Employers warned of 'complex, challenging recruitment environment'

Employers across New Zealand are being warned of a "complex and challenging recruitment" climate ahead as friction comes between employers and employees on pay rises matching inflation.

"We are fast approaching what appears to be the most complex and challenging recruitment environment in recent years — yet another blow to households feeling the pinch as the cost of living climbs," said Shay Peters, managing director of Robert Walters Australia and New Zealand

The warning came as the latest Robert Walters' Salary Survey among 1,000 candidates and employers found that 97% of candidates are expecting their pay rise to either match or surpass inflation.

Among them, 65% said they are expecting their employer to consider the rising cost of living in determining their salary increases and bonuses over the next 12 months.

Employers, however, aren't considering the possibility, according to the Salary Survey, as 70% said they don't expect to offer a salary hike above inflation over the coming year.

"The survey shows there's a fundamental disconnect between candidates and employers, and that will undoubtably cause increasing friction," Peters said.

In the end, employers would risk losing staff because of pay rise, as 79% of white-collar workers said they would start looking for a new job if they don't get a pay rise that beats inflation over the next 12 months.

New Zealand's inflation rate for the September quarter is at 7.2%, according to data from Stats NZ, driven by "housing and household utilities due to rising prices for construction, rentals for housing, and local authority rates."

What can employers do?

Honesty and flexibility are some steps that employers can do to navigate the challenging employment climate, according to Peters.

"Open and honest conversations are more important than ever, especially with the warning from the RBA that ever-increasing wage offers could drive inflation beyond current predictions," he said.

"We're finding that where organisations cannot increase salary offers, sign-on bonuses, additional training, and boosted leave entitlements can encourage candidates to look beyond mere salary levels and towards an increased quality of life."

With employees threatening to walk out of their jobs due to inflation, employers could also provide flexibility and a better workplace.

"Providing an environment in which people enjoy working will become even more vital when salary expectations cannot be met, with superior employee wellbeing a valuable advantage for organisations seeing their star staff offered wage rises elsewhere," Peters said.

"Be nimble, be agile and be prepared to adapt to prevailing economic conditions, because those who are bullish today about securing a new job may change their mind if the market softens and recruitment freezes become commonplace."