After two years of being hammered by Covid policies, the labour market is the worse for wear, and pre-existing shortages have been exacerbated by New Zealand’s lengthy border closure. The most recent ‘Quarterly Survey of Business Opinion’ from the New Zealand Institute of Economic Research noted both the high proportion of firms reporting that are having difficulties in finding skilled and unskilled labour, and the highest proportion of businesses now reporting labour as the primary constraint on their business.
Wage inflation is likely to accelerate as a result. According to the survey, businesses reported a 61 percent increase in costs in the December quarter, the highest since June 2008.
Now businesses will have to deal with the cultural fall-out too. Embattled employers who’ve been jumping through hoops with regards to vaccination policies and managing mental health issues among their staff are now faced with a large sector of the workforce rethinking their relationship with work. The Great Resignation, as it’s been dubbed, has now reached our shores and is in some respects a return to normal in a labour market that had always been characterised by high levels of turnover. After a two-year reprieve in which people hung onto their jobs for fear of an uncertain future, the workforce is now in reassessment mode.
ANZ economists suggested in November that “turnover in the labour market was likely to flirt with record highs once current Covid restrictions ease”.
