of Sport & Recreation (11%), Engineering (4%), and Construction (3%).
Less roles being advertised, can equate to less roles being available, and therefore a potential indicator that unemployment rates may rise – affecting Employment Market Confidence.
Adhoc reports across our own client base have reported that they are seeing the strongest quality of applicants, for several years, with many applicants having more relevant experience. This is consistent with the view that with less roles being advertised, they are seeing increased level of applicants for advertised roles, and this may indicate, such trends as:
- Employees seeking opportunities that are perceived to be more secure
- Individuals/Sole Traders seeking to shift from self-employment options into paid employment
- Redundancies (or restructures) driving employees into role searches
- Increased migration making the skilled-market more competitive
Whilst it is good news for employers looking for candidates, that they may have both a quantity and quality of candidate, overall the recruitment market is still competitive, with many employers vying to attract and retain the best talent. This means being clear on what you have to offer as an organisation, and ensuring that strong candidates are follow-up with quickly.
This also means that we can expect undesirable employee-churn if we are not communicating clearly with employees on the active role the organisation is taking to create sustainability, as well as providing ongoing positive employee experiences, such as cultural and development initiatives. For further ideas on engagement during tough times, have a read here.
Business Financial Pressures
May 2023 saw the Reserve Bank lifting the OCR by a final 25 basis points with no further raises, to reduce inflation, anticipated until 2024.
Keaton Pronk, a Senior Associate - CA (PP) of McDonald Vague, recently wrote an article titled, Insolvency by the Numbers: NZ Insolvency Statistics May 2023. He stated that there are raised levels of Company Insolvency appointments in 2023 compared to the prior two years; however, Company Insolvency appointments for May 2023 dropped back to the 2020/2021 levels – therefore total corporate insolvency figures for the year-to-date remain above the last 3 years but behind the 2019 total levels.
The July 2023 New Zealand Institute of Economic Research (Inc) Quarterly Survey of Business Opinion shows business confidence continued to pick up over the June 2023 quarter but from low levels; however, on a seasonally adjusted basis, a net 59% of businesses expect deterioration in general economic conditions over the coming months. In their media release, they summarised that capacity pressures (such as finding skilled workers) have eased, but revenue-sourcing (e.g. inability to increase pricing, conservative consumer spending) and cost pressures (e.g. costs incurred during international imports, delays in materials) are still intense.
These conditions highlight the continuing challenging economic climate and financial difficulties, necessitating close attention to financial stability and operational viability, (including holding off on significant capital investments).
Organisations off the back of COVID, have been constantly reviewing and adjusting to ensure they are competitive, streamlined and make the most effective use of all their resources and assets. It is said that adversity builds character, and in the business world, the economic pressures have been the catalyst for organisations to ensure they are operating on solid foundations.
In environments such as New Zealand, we often have less hierarchy in our organisations, and frequently employees need to perform or cover several specialities. Whilst this can become overwhelming and drives the need for greater care in regard to wellbeing of employees and equipping them for changing environments, it can be a significant benefit when it comes to having inherent adaptability. During a large-scale merger, where I was facilitating the post-merger “coming together” of the two organisational hierarchies into a new structure, several team members reflected to me, “It seems like those who have treated their roles as fluid and have been able to pick new tasks as needed, have found there are opportunities within the new structure. For those who viewed their roles as more static, they are now experiencing change which may be too significant for them to overcome, and/or has resulted in their current roles being out-of-date with the needs of the business going forward.” In today’s world – and tomorrow’s – a strong capacity for change and the ability to both manage and thrive within an unpredictable environment is key for continued successful performance. There is a shift away from a mentality that centres around reducing uncertainty, towards an approach that recognises the importance of actively engaging with it. So, ideally, building people’s capability and capacity for change, reduces the need for restructures, and provides a greater sense stability, despite change continuing to occur.
The balancing act between financial and resource prudence, while continuing to invest in what can strategically and sustainability drive an organisation, is real. Regardless of the external business or employment market confidence, internal business confidence may be key to an organisation being successful in the long-term. We are all challenged, right now, to reflect on both, and hold the tension between the two carefully. From a people perspective this means keeping our focus on how individuals will experience our organisation as candidates or as employees, protecting employee (and leadership) wellbeing, and building the capability to live in a changing environment. From an organisational perspective this means ensuring we have alignment between our strategy and how we deploy our resources, be that across people, process or systems.