Hawke’s Bay’s future economic growth is at risk because of severe labour market shortages. 

With borders closed it’s not only the agricultural sector that’s feeling the pinch. Every sector, and every industry, including our local hospitality sector, is affected by shortages in both the permanent and temporary labour markets.

September’s Seek NZ Employment Report showed job ads increased by 44% year-on-year in September 2021 compared to the year before and by 12% compared to 2019. Almost every region saw an increase in job ads between August and September, including Hawke’s Bay, where job ads increased by 1% for the month, and 32% in the past 12 months. 

In related data, seasonally adjusted unemployment and underutilisation both fell. Unemployment for the June quarter sits at 4%, with Statistics New Zealand reporting that the fall in the June quarter was the largest quarterly percentage fall in unemployment since the Household Labour Force Survey began 35 years ago. 

Underutilisation, measured by the spare capacity in the labour market, is also rapidly disappearing, experiencing the largest quarterly percentage fall since the series began in 2004.

A new immigration data series from MBIE looking at the number of work and student visa holders makes for concerning reading. It shows that the number of migrants, which tends to peak in May each year, has been falling steadily since the borders closed, and is currently down 28% in the 14 months to July 2021.

Rob Heyes, senior economist with Infometrics, says that labour shortages are impacting on economic growth.

“It’s a handbrake for every business. They can’t get the staff, and we are beginning to see employers raise wage rates to secure the workers they need. Over time this will lead to increased costs that will be passed on to consumers in the form of higher prices.”

According to anecdotal feedback, Hawke’s Bay’s temporary labour market has never been tighter.

With unemployment at an all-time low, all that’s left are candidates presenting with multiple barriers to employment. This cohort is woefully underprepared for the job market and expectations of employers. Many are unable to pass drug tests, a non-negotiable for temporary labour agencies, and/or have criminal convictions that preclude them from being hired. And then there are those who pull the plug on work because they can’t handle the reality of a 40 hour a week full time job.  

Rates for most temporary roles aren’t much above the minimum wage, and maybe that’s part of the problem. An extra $50 or so a week isn’t much of an incentive to give up Government support and join the full time workforce. 

New Zealand’s and Hawke’s Bay’s labour woes will only improve when our borders open … and not before. 

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