Making sense of the talent market
52,000 people. That’s NZ’s migration gain for the year ended February 2023, according to Stats NZ. But numbers can be deceiving. If you’re still having trouble finding good talent, here’s why.
At the start of last month, I made a few predictions for the year ahead.
The bit that seemed to really resonate with people (based on the number of messages I received – thank you!) was the part about NZ’s talent market. So I thought it would be useful to do a bit of a deep dive into it. So here goes.
Anyone trying to find good talent over the last two years (which is all of us!) will know that ‘the struggle’ has been ‘real’ – really, really real. With so many employers bearing the brunt of a shortage in skilled labour, it’s been a major headache for business.
So what’s happening in the employment market? Are employers still hiring? Is it easier to find good talent? And what about salary rises?
The short answer is – it depends. Statisticians can rejoice because the data can tell you whatever story you want it to mean. But from our humble experience and research, this is where we think we are right now:
People are arriving, but we’re still short on skilled talent
While NZ is again experiencing net-positive migration* we are not seeing this translating into skilled candidate arrivals in any meaningful way. Sure, there are pockets of talent pools where this isn’t the case (think legal, auditors and a bit of tech), but most of the entrants to NZ are on holiday, studying or doing a working OE (not that anyone is complaining about more barista’s in NZ!).
Market data shows that we continue to lose large swathes of skilled candidates across the technology, accounting and finance sectors for Australia, the UK, and Canada. With that in mind, we’d still consider it a net-negative migration for skilled talent in those industries.
We’re still at the mercy of the global talent shortage. According to the OECD, nearly 80% of companies within the OECD are still reporting talent shortages in 2023 driven by digital and green transformations spurred by the pandemic, coupled with a generation of baby boomers leaving the workforce.
Kangaroos & Maple Leaves
In response, governments worldwide have sprung into action, making it easier and more desirable than ever for skilled talent to gain entry (and residency). Additionally – pay rates may be better and the cost of living lower, which may make other countries a more attractive choice.
It was a well-known fact among employers before the pandemic that many migrants would use New Zealand as a stepping stone for Australian residency. They would come here for five years, get residency before heading for the sunny sandy shores of our ANZAC cousins.
During 2022 however, Australia removed many of those barriers meaning that skilled talent can now go direct (bypassing their layover in the land of the long white cloud). Similarly, Canada announced that it would aim to receive up 500,000 migrants per year by 2025 – an increase of more than 50% on pre-pandemic numbers. It’s fair to say that Australia’s recent relaxation of the residency path for Kiwis will also play a significant factor.
Last in, first out psychology
Combine this with employee nervousness to start a new job should the economy go bad (think “last in, first out” psychology); you’ve got real pressure remaining on NZ-based employers to find and retain talent..
I get it, some of you will be thinking I don’t believe what you’re saying Ang – I’m actually finding it easier to access good talent.
Well, first of all, that’s fantastic news! I’m actually relieved to hear it.
Secondly, I’m not surprised because the big caveat is that these factors are not affecting everyone evenly. When the tide rises, everyone goes up together. When it gets choppy the waves will splash different parts of the economy in different ways.
As businesses prepare themselves for potentially leaner days, they are releasing talent through cost-out exercises into the market. This can create ‘seams of gold’ in the talent market. Suddenly a whole group of X candidates become available, making it seem like talent is loosening up a bit.
Our recommendation for hiring managers in those circumstances is to make the most of it. If you’ve been struggling to find the right people (and you’re in a position to do so) you may even consider over-hiring and creating positions for the great talent that you can find. Having them on your team will make it easier to plan for the future and accelerate delivery.
All in all, it’s not an easy situation to summarise. But I would say that if you’re in the market to hire, from our perspective, if you find great people, you should hire with confidence. Better to have them than be looking for them right?
*The end of Feb-23 saw a 52K gain on arrivals, compared to a net loss of 19K individuals in Feb-22.
Statistics New Zealand