Employers are pulling out all the stops to retain staff in a competitive market tipped in favour of workers

Special leave, compressed work weeks and hiring bonuses are all among the tactical gambits companies are using to lure and retain staff.

ANZ chief economist Sharon Zollner says the labour market is almost at full capacity as labour shortages hit every sector. 

Unemployment fell to 4.7 percent in the March quarter but under-utilisation in the workforce increased to 12.2 percent, Stats NZ data revealed earlier this year.

Zollner expects the updated labour numbers for the second quarter, due next week, will indicate a further slump in unemployment from 4.7 percent to about 4.5 percent. She also expects a drop in underutilisation, which represents people working fewer hours than they want to.

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Closed borders, the loss of migrant labour and increased demand for pretty much everything has created the perfect storm for labour shortages, she says.

“It started off with construction, but we’re seeing this across the board,” Zollner says. “The labour market is the tightest it has ever been.”

She says a steady flow of migrant labour has helped New Zealand’s population grow at about 2 percent per year for the past five years. But Covid brought an “abrupt” end to that. 

As a result, employers have become desperate to hold on to staff who could be poached by competitors here or overseas, Frog Recruitment managing director Shannon Barlow says.

Work perks are becoming the bare minimum for candidates, as employers offer flexible working hours, bonuses for taking up a job as well as bonuses for sticking till the end of a fixed term contract, Barlow says. 

Recruiters are facing horror stories of candidates “ghosting” employers because they had received multiple job offers and accepted another role after going through the onboarding process.

“The labour market is the tightest it has ever been.”
– Sharon Zollner, ANZ

One of Barlow’s clients is offering grandparents leave, another is offering “pawternity” leave to care for pets. She says special leave days where staff don’t have to disclose what they needed the day off for were also becoming popular.

A Seek survey of 4000 workers around the country published last week shows more than half the respondents felt workers deserve at least one day a year to relax in addition to sick leave and annual leave.

Over the weekend, the national sick leave entitlement for workers officially doubled to 10 days. 

Last year Kiwi company Hello Cup started offering five “duvet days” for staff to take without giving a reason for it.

Its co-founder Robyn McLean says the leave has not been abused or used to its full capacity by employees.

“Being a small business is challenging, full stop. But at the forefront of a successful business are the staff. 

“You need to be realistic about ensuring they have adequate leave, especially in a small business chances are they’re working extra hard,” McLean says.

Psychologist Sabina Read says after a “tough” 16 months many Kiwis were reluctant to take time for themselves with annual leave balances piling up. 

“It’s not surprising that we’re feeling tired, overwhelmed, or possibly drained and even resentful,” Read says.

“With conversations around mental health and burnout becoming more commonplace, it’s no wonder Kiwis are taking a day off just to be lazy.”

Hello Cup co-founder Robyn McLean, right, says she started offering five ‘duvet days’ for staff to use to reward them. Photo: Supplied

But Read says with many working long hours since last year, workers’ expectations were changing.

“More of us are recognising and prioritising our own needs, boundaries and wellbeing.”

Barlow says mental health leave and flexible working hours have become basic requirements.

“Instead of employers asking candidates ‘What can you bring to the table?’, candidates are asking ‘Why should I work for you?’.

Companies like travel agency Flight Centre and media company Stuff are also offering staff shares as an incentive to stay with the company longer.

Barlow says these incentives are indicative of a highly competitive labour market.

Consultancy firm Mana Communications founder Caleb Hulme-Moir recently started offering staff the nine-day fortnight in a bid to reward staff working long hours with a three-day weekend every second week.

During the lockdown, Hulme-Moir says the company was forced to reduce its pay to 80 percent and shorten its week to four days.

But within a month, the company reset staff pay to 100 percent and decided to compress the 80-hour fortnight into nine days instead of 10.

“Consultancy life is known for really gruelling hours. It can take over your life. So this is a way to put some boundaries around work life balance and ensure that the team is getting some time back. 

“We alternate Mondays, so one week the New Zealand office is on and one week Australian office is on.”

The traditional model works by giving staff four days off a week, working 32 hours, while being paid for 40 hours. 

“More of us are recognising and prioritising our own needs, boundaries and wellbeing.”
– Sabina Read, psychologist

Four-day week pioneer Andrew Barnes says while the aim is to reduce the amount of hours worked, he understands the flexibility model will change from workplace to workplace.

Barnes, who employs the four-day week at his company Perpetual Guardian, says the model has played a role in attracting and retaining workers.

Hulme-Moir’s move was also strategic.

“At the moment it’s really low unemployment so there are a lot of jobs out there and a lot of competition. Policies like this are hopefully good retention tools.”

Meanwhile, Kiwi tech firm Kami has managed to triple its staff over the past year, offering staff offsite work retreats, mental health days and paying for employees’ training programmes that are unrelated to work.

With the Government signalling a stop-start opening of the border and an indication of turning off the migration tap, Zollner doesn’t see this trend changing in the near future. 

“It’s not clear to me we’re about to have a migration boom anytime soon,” she says.

Zollner says there is a “rejigging of power” going from the employer to employee.

“It’s not just about money, but it will be. There has been a long-term decline in the share of income that’s gone to labour. 

“The internet is infinitely scalable so basically there’s no limit to how wealthy someone can become but it is all at someone’s expense to some degree.”

Last week the world’s richest man Jeff Bezos thanked his Amazon employees and customers for paying for his trip to space: “You guys paid for all of this”.

She says as long as the current business climate remains, workers will gain more power. 

But automation and technology may change that, as ANZ’s latest business survey showed businesses were beefing up investment because of skilled labour shortages.

However, worker shortage was also the main reason businesses said they wouldn’t invest in labour.

“We have never had such an artificial abrupt, negative hit to labour supply. 

“We’re living through a very interesting experiment.”

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