Making sense of the job market with Angela Cameron
I’ve started to write this so many times this year, and it’s no joke when I say that every time I begin to write, the world has changed again.
Rain, floods, a cyclone, inflation, more rain, drought in the south (!), a cost of living crisis, OCR lifts, talent shortages, the war in Ukraine and the looming general election – did I miss anything?
With the events of the last few years, you’d think we’d be used to a bit of disruption by now.
As always, though, we pick ourselves up, and like the fans of a hapless sports team (think Ted Lasso), we say, “2023 is going to be our year”.
So here is my prediction (guess!) for the year ahead:
The Old News
So let’s start with the old news. We’re headed for a recession of some kind this year. Boo? Maybe it’s a good thing? Time will tell. But after years of riding high, it’s time to pay the piper (or, in this case, the RBNZ).
As Kiwibank Chief Economist Jarrod Kerr succinctly describes the economy, we’re “spending more to get less”. A dollar today buys a lot less than it did a year ago, and coupled with falling house prices and higher interest rates; our confidence is down. And everyone from workers to renters to home and business owners/leaders are feeling it. But let’s cut to the chase:
What does this mean for finding talent/being found?
Candidates have been firmly in the driver’s seat for the last few years. And, with an outlook like this, you’d be forgiven for thinking an economic dip might level the playing field. But unfortunately, this tight talent market is here to stay – for now, at least. But why?
Well, there are two critical factors at play. The first is about the psychology of a recession. In people’s minds, recession (for those who can remember one) means redundancies. With that in their minds, people in ‘secure’ permanent roles suddenly decide to stay put for fear of being in a ‘last in, first out’ situation. Being around the office for a while means you’ve had a chance to prove yourself, and understandably people aren’t willing to give that up.
With fewer people willing to make a move, there are fewer in the market for employers to choose from.
What about business confidence?
But surely reduced business confidence means fewer jobs to level up supply and demand? A recent survey of 143 NZ CEOs by PWC saw that 84% of them planned to continue with transformation projects to ensure ongoing profitability in the medium term. Similarly, small and medium businesses (who make up 90% of employers in NZ) can pivot when required (pandemic ingenuity, anyone?). Both of which continue to add pressure to the tight talent market for now. Remember – we are in an environment of extreme talent shortage so even a drop in demand is unlikely to have a huge impact for many.
The Departure Lounge
The other factor is migration – and a story of unintended consequences. During the pandemic, we tightened our borders to keep vulnerable New Zealanders safe. At the same time, this made it very difficult to leave. Heading abroad was like walking through a one-way door. For people who were otherwise freely exploring the world – let’s call them the 20 and 30-somethings – they were trapped. So when the restrictions were lifted, their tickets were booked, and they were off. You’d be hard-pressed to find a business that has yet to see at least one young Kiwi pack their bags for the bright lights in the last 12 months.
The result is another hole in our talent pool.
The Lonely Arrivals Lounge
On the other side (and not helping the situation), arrivals into New Zealand are down. Way down. Getting people here is more complex than turning on a tap again. Aotearoa is still a highly desirable place to live and work – it will take time to get them coming back.
All in all, economists call this scenario net-negative migration. So, it will be challenging for people looking to hire for the next little while.
The good news
This situation won’t last forever. Discussions with Kiwibank Chief Economist Jarrod Kerr indicate we should expect that tide to turn around in Q3/Q4 of this year. Hang in there.
How will recruitment be different in 2023?
At the Indicator Mood of the Sales Leader event (before the floods!) I predicted three things:
- 2023 is going to be about Quality over Quantity. Where recruitment felt like a turbo-charged primary school lolly scramble in 2022, employers will focus a lot more on hiring fewer but ‘better’ talent this year.
- Prepare for a more considered market this year. Rather than diving in, employers will likely be taking their time (as much as they can) in 2023. They’re working out the structure they need to set them up for 2023 success.
- Talent is seeking development. Training took a back seat during the pandemic. As we ‘find ourselves’ again, self-improvement is back at the top of the wish list.
What do these predictions mean for candidates?
You should be doing your best work, making your value known so that should push come to shove, you stay in that ‘quality’ column.
It also means that those regularly contacted by recruiters (like tech contractors) should expect fewer approaches. But hold your nerve! It’s not that you’re less desirable; it’s just that businesses are making more well-considered decisions.
It’s probably a good idea to get back to the office and focus on keeping those internal relationships strong. You want to be someone that people know.
The wrap-up and the opportunity
There’s no hiding a mixed forecast. But while clouds are starting to form, there’s also a huge opportunity to innovate and do the best work of your career. Because, in the end, calm seas never made a good sailor, right?