'The ability to give pay rises to match the cost of living and inflationary pressures is really taking a hit this year'
A majority of workers in New Zealand are poised to receive pay raises that fall short of the escalating cost of living in the coming year.
About two-thirds of employers are open to granting their staff a pay raise, but nearly three-quarters anticipate the increase to range between 1 and 5 percent, found a survey by global consultancy Robert Walters.
The latest data from Stats NZ underscores the challenging landscape, showing a 7.4 percent surge in average household living costs in the year ending September, according to cited by Radio New Zealand (RNZ).
Simultaneously, annual headline inflation reached 5.6 percent in the third quarter.
Cost of living and inflationary pressures
New Zealand firms are not alone in adopting a cautious approach to pay increases, said Robert Walters Australia and New Zealand Chief Executive, Shay Peters.
"The cost of sales for an organization is increasing significantly. However, their own revenue lines aren't increasing at the same rate,” he said in RNZ.
“Therefore, the ability to give pay rises to match the cost of living and inflationary pressures is really taking a hit this year compared to the last two years."
While the labor market is still displaying signs of constraint, there is a noticeable shift, said Peters.
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"I think we've definitely seen the wind of change come through the labor market. If you think about the balance of power in that employment relationship, it's definitely swinging back more towards what I would classify as the middle ground."
Lack of applicants for recruiters
The survey also unveiled that 44 percent of employers are grappling with a lack of applicants, and 43 percent cited fierce competition for candidates as a significant challenge, said RNZ.
Peters characterized this shift as a "healthy place" for the labor market, asserting that maintaining equilibrium is crucial.
"If the pendulum swung too far either way, it would become unhealthy, and candidates and employers would feel pressured.