Leighton Howl, the Director at New Zealand’s Pond Recruitment, reports on employment trends in the recruitment sector and insights gathered from both candidates and clients in 2022. The Pond team have interviewed over 2500 Creative, Marketing and Digital candidates over 365 days. Here are some of the trends they discovered from chatting to so many people.
How has it been employing people in 2022?
Hiring this year continued to accelerate on from early 2021. What unfolded nationwide was a giant game of tag created by two years of Covid-19.
The New Zealand employment market wasn’t in fact growing, but was actually shrinking and merely playing catch with itself. What was evident with both employers and employees was that both groups were running the game hard; catching someone to fill a position or stay in one wasn’t easy.
Employees were resigning to chase something better, and employers were chasing candidates to fill a newly created opening. This process remained circular for 18 months until about September 1st earlier this year. At this point, inflation started to kick in, and the cost of doing business quickly went up. Hiring started to go on hold, and employee costs and structures were reviewed. This resulted in way fewer live roles* being advertised in the market.
*We’re referring to roles in the salary bracket of $ 60k – $ 180k across New Zealand.
Looking back, how did the Covid pandemic create such mayhem for NZ businesses?
Gaps in businesses were created due to many reasons and motivations: skilled migrants were going home, under 30 travellers had already gone, older employees were stepping away from work and considering semi-retirement, young educated locals were sneaking out of New Zealand on their well overdue Overseas Experience, and most of all, expats were not returning to New Zealand like everyone thought they would. In simple terms, we had less people willing or able to work.
What accelerated this game of catch were employees who were not feeling loved. They had not had a performance review or pay increase for years, or simply felt like a change within a few months of Covid settling down. They got on their bike and had a look at what was around the corner. To their delight, there were new roles live in the market everywhere, and the opportunity to move up or sideways with a pay increase became evident. Covid exposed some average business practices, average culture, and a lack of appreciation for workers, which created instant movement. All businesses were still affected to some extent – some more than others (excluding industries such as hospitality, tourism, travel and aviation which were brought to a complete standstill). Most employees who found themselves displaced from these ‘standstill’ industries had to retrain and merge their knowledge and transferrable skills into newly created roles in other sectors short on employees.
Even though many employees spotted an opportunity and left, employers were getting left out in the dark, cut off at the knees, and left with little acknowledgment of their survival efforts through Covid. On the flip side, we are now seeing candidates who moved on a whim with little career planning or thinking, landing in a business that wasn’t necessarily any better. As of September 2022, they are now looking for a new role or looking to changing career direction completely. Good loyal employees (mostly senior) who held on and gritted their teeth are now reaping the rewards for their loyalty in staying with pay increases and additional benefits.
Have salaries grown?
Yes, they have. Salaries have certainly gone skyward in 2022. From as little as 10 percent to highs of 20 percent on average across all professions we cover in Marketing, Media, Creative, Design, Digital & Tech. Increases have been driven by low supply, high demand, and constant movement of candidates as they chase something better for reasons outlined above.
One common trend that has emerged is that less skilled and inexperienced candidates are getting paid more, many in the salary bracket of up to $ 90k (some with only 2-3 years’ of professional experience). We think that this is because that specific salary bracket comprises of the <30 age group and this particular age group have left New Zealand, leaving a huge gap in their wake. These are the Kiwis heading off on their OE, choosing bustling cities like Sydney and London with tons of job opportunities. There has also been a lack of working holiday visa holders in the country compared to 2019. Thus the direct effect is that the <30 age group has been light on numbers.
Have the salary increases been worth it for this younger group? We think that this is not the case, which may become the ingredient for early redundancies as we move into a speculated recession in 2023. Businesses will be forced to look closely at what young people can do and how they can perform in a tough economy. On that note, we are already seeing some early pre-recession redundancies as we come up to Christmas.
The other trend we’ve seen is that candidates in the $ 140k – $ 200k salary range have not moved much. Granted there have been some exceptions, but in general senior people are not earning more following inflation pressure. Many have had retention-focused increases of 5-6 percent. A peer-to-peer scenario of “We love what you do so here is a bit more because you’ve been loyal and we need you.” The manpower of embarking on a replacement hire in 2022 has been proactively avoided by smart employers working with their best employees. Some have also translated this mindset into other benefits like using the work-from-home (WFH) policy as a benefit to reduce costs for employees (travel time, cost of petrol, etc).
Senior candidates in this upper range have not moved jobs at all. The risk is too high for them personally as the cost of living goes up and mortgages go up. There is a “head down, stay focused and keep doing what works” mentality.
Why is skilled immigration slow?
The idea of hundreds of wonderfully educated and skilled migrants coming to New Zealand in 2022 to support and drive a new knowledge economy turned out to be a fairy-tale story with blank pages. Little made their way over here, especially in the upper $ 100k – $ 200k+ salary bracket. What is worse, as you may have read in the media, the under $ 80k travellers on working holiday visas are only starting to drip feed into the country, with many under 30s, focused on fun times and summer travel (great for the Hospitality or Horticulture sectors).
So what are the reasons for people not seeing New Zealand as the place to be? Firstly, we’ve seen new heights in crime with ram raids and break-ins happening frequently, lack of affordable accommodation, and most of all, a sluggish visa approval process. Newly settled migrants may even report back to their extended families and friends in their respective home countries about these negative experiences if experienced first-hand, which may put them off from immigrating here. Inflation is out of control in 2022 – thus the cost of living goes up and the ability to work and survive in New Zealand for the single skilled migrant worker, whatever the profession, can prove difficult. It may take 18 months for New Zealand to become appealing again.
Are expats are returning home?
Some have, some want to, but many haven’t. The government’s dream of New Zealand catching a new knowledge wave back home hadn’t become a reality. Are we interviewing weekly candidates from London or Sydney wanting to come home? Maybe the odd one or two, but the numbers prove to be very low. With little movement in the $ 140k – $ 200k+ salary bracket, there are few job openings of this level, which provides little career opportunity to entice them back home.
What seems to be clear is that these expats (700,000 odd) are all happy staying where they are. Covid has become a thing of the past abroad, while New Zealand continued to stay in the Covid mindset longer (note our Auckland lockdown in late 2021). Many Kiwis abroad don’t see the roles, growth and economy here to sustain their needs and lifestyle so the idea of coming home to Tauranga or Wellington for a 40 percent – 50 percent pay cut does not appeal to them. We have interviewed a few who ended up doing so, but those who did are now heading back to London, Sydney, Singapore, the States, or even Ireland.
Is working from home is slowly dying?
WFH is still happening in the New Zealand workplace nationwide as we approach Christmas 2022, but the practice is now in question by businesses. What is clear is WFH has turned into a more generic conversation around “employee flexibility”. So what are we seeing in the field?
Firstly, 3/2 (3 days onsite, 2 offsite) & 4/1 day splits are more common now and have become the new norm as people return to work and enjoy human connection and one-to-one contact with colleagues in the office. Some companies are fully back as many younger employees are tired of working from home, especially since they enjoy the social aspect of working in a team environment. Not to mention the poorer quality of some flat-sharing situations – which can prove frustrating to work in.
What may unfold in 2023?
The need to employ will ease off in a slowing economy, but some key global growth sectors like Digital & Tech, Healthcare, and Building & Construction will continue to stay hot with a lack of talent. The hospitality sector will heal itself quickly with travellers on 1 – 2 year working visa now arriving in bursts leading up to Christmas. Overall salaries will readjust themselves as domestic candidate movement between jobs slows down. With less advertised jobs, skilled immigration will stay flat with small pockets of increases, and senior employees in great roles will knuckle down and stay put as mortgage rates continue to stay high.
The focus for businesses will be around performance and retention, staying in areas of expertise with less drift, and investing in training and working smarter together. The <30 age group will continue to move around, seeming to always chase a better deal or continuing to travel abroad. In this vein, the <$ 90k young corporate hiring market will probably continue to be overpaid, as extremely busy senior executives now look for support in their teams, in order to increase overall team performance, especially as we leave Covid-19 behind us and head into 2023 and beyond.
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