Hiring in a Challenging Economy: Strategies for Wellington Businesses

The current job market in New Zealand is in a state of flux, with businesses navigating through uncertainty and job seekers grappling with fewer opportunities. The latest data indicates that business confidence across the country is the highest it has been since 2016, suggesting a glimmer of optimism. However, the overall economic landscape remains complex, particularly for regions like Wellington, where the job market has been under significant strain.

In Wellington alone, nearly 7,000 public sector jobs have disappeared, impacting not just the immediate workforce but also the broader community. The nationwide workforce stands at around 3.7 million, making this number small in proportion, yet it has a profound effect on job seeker confidence. Businesses and job seekers alike are adapting to these changes, with the public sector restructuring leading to a cautious approach to both hiring and job hunting. Despite the downturn, the quality of talent available remains high, providing a unique opportunity for forward-thinking businesses to secure top candidates before the market turns around.

While other parts of New Zealand have started to see slight improvements, Wellington’s recovery is projected to be slower, with experts predicting a market normalisation only by March 2025. This slow and steady recovery reflects the broader trends seen globally, where economic cycles are taking longer to stabilise, especially in sectors heavily influenced by government employment and spending.

"This prolonged slump has created a sense of inertia, with many people hesitant to make job changes or even explore new opportunities due to uncertainty in the public sector."

In a recent NZ Market Update, Frog Recruitment Managing Director Shannon Barlow and Principal Consultant Mark Smith, shared their observations and advice on the state of the job market in Wellington. Mark, who has over 30 years of experience in the recruitment industry, described the current environment as one of the most challenging he has faced. He emphasised that the downturn has lasted much longer than previous cycles, noting, “This is the fifth economic cycle that I’ve worked through, and what makes this one particularly unique is the length of time.”

Wellington’s downturn started around May 2022, and since then, it has been a slow descent into one of the toughest markets. Mark highlighted that “the word we’ve been using to describe the market in Wellington has been brutal,” reflecting the challenging circumstances both employers and job seekers are facing. "This prolonged slump has created a sense of inertia, with many people hesitant to make job changes or even explore new opportunities due to uncertainty in the public sector."

Shannon added to the conversation, pointing out that stability is currently a top priority for both job seekers and employers. She stated, “In an uncertain market like this, some employers might be feeling panicked or nervous about hiring decisions,” which could lead to rushed decisions that impact long-term business success. The implication of a bad hire in such a fragile market is not just financial but also affects company culture and long-term stability.

Mark elaborated on this by advising employers not to compromise on quality, even if it might be tempting to offer lower salaries to candidates in the current market. He warned, “You might get a candidate to accept a salary that is lower than what you’ve been paying previously. But do you think that person will stay when the market turns?” This insight highlights a common mistake that can result in higher turnover and increased costs when the market begins to recover.

Both Mark and Shannon agreed that this is a critical time for businesses to act strategically. With the high calibre of talent currently available, it is an ideal moment to make quality hires that may not be possible once the market picks up again. As Mark pointed out, “If you have the capacity to hire now, I would go to market because you can actually secure that talent right now.” This sentiment reinforces the importance of seizing the opportunity while the talent pool is strong and before competition for candidates intensifies.

Hiring in a Downturn:

1. Act Quickly and Strategically: When a role opens up, don’t wait too long to fill it. As Shannon noted, job seekers are not waiting until closing dates to apply, with some positions receiving over 600 applications. Getting in early ensures you have access to the best talent and aren’t left behind in a crowded applicant pool.
2. Don’t Cut Corners on Salaries: Offering lower salaries might seem like a cost-saving measure now, but it can lead to higher turnover when the market recovers. Ensure you offer competitive compensation that reflects the value of the role and the current market conditions.
3. Prioritise Cultural Fit: Hiring in a downturn is an opportunity to refine your team. Make sure new hires align well with your company culture and values to build a cohesive team that will stick with you as the market evolves.
4. Keep an Eye on the Market: While the market might be slow to recover, staying informed about potential shifts is crucial. Use this time to build strong relationships with potential candidates and keep your pipeline active.
5. Focus on Employee Engagement: In uncertain times, retention is as important as hiring. Engaged employees are less likely to leave and more likely to contribute positively to your company’s culture and goals.

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In business since 2002 in New Zealand, Frog Recruitment is an award-winning recruitment agency with people at our heart. Located across Auckland and Wellington, we specialise in accounting and finance, business support, education, executive, government, HR, legal, marketing and digital, property, sales, supply chain, and technology sectors. As the proud recipients of the 2024 RCSA Excellence in Candidate Care Award, we are dedicated to helping businesses achieve success through a people-first approach.