'Other problems are beginning to outpace simply finding and retaining people'
Retaining and recruiting employees became less challenging for employers in New Zealand this year, but other pressures impacting organisations are likely to lead to redundancies in the future.
These are the findings of the 2023/24 Beyond Recruitment Economic and Labour Report, which surveyed over 500 employment leaders in New Zealand.
The report found that only 48% of employers struggled to retain employees, a major decline from the 83% a year ago.
In terms of recruitment, 24% answered it was "somewhat easier” this year.
"While those finding it significantly easier to find talent only saw a two per cent bump, it's still a step in the right direction," said Liza Viz, CEO of Beyond Recruitment, in a statement.
"We haven't seen a step in that direction for some time, and we're not quite yet at pre-pandemic levels, but a market where finding good talent is becoming easier is change worth celebrating."
Fiscal pressures catching up for employers
Despite these improvements, however, the lack of talent still emerged as the top issue for 48% employers in New Zealand, according to the report.
But other issues are catching up and impacting organisations, according to Viz.
"This year it indicates that other problems are beginning to outpace simply finding and retaining people. Cost of living and operational performance are being talked about by CEOs and boards alike," the CEO said.
According to the survey, the increased cost of living was the second-highest cited problem by employers (40%).
The "current level of operational performance" was also cited by 27% of employers as a problem, up by 11 points.
"The data indicates that major corporations are encountering fiscal pressures, especially in managing personnel-related expenses that smaller enterprises often sidestep," Viz said.
Redundancies on the horizon
These fiscal pressures faced by employers could be leading up to potential layoffs in the future, according to the report.
It found that very large organisations with over 1,000 employees are most likely to make this move (24%) as part of reducing costs.
Only 18% of large organisations (201-1,000 staff) and nine per cent of SMEs (1-200 staff) said they will reduce headcounts as part of cost-cutting.
"Unlike SMEs, large firms frequently bear the brunt of regulations, compliance, and administrative structures. It's hard to change direction in a large organisation, but those in charge are seeing the writing on the wall – that's why big businesses are reimagining their human resource strategies," Viz said.
Greater focus on workplace culture
Meanwhile, the coming year will likely see employers put more focus on culture as the report found 75% organisations that are still impacted by flexible working practices.
"I also believe that businesses will put a renewed focus on culture. Hybrid working has had an impact, it is making it harder for businesses to develop consistent cultures – there's little space for new employees to learn by osmosis and serendipity. Smart businesses will look to combat that," Viz said.
Economist Shamubeel Eaqub also predicted that 2024 will be a year of consolidation and normalisation.
"Rather than expansion, the focus will be on retention, efficiency through training and new technologies, and improving culture in the workplace," Eaqub said in a statement.