Interest rate rises, labour shortages blamed for the contraction
The New Zealand Job Index posted its worst annual performance after plunging 30.5% in 2023, demonstrating a "difficult year" for the country's employment market.
The index now sits at 87.68, “implying a 12.3% decline since the Index (of 100.0) was set in June 2018. It is the lowest level on record," says a report from the Recruitment, Consulting and Staffing Association (RCSA).
The index is a measure of where job postings exist in the country's employment market, which are collected from employers, recruiters, and niche job boards across New Zealand.
Source: New Zealand - The Jobs Report 2023 - A Year in Review
The report attributed the massive decline to the interest rate rises that were used to contain inflation, which influenced consumer confidence.
"Some of the policies already implemented by the new government have reduced public spending with an adverse consequence on hiring," says the RCSA.
Businesses have also been constrained by labour shortages, according to the report.
"There has, at least, been some rebalancing in the employment market. Some skills shortages remain.”
Job decline by industry
By industry, the Public Administration saw the "most significant sectoral decline" after getting halved in the last 12 months.
"All of this decline has occurred in the second half of the year, firstly in anticipation of political change but predominantly, in the last quarter as a result of it. The new government has reduced a number of major contracts to improve the budget deficit. Jobs have been lost," says the RCSA.
But the largest annual decline was recorded in the Financial Services industry, with 57%, with a double-digit decline recorded each quarter for the sector.
"A little hard to explain as rising interest rates has seen banking margins rise. These profits seem to have been prudentially retained rather than reinvested in people. Technology projects, shelved during the pandemic, have not been resumed," the report read.
Source: New Zealand - The Jobs Report 2023 - A Year in Review
Declines by occupation, region
By occupation, demand for tech professionals saw a 58.3% decline, the biggest among managers and professionals in the last 12 months, says the RCSA.
This is followed by business professionals (-26%), executives and managers (-24.6%), and then health, education, and community professionals (-16.4%).
For non-professional occupational groups, there was a 43.5% decline in labourers, drivers, and operators, according to the report.
By region, Wellington registered the biggest drop in the job index with -47.6%, which the report attributed to the changing government.
"This can be clearly attributed to the purging of projects by the new national government. It is doing what it was elected to do," says the RCSA report.
"The goal is to pare back the ballooning debt crisis. The casualty is jobs. This will make life particularly challenging for job seekers in the region."
Other regions also saw significant drops. They registered the following declines:
- Canterbury Region (-32.2%)
- Auckland Region (-30.1%)
- Other regions (-20.2%)
