The Scoop on New Zealand’s Bargaining Landscape: What You Need to Know!

May 17, 2023

Let’s dive into what’s happening in New Zealand’s job market as we roll through 2023. There are some interesting and conflicting shifts taking place, including changes in unemployment rates, wages, inflation, migration patterns, and ongoing challenges faced by both the public and private sectors.

So, let’s get up to speed on what’s happening in the world of the Kiwi labour market – none of this will be new news, I’m sure!

1.  Unemployment: Slow and Steady Wins the Race:

Don’t panic! While the unemployment rate is predicted to creep up from 3.4% to around 5% by the end of the year, it’s not all doom and gloom. We’re talking about slow growth in joblessness, not a total jobs meltdown (at this stage!). The labour market just needs a bit of rebalancing.

2.  Show Me the Money! Wage Growth and Why It Matters:

Hold onto your hats because wages are on the rise! The average hourly rate for ordinary work has shot up by a whopping 7.6% compared to last year, clocking in at $38.93. But here’s the twist: that’s different from the labour cost index (LCI), which only increased by 4.3% in the year leading up to March 2023. Why the gap? Well, the LCI doesn’t account for job changes like promotions, while hourly earnings do. Many people have been taking matters into their own hands by switching employers or flexing their individual negotiation skills more frequently.


3.  Budget Crunch: The Squeeze on Households:

Feeling the pinch in your wallet? You’re not alone. Rising costs are putting the squeeze on Kiwi households, especially when it comes to food prices, housing, and household utilities. Brace yourselves because the consumer price index (CPI) is likely to stay high for longer than expected, thanks to Cyclone Gabrielle wreaking havoc and the ongoing recovery efforts required. On top of that, the tight labour market has played a role in driving up the CPI. Unfortunately, the average household income has taken a hit in real terms over the past year.

4.  Here They Come: Migration Roller Coaster:

Hold onto your hats because the migration roller coaster is on the move! Net migration from February 2022 to February 2023 has gone up overall, when compared to both the previous year and pre-COVID times. The influx is driven by non-NZ citizens arriving in droves, while the number of Kiwis leaving has caused a negative net migration of NZ citizens. It’s worth noting that the government’s immigration Green List and improved processing capacity at Immigration NZ have led to record numbers of work visas being granted.


5.  Help Wanted! Labour Market in the Hot Seat:

Employment levels are still riding high and above the sustainable threshold. Companies are grappling with widespread recruitment challenges, struggles to attract talent, and difficulty retaining employees. These headaches are big reasons why people have upped their salary and wage expectations. The labour market is in a bit of a pickle, but the good news is that things might start to ease up. Job vacancies are starting to decline, and there’s a growing number of applicants for each advertised role.

6.  Collective Agreement Tug-of-War and Possible Fireworks:

There’s still a bit of a tussle going on with some major public sector collective agreements. Despite the government’s pay directive, it’s likely that they’ll settle at higher percentage increases or with significant extra perks. And you know that those settlements can have a ripple effect, causing private sector union members to raise their expectations too. While we don’t expect too much industrial action for the rest of 2023, there could be a few organisations or industries that decide to make a fuss and draw attention to their concerns.

As we navigate the ever-changing landscape of New Zealand’s job market, it’s important to stay informed and adapt to the shifting tides. Keep an eye on the market, as understanding these trends will help you make smart choices for your collective bargaining strategy.

If you need any assistance to apply the broad trends to your organisation’s situation, please reach out for a confidential discussion.

Anna Holmes is a collective bargaining and industrial relations specialist extraordinaire. For the past 15 years she’s worked with companies of all sizes both here in New Zealand and Australia.