Market Update - Quarter 2 2024

Business News Employer

Within a blink of the eye, somehow, we’re already into April 2024. The employment landscape in New Zealand has been in a state of transformation for some time now, steered by innovation in technology, global economic shifts and societal changes.

As we step into the second quarter of the year, Kiwi businesses can expect change to continue as they adapt to the latest announcements from our new coalition government, whilst forecasting what the future of work may look like for their operation. Below we discuss the latest employment law changes, the upcoming landscape for employees and employers, and our view on some key HR themes likely to be hot topics over the coming months.

Minimum wage increase

The Government has announced an increase in minimum wage rates from 1st April 2024. The adult minimum wage will go up from $22.70 to $23.15 per hour. This is a 2% increase, which has been identified as one of the smallest incremental changes in this space for some time. Starting-out and training minimum wage will go up from $18.16 to $18.52 per hour. This reflects ongoing efforts to enhance worker well-being and address income disparities.

90-Day Trial Period Re-Activation

Just before Christmas, on the 23rd of December 2023, the Bill to extend the 90-day trial period to all Kiwi businesses, regardless of their size, was passed. Before this date, these trial periods were exclusive to employers with fewer than 20 employees. Now, all employers can utilise these trial periods, providing employers with greater confidence when hiring new employees.

Some key information to be across regarding the 90-day trial period is:

• They are only applicable to new employees who have never worked for your organisation before, even on a part-time or casual basis
• Before an employee begins their job, the employer and employee need to mutually agree in writing and in good faith to a trial period, as part of a clause in their employment agreement
• The employer must give notice to the employee before the 90 days is up
• The employment agreement must be signed before the employee starts work
• The duration is exactly 90 days, not three months; and this is an important difference
• 90-day trial periods do not override the statutory duty of good faith. Employers must not mislead or deceive employees and must continue to be responsive and communicative, even during a trial period process.

As 2024 progresses, we can expect this decision to boost the confidence of Kiwi organisations looking to hire new talent. Job seekers are also set to benefit, as employers who may once have dismissed an applicant for not possessing the ideal skills and experience, may now be willing to take a chance and be open to on-the-job training for potential candidates with the right attitude and values.

Repeal of Fair Pay Agreements

Last December 2023, the Fair Pay Agreements (FPA) Act had been repealed. The FPA Act was only in force for one year and no FPAs were finalised during this period. The repeal of this Act means that there is no longer any possibility for FPAs to be sought or bargained for. Despite this change, employers, unions, and employees are still encouraged to work together to agree on suitable employment terms.

Immigration update

2023 was a significantly busy and challenging year for Immigration New Zealand and our immigration system. A significant highlight included it being the first full year of open borders since 2019. They saw unprecedented demand for visitor visas, with the record of applications submitted being broken on several months. New visas were introduced, including the Recovery Visa to support the country’s clean up after the devastating Cyclone Gabrielle, and the Skilled Migrant Category to support our country’s workforce. It is anticipated that this growth in demand is going to continue proving to be another eventful year for this government sector.

On the 6th of January 2024, the Worker Protection (Migrant and other Employees) Act came into force. This Act introduces an offence and penalty regime to deter employers of migrant workers from breaching their legal obligations. Under the new WPME Act, Immigration Officers and Labour Inspectors have the right to request documents from employers regarding their migrant employees. Requested information may include wages, timesheets, leave records, or any other document relating to the migrant employee’s remuneration or employment conditions. Employers must then respond within 10 working days of these requests. If an employer fails to provide the requested documents in the required timeframe, the organisation may be issued infringement notices and be up for high penalty fees.

HR Trends

Hybrid Working - Over the past year, there has been a noticeable shift towards employees returning to the office environment. Remote work became the norm during the Covid-19 pandemic, but with Covid-based restrictions now behind us, a growing number of businesses are enjoying the renewed benefits of in-person collaboration, interaction, and teamwork. While companies are valuing being physically together in the workplace, there are strong indications that hybrid work is the way of the future. Many organisations are taking stronger stances on flexible working or working from home arrangements. More so, smart businesses are finding ways to strategically blend the best of both worlds; implementing hybrid working-style models that cater to employee preferences whilst ensuring a dynamic and team-based environment.

Skills Shortage – it is forecasted that the skills shortage will begin to ease over the coming months, but it’s going to be a gradual process that will take time. The market remains tight with the unemployment rate at 4% in December last year. In 2023, the skills market was very challenging, with research suggesting that 88% of employers experienced a skills shortage, and 40% said that it had intensified when compared to previous years. This prompted businesses to move toward skills-based hiring models to widen their talent networks, to secure the skillset, they needed for their operation. Accounting, Trades & Labour, and Engineers are listed as the top three in-demand skills that companies need nationally to date. These are the skills that are in strongest demand relative to supply.

Upskilling - Job hopping is becoming increasingly common, and employers are having difficulty filling roles. It is recommended to compensate this by employers looking towards building skills internally and upskilling. Are there existing capabilities within your workforce that you can identify and upskill?

In conclusion

As our nation continues to navigate through challenging economic conditions, and a new coalition government, the road ahead looks challenging and uncertain. Yet, it also presents opportunities for growth and resilience and Kiwi businesses are no stranger to having to adapt and grow during challenging times.