Dan Wirepa planned to spend months trying to find a job back in New Zealand when he returned from overseas. It took him just two weeks.
The 28-year-old came home in May, after 21 years in the UK.
The last time he job-hunted was about eight years ago, and he says there were no major differences in the process of applying and finding a job between the two countries. “Except the advent of virtual meetings and Zoom, which made the whole process a lot smoother, especially considering I was up in the North Island while applying in Christchurch.”
Wirepa applied for four jobs, received two interviews and was successful in both. He now works as the growth marketing manager at online menu planning business MenuAid.
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“Between quitting my job in the UK, moving to New Zealand, and eventually getting the job with MenuAid, I was out of work for a total of six weeks,” he said, which put paid to his original plan to travel the country and catch up with friends and whānau.
“I never expected to find work so quickly and thought I should start applying sooner as it would drag out.”
While the job hunt took him by surprise, Wirepa’s story is not unusual.
Rob Clark, country manager of recruitment site Seek, says it is still a job hunter’s market.
“Although we have seen an uptick in applications per job ad in August by 11%, job ads remain very high, which mean jobseekers have plenty of choice.
“For businesses, this means that getting the hiring process right is key, and if you are slow to respond you run the risk of losing good talent to other offers,” he says.
One of the biggest changes hirers have had to make in the past 18 months to combat the tight labour market is to sharpen their hiring processes to reduce the delay between application and handshake.
“Gone are the days where hirers would compile a list of applicants and review at the end of the month. They need to be reviewing applications as they come in real-time, and if you have someone who looks right for the role, respond immediately.”
Trade Me Job sales director Matt Tolich agrees applicants are in the driver’s seat.
“With an abundance of options and salaries at an all-time high, it’s a great time to be looking for a new role,” Tolich says.
“My advice to job hunters is to use the current market conditions to your advantage in the negotiation process when discussing things like salary, flexibility and career goals.”
Economists say there’s unlikely to be a big change any time soon, either. They’re expecting unemployment to remain around current levels for the rest of the year before slowly climbing higher.
“I expect the labour market to remain tight for a few years to come,” says Westpac acting chief economist Michael Gordon.
“We’re looking for the unemployment rate to rise from where it is, but still not reach particularly high levels.”
Gordon expects some easing of labour market pressures. He sees the unemployment rate moving into the 4% range in the next couple of years, but noted that was still quite low historically.
The unemployment rate has trended down over time, partly as a result of better job matching and partly due to the ageing population, he says.
While businesses decry the country’s extended border closure during the pandemic and the Government’s strict immigration settings for their labour woes, Gordon doesn’t think that’s the main driver.
To be sure, sectors that are more reliant on mobile labour on working holiday visas, such as hospitality and tourism, have felt the pinch as those workers have been absent over the last couple of years and are only just starting to come back. And sectors reliant on migrant workers like healthcare and aged care have also been cut off from their normal flow of labour.
But Gordon says the fact that worker shortages are so widespread, including areas like advertising and accounting that don’t rely on cheap migrant labour, suggests to him that other factors are at play.
“I see this as more a product of the overheated demand in the economy rather than labour shortages per se,” he says.
“Businesses will always talk about labour shortages, because what they see is the role that they can’t fill. When everyone is saying that, you have to ask – why is there so much work on?”
Gordon notes there are still broadly the same number of people and the same number of potential workers as there were a few years ago, and questions why that is no longer enough.
“It seems to be a product of what we’ve seen in the wider economy, which is overstimulation to get through the Covid shock,” he says. “Now that has to be pulled back.”
If overheated demand is at the core of the problem, then bringing in more migrants won’t solve it because more people will just add to that demand, he says.
“An employer will always see this as a worker shortage,” he says. “They see the role that a migrant helps them to fill – what they don’t see is the extra demand that person creates. They need to be fed and clothed and entertained and so on, and it’s actually creating a need for more workers elsewhere in the economy.”
Gordon says it’s not so much that particular parts of the economy have been short of migrant workers, but is really an imbalance that is showing up everywhere.
“Simply increasing the population doesn’t fix that imbalance,” he says. “It really has to be done through wider macro policy.”
He’s referring to the Reserve Bank Te Pūtea Matua wielding its big stick of interest rate hikes to slow down activity in the economy.
New Zealand’s central bank has been among the most aggressive in raising interest rates to rein in inflation which accelerated away in a period of loose monetary conditions during the pandemic.
The bank began lifting the benchmark rate from a record low 0.25% in October last year and last month announced its seventh consecutive hike, signalling it would continue tightening at pace until spending cooled and inflation slowed.
At its August meeting, the bank raised the benchmark by half a percentage point, effectively a double hike and its fourth consecutive rise of that magnitude, which took the official cash rate to a seven-year high of 3%.
As well its inflation mandate, the bank is also required to support maximum sustainable employment, or what you might call “full employment”, where the job market is tight, but not so tight that inflation is rising out of control.
In its latest Monetary Policy Statement, the bank said its indicators suggest employment is “well above” the sustainable level and unemployment will need to rise from its “exceptionally low levels” to get inflation back to its 2% midpoint target by 2025. Inflation is currently at a 32-year high of 7.3%.
The Reserve Bank expects pressure in the labour market to ease in line with moderating demand and gradual growth in the labour force. It sees the unemployment rate rising to about 5% by the end of 2025 as workforce supply growth outstrips additional labour demand.
ASB expects the unemployment rate will remain well below the 4% to 4.5% “Goldilocks Zone” for longer than the Reserve Bank expects as companies hold on to staff even as the economy slows.
“Growth over 2022 and into 2023 is expected to be anaemic, which in time will loosen the labour market,” ASB senior economist Mark Smith says in a note on the labour supply outlook.
“Even if New Zealand enters recession, we don’t expect to see wholesale job losses,” Smith says.
“The starting point for the labour market is very tight. With currently the most acute shortages for both skilled and unskilled labour in a generation, firms are unlikely to shed staff unless they have to. They know they will be scrambling for staff when the upturn arrives. A period of labour hoarding looks more likely to us than wholesale job shedding.”
Westpac’s Gordon says he expects the Reserve Bank to keep up the pressure to slow the economy until the labour market comes back into balance.
The Reserve Bank estimates there are currently two job vacancies for every unemployed person.
“There’s a lot of positions that are going unfilled for long periods,” Gordon says.
As the economy cools, he expects a “soft landing” which would see demand for workers slow rather than widespread job losses.
“The first thing I’d expect to see is that unsatisfied demand for workers will start to fade. So you will get employers saying ‘Oh actually, I don’t have to fill this role because I’m seeing the customer demand come off now’,” he says.
More people coming in to the country now that borders have reopened will also help ease labour market pressures.
Gordon expects the number of migrants coming to New Zealand will continue to increase, returning the country to net positive inflow of people over the next couple of years.
In the year to the end of July, New Zealand had 12,400 more people leave the country than arrive – the 17th month in a row of net annual migration loss.
That’s a far cry from annual net influx of about 50,000 people a year prior to the pandemic.
Gordon doesn’t expect the country to return to such high levels in the future, although he says there may be a catch-up period of inflows and outflows over the next year or so.
ASB concurs, saying New Zealand is unlikely to reach its earlier peaks given the strong demand for workers in other countries.
Kiwibank chief economist Jarrod Kerr expects the labour market to worsen for the rest of this year as the country continues to lose more people than it gains.
“For the near term, the labour market looks like it’s going to get worse as we lose Kiwis in their prime overseas,” he says. “That’s just going to further complicate or tighten the labour market.
“Then hopefully next year we start to see some decent migrant inflows that will hopefully alleviate some of the shortages in the labour market.”
He expects unemployment to remain around current levels for the rest of the year, before gradually increasing towards 4% next year as the economy slows and more migrants arrive to fill some of the gaps.
“We have a very tight labour market, and it’s across most industries,” Kerr says. “Most of the clients that we speak to are struggling to get workers, and there’s a lot of churn in the labour market – there’s a lot of people leaving jobs for better jobs and our customers are telling us that it’s costing a lot more to retain staff and attract staff.”
Kerr believes the country has improved its skills training during the pandemic, because it was forced to.
“There’s some good government schemes out there, trying to get people trained up in the right areas where there are the biggest shortages. I think we’re doing a good job with what we have. The problem is we don’t have enough bodies – we don’t have enough people to take on these roles,” he says.
He cites residential construction as one of the areas with the biggest shortages as a surge in activity in the industry bumps up against capacity constraints of labour and materials.
Hospitality and retailing were also struggling, Kerr says.
“We hear from some customers telling us they simply can’t open their cafe or restaurant because they don’t have the staff. That’s a real problem for these companies. That’s basically money not coming in the door.”
Absences were also high due to Covid-19 and a bad winter flu season, and there wasn’t as much slack in the workforce to cope as normal, Kerr says.
Most labour markets around the world were quite tight at the moment, he noted.
“I think now is the time when we really should be advertising ourselves as a fantastic destination,” he says. “Now’s the time to really try and attract more people. We’re all fighting for workers.”
As for Dan Wirepa, there was another unexpected element to his rapid job hunt – a dose of imposter syndrome.
“Having not written a CV in close to four years, starting to sit down and put past accomplishments on paper almost felt like I was embellishing, and the imposter syndrome began to kick in,” he said.
“You almost feel like it’s one thing to put it on a CV, but another to be able to back it up.
“Getting to the interview stages and realising, when asked, that my experience really did align with what I had written and that I was confident in myself, my role and my ability, was definitely a relief.”
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