Labour Shortages

A new year’s resolution to grow your business is likely to require growing your team. It’s fair to say that the labour market is tight at the moment and seems to be getting tighter with each passing month. Recruitment for staff is taking much longer, with a reduction in both the number and skills of applicants. What is driving it? Is it a NZ issue only, or is there a wider global issue at play?

An obvious observation is the closure of our borders for over two years which prevented international employees from entering the NZ labour market. The hospitality industry in particular has been feeling the impact of this over the past year. Not being able to draw upon the pool of individuals travelling around New Zealand to experience their “OE” has meant it is rare to not see a “short of staff, please be patient” sign when dining out. The re-opening of our borders in mid-2022 has had the equal and opposite impact, with some skilled New Zealanders finally able to take steps to move and work overseas, thereby reducing the labour pool.

In an attempt to attract high-skilled workers from overseas for the long term, NZ’s “Green List” (previously known as the skills shortage list) was significantly expanded in December 2022. Roles added to the “straight to residence” tier include registered nurses and midwives from 15 December 2022, and registered auditors from March 2023, with secondary and primary school teachers being added to the “work to residence” tier from March 2023.

Another theory is that we have an overreliance on labour trained overseas, and that employers are reluctant to invest in the education of migrant workers to ensure they are ready for the NZ workforce, which means, often, they leave. This theory suggests that NZ’s labour shortages predate the pandemic, and that underlying fundamental changes need to occur in the way employers treat migrant employees in order to see any improvements.

Another popular suggestion is that we are currently undergoing a structural change in our employment demographic with a “retiring population”, which sped up due to the pandemic. Due to the various lockdowns and challenging work environments in recent years, experienced employees who had intended on working for several more years instead decided to retire early. In America, there are around 3.5 million fewer people in the job market compared to pre-pandemic, of which, 2 million has been attributed to this unexpected surge in retirements.

As the labour shortage lingers, employers will either need to think of creative ways to firstly attract and then retain valuable staff members, or decidewhether they have no choice but to either pivot and automate a particular role or simply discontinue it.

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