Two-thirds of Kiwi employers plan to boost workforce in 2023

Despite increasing economic turbulence, two thirds (65%) of New Zealand businesses plan to grow their workforce in 2023.

That’s up from 52% last year and the highest level since the study began in 2019, according to the latest annual ELMO HR Industry Benchmark Report.

“The overall level of optimism was surprising given the fear of a recession globally and domestically, as well as the ongoing labour shortage, ELMO Software CEO and Co-Founder Danny Lessem, said.

"But while job cuts in tech companies and professional services firms are in the spotlight right now, the overall surge in optimism when it comes to adding headcount is a good reminder that not all organisations will be impacted by economic uncertainty in the same way. While some sectors may be forced to downsize in 2023, either due to a potential recession, rising material prices and interest rates, others will outperform.

Of those HR professionals who are anticipating a change in the size of their workforce in 2023, more than half (56%) expect their workforce to grow by 11-25% while a fifth (20%) anticipated an increase of more than 25%.

Another quarter (23%) of HR professionals expect their workforce numbers to remain the same size, while 11% are predicting a decrease in 2023.

But there were stark differences by size, with enterprise-level companies (those with 2000 or more employees) expecting on average to grow their workforce by 24%, compared to small and medium size businesses with fewer than 180 employees predicting an increase in headcount of 12%, finds ELMO.

The number of job ads in New Zealand saw a slight uptick in February, as applications declined following a year of consecutive increases.

Addressing the talent shortage

Both recruitment and upskilling, cross-skilling or reskilling employees tied as the number one issue for HR professionals across the board, with 16% choosing them as their top challenges in 2023.

Recruitment woes are being compounded by a difficulty in holding onto new hires. average turnover rate in New Zealand for new hires within their probation period is 12%, and while that’s down from last year, it’s still twice as high as it was in 2019 and 2020, says ELMO.

“The high new hire turnover rate seems to be an outcome of the ‘bums on seats’ mentality of the last few years, without regard for the short or long-term costs,” said Lessem.

“HR is now telling us that finding the right candidates is one of their biggest recruitment challenges and that suggests the focus has shifted from quantity to quality, in order to hire those who are truly right for the roles rather than choose someone without the necessary skills and experience.

So what are the top three recruitment challenges?

• skills shortage (27%)
• finding the right candidates (26%)
• competition for talent (24%)

New data released by employment website Seek suggests that the job market is moving in a positive direction for organisations looking to fill roles.

Focus on wellbeing

In addition, the number of organisations offering mental health days/programs has risen from 18% in 2021 to 38% this year, says ELMO, while the number offering no initiatives has fallen from 10% to 3%, finds the suryey of 500 New Zealand human resources professionals.

There has also been a substantial decline in the use of employee assistance programs (EAPs) from 76% in 2021 to 38% in 2023. At the same time, employee wellbeing is a high priority for organisations in 2023, according to 56% of respondents.