Employers seek clear direction on issues affecting hiring and investment
Businesses in New Zealand are asking for stability and clear direction to have more confidence in hiring, according to the Employers and Manufacturers Association (EMA), after unemployment surprisingly went up to 5.7% in the September 2026 quarter.
EMA Head of Advocacy and Strategy Alan McDonald said employers want stability and clear direction on the major issues affecting investment and hiring, including education, infrastructure, and the wider policy environment.
"Confidence is critical. Businesses need a stable environment and greater certainty that the recovery will endure before they invest and hire," McDonald said in a statement.
"That requires employers, training providers and government agencies to work much more closely together to connect people with the opportunities businesses are able to create."
Hiring caution among employers
New Zealand's unemployment rate saw a modest increase to 5.7% in the September 2026 quarter, up from 5.6% in the previous quarter.
"A 0.1 percentage point movement may appear small, but it represents roughly another 3,000 people unemployed and shows the labour market has not yet turned the corner," McDonald said.
According to the EMA official, the findings show that economic recovery remains "brittle" despite positive signs.
"We are seeing signs of economic recovery, underpinned by strong exports and improving activity in manufacturing, residential construction and tourism," McDonald said.
"However, the recovery remains brittle, and businesses are still assessing whether stronger demand will last before committing to permanent hires."
This can be seen in the greater use of casual workers and fixed-term contracts, which McDonald said shows that many employers are "not yet ready to take on the longer-term commitment of additional permanent staff."
"Casual and fixed-term arrangements give them flexibility while they assess the market and the impact of pressures such as higher fuel costs and wider international uncertainty," he added.
Genuine pathways needed
Meanwhile, McDonald also called for genuine pathways to sustainable employment for young people, as the proportion of young New Zealanders not in employment, education or training (NEET) went up to 14.1% in the September quarter.
"Employers regularly tell us that work readiness is one of their biggest recruitment concerns. At the same time, more young people are becoming disconnected from the pathways that could help them build the skills, experience and confidence needed to enter the workplace," he said.
"The goal cannot simply be to move young people into any available activity. Education and training need to provide genuine pathways into sustainable employment and equip people with the skills businesses need."
Surprising unemployment increase
McDonald was among those who described New Zealand's recent unemployment growth as surprising, following expectations that it would remain stable.
Economists from Kiwibank also described the unemployment growth as surprising, and warned that this may not be the worst.
"The latest employment data for the September quarter brought some surprising bad news," said Alexandra Turcu and Elliott Lowe, economists at Kiwibank, in a new insight.
"We can't guarantee that this is the peak in unemployment. Offshore chaos is still driving prices for transport up across the motu, and many businesses have been facing higher costs, while consumers are pulling back on spending."
The soft labour market has limited salary negotiation for workers, while also putting downward pressure on the prices businesses can charge.
"We need a substantial reduction in business costs in order for the labour market to have a chance of a true revival," they said.
