What an extraordinary two years! Not only has New Zealand experienced a pandemic, consequent recession, a remarkable recovery we now have had a March quarter of negative economic growth to start 2022. Is this the end of the post pandemic jobs boom?
During the recovery over the last 18 months we have seen a dramatic drop in unemployment and a dramatic shift from a talent over supply at the beginning of the pandemic to a market where the talent shortage is now contributing to inflationary pressures with the first noteworthy rise in wages for nearly a decade.
A combination of net migration out of NZ , lockdowns and candidate hesitancy translate to less quality talent willing to consider new opportunities whilst employers have been frantically trying to secure talent to take advantage of the recovery. Statistically you can see this is represented on the internet job vacancy index (see image).
Now, as we navigate 2022, the economy has been damaged by inflation and supply chain issues translating into a quarter of negative growth. Consequently consumer confidence has collapsed to recessionary levels. The question for recruiters is therefore is this end of one of the most buoyant, rewarding and sometimes frustrating boom markets?
My view, somewhat counterintuitively, is that it is not, although there is a risk of a market that would be very damaging for the industry.
Before I explore the potential risk here is my assessment as to why I am confident that the recruitment industry should not be too concerned in the short term and that the jobs market will remain relatively strong. Although companies are contemplating the drop in confidence they also have a very recent corporate memory of the consequences of being unable to secure staff to take advantage of the recovery.
So, unless companies crash into losses, I see them absorbing lower returns to maintain staff in anticipation of the next recovery. I also see the demographic and immigration changes that NZ has / is experiencing not changing anytime soon. i.e an aging population and net loss in migration. This combination with consumer confidence at a low ebb means that the ability to quickly and easily secure talent will not be available. Corporates will require talent acquisition teams or partnerships with quality recruitment agencies. So in the short to medium term I am optimistic for the jobs market and demand for recruitment services.
Now for the risk. In a worst case scenario we could see the demand for talent collapse but labour mobility and demographic and confidence remain at historic lows. This could mean that recruiters have many fewer vacancies to work on but still incur the increased costs to seduce talent to consider new opportunities. So less jobs to fill with extremely hard to find talent. Not a good mix.
Interesting times ahead for the recruitment industry in New Zealand.