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Is it the Right Time to Quit?

Across the globe, workers are quitting their jobs. And this means there has never been a better opportunity to earn more money, says Amy Hamilton Chadwick.

24 August 2022

Since 2021, we’ve been hearing about the Great Resignation: employees quitting their jobs in huge numbers.

In the US, 4.4 million people quit their jobs in February this year, driven by factors like low wages, job dissatisfaction, and people’s changing priorities, thanks to the pandemic.

Lockdowns made people reassess their lives, and some realised they didn’t like their jobs, or couldn’t face returning to the office after working from home.

Online movements like r/antiwork on Reddit fuelled the fire, championing those who demanded better conditions or quit.

Most workers moved on to higher-paying jobs, but some left the workforce altogether, leading to labour shortages that have been exacerbated by widespread Omicron infections.

Employers beg for staff

Have we had our own version of a Great Resignation here in New Zealand? Yes and no, says economist Finn Robinson of ANZ.

Our labour laws and healthcare make New Zealand a better place to be an employee than the US, he says. But New Zealand is definitely part of the global trend that’s seen the balance of power shift from businesses to employees.

Where employers once called the shots, they’re now having to bend over backwards to keep their staff.

“A worker generates income for an employer,” Robinson explains, “and what share of that income the worker receives depends on how tight the labour market is.

“Here we’re seeing quite a different dynamic to the post-global financial crisis period where employers could dictate terms.

“Now we have close to record job vacancies, and employees can more easily get other job offers, so the employer has to pay up.

“That fundamental shift from the previous labour market is one reason why inflation is expected to be so persistent over 2022.”

Perfect time to hunt for a job

With our borders closed for so long, our worker shortage has worsened, with businesses competing for the same pool of local talent.

Employers have had to get creative to make themselves attractive, primarily with higher pay, but also with work-from-home options, greater flexibility, and more emphasis on treating employees well.

All these factors are encouraging Kiwis to quit jobs they’re not happy with and make the switch into a new higher paying role or jump into an industry they’re more passionate about.

It’s even attracting people to stay in the workforce longer or return from retirement, particularly in the face of rising household costs.

“In the US, millions of people left the workforce and never came back, which means a big chunk of the labour supply is gone,” Robinson says.

“But in New Zealand, labour force participation is close to the highest it’s ever been. That’s surprising because structural demographic changes mean our workforce is getting older, so you would expect that to reduce participation.

“Instead, higher wages are pulling people back into the labour force – whether that lasts is another question.”

With unemployment at a record low, and underutilisation close to pre-pandemic levels, there are very few workers to go around, so employee negotiating power has never been stronger.

It could get worse

Kiwi workers have already jumped at opportunities to move up the career ladder, says Warrick Ryan, sales consultant at CCR Group, which specialises in bringing migrants to New Zealand for employment.

Labourers, for instance, have taken their chance to get builders’ apprenticeships, setting them on a pathway to an extra NZ$7 to NZ$10 an hour.

That’s leaving significant numbers of job openings that, before the pandemic, might have been filled by new migrants. But with our borders closed, bringing in migrant workers is much more difficult, which is putting the squeeze on employers.

“Over the past couple of years, migrants coming here to work completely stopped,” says Ryan. “Our economy kept growing and developing, and now there are not enough people to do the jobs we need.

“Unemployment is at 3.4 per cent, and the majority of people in that category don’t want to work. So, employers are having to pay high rates to get migrants to come to New Zealand to fill roles, but they’re prepared to do that because they just can’t find Kiwis to do the work.”

Migrants can come here to work in specific roles where there are severe labour shortages, including ski workers, forestry, deep sea diving, vets, tech sector workers, teachers, and dairy workers.

All these workers must be paid at least NZ$27 an hour, in some cases NZ$28 an hour, while ‘other critical workers’ must be paid NZ$40.50 an hour or NZ$84,240 a year.

Each job is advertised locally at that rate before the employer can apply for an approval for a migrant worker – these rates are helping push up average wages in New Zealand, but still don’t attract workers.

“Even at $28 an hour, Kiwis are still not applying for those jobs,” Ryan says.

“The border policies haven’t opened up quickly enough to keep the economy moving as fast as it could.

“We’re going to miss the boat – the situation for employers is going to get worse before it gets better.”

Wages likely to keep rising

Ryan believes that the government isn’t going to return to the days of allowing large volumes of low-skilled workers to come here and fill minimum wage positions.

That’s for the best, he says, because it should encourage businesses to invest more in productivity and not rely on low-paid labour – which means wages are likely to keep rising.

Robinson’s forecasts agree. He says that while wages aren’t yet keeping up with inflation, real wage growth is on the cards for 2023 and 2024.

“Wages are sticky. It’s much easier for them to go up than down. A decade of low nominal wage growth is a hard habit to get out of, but we think they will catch up.”

For employers, this means there’s no relief in sight. For the time being, it’s vital to find ways to hold onto your workers and attract new team members – or spend the time and money bringing in a migrant to do the job.

It also means thinking hard about how to invest in systems or tools that will lead to higher productivity, so your business can run with fewer staff.

Workers have the power

If you’re an employee, you hold the balance of power in a way that has probably never happened before in your lifetime.

This is a time of opportunity – whether that’s switching jobs, asking for a pay rise, or negotiating on some other aspect of your work that you’re not happy with.

We don’t know how long this shift in balance will last, so make the most of it. This is your chance to either jump up your current career ladder, switch to a new ladder, or move into a job that does a better job of delivering the kind of lifestyle you want.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


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